As Brexit rumbles on, British consumers continue to spend on brands and businesses that successfully appeal to the Holy Trinity of current consumer behavior; the experience, health and wellness, and ethics.
The new Mintel research reveals that total consumer spending hit £1.32 trillion in 2018, an increase of 4% compared to the £1.27 trillion spent in 2017. By 2023, the forecasts of total consumer expenditure is set to reach an estimated £1.55 trillion, rising by 17% over the next five years.
Mintel’s British Lifestyles Report has tracked spending across major consumer markets to provide a snapshot of how modern Britain dresses, shops and relaxes.
Working at home drives nightwear and loungewear boom
Sales of underwear, nightwear and loungewear have increased by 18.8% in the last five years, with British consumers spending £4.6 billion on these items in 2018. Last year, the average British consumer spent £38 on underwear, rising to £46 for ages 35-44, and £34 on lounge/nightwear.
Meanwhile, young men’s love of premium brands push sales upwards. Of males, 29% ages 16-35 say premium brands are their preferred choices for underwear, nightwear and loungewear. Growth in this market is forecast to remain robust over the next five years, representing a 19.1% growth with consumer spending expected to reach £5.5 billion by 2023.
“More than four million people now regularly work from home, and their demand for comfort has arguably been a contributing factor to the booming sales of loungewear,” says Jack Duckett, Mintel association director of consumer lifestyles research. “Celebrity influence is likely to have fostered the trend for chicer underwear. Candid celebs have shared images on social media in sexy and sporty underwear designs, which has helped to return the sense of fun and even aspiration to a category that otherwise runs the risk of being a price-driven basic purchase.”
There’s no place like the Instagram home
The homes and gardens sector was the fastest growing area of consumer expenditure between 2017-18, increasing by 11.6% during this period to £68 billion. Furthermore, decking out homes and gardens is projected to rise a further 37.4% over the next five years. Whether buying or renting, older Millennials are leaving their parents’ nest to their own homes, turning to homeware brands to cultivate a trendy and social media-friendly layout. According to Mintel research, 30% of millennials look to social media to get inspiration on home styling.
“Offering Instagram-friendly value-oriented homewares will become increasingly important as millennials finally begin to set up homes of their own. Indeed, fashion retailers including Zara and H&M are already increasing the number of homewares products they offer,” says Duckett. “We’re also seeing a rise in gardening spend due to warmer weather. There could be a slowdown in the housing sector similar to what we saw during the 2008 recession, with people making their homes and gardens nicer rather than moving.”
Alcohol consumption falls as demand for premium alcohol and soft drinks increase
One in five UK adults say they do not drink alcohol*, while nearly half of alcohol buyers/drinkers say they have cut back or limited the amount of alcohol consumed in the last 12 months**. But as British consumers actively look to curb their intake, many are prepared to spend more on their drinks. As a result, premiumization is driving value sales, with overall sales of alcoholic drinks growing by 5.5% between 2017-18 to a total of £21.8 billion.
The soft drink industry is gaining opportunities due to the widespread efforts among consumers to limit or reduce their alcohol intake. Estimated to be valued at £11.3 billion in 2018, the non-alcoholic drinks retail market grew by an impressive 15.4% between 2013-18, with ‘adult soft drinks’ among the fastest growing soft drinks segments.
“The fact that so many Brits are cutting down on the amount of alcohol they drink has proven to be a boom for soft drinks brands. The industry has helped to further drive this demand by launching a raft of new soft drinks—using more sophisticated packaging and flavor profiles to help secure a ‘grown-up’ audience,” says Duckett.
From the dance floor to the darts floor
The UK leisure industry continues the streak of positive growth as consumers seek new ways of entertainment for themselves or with family and friends. The leisure market was valued at £34.3 billion in 2018, with growth expected to continue over the next five years, taking the sector to £40.3 billion by 2023.
There’s no doubt the experience economy is a driving force behind the leisure market. Luxury cinemas, retro tenpin bowling alleys, and social darts bars have sprung up in recent years to provide an alternative late-night entertainment experience to the traditional nightclub. Today, 65% of adults say they would spend money on experiences rather than possessions, rising to 72% of Millennials.
“The unquenchable consumer enthusiasm for experience-led activities continues to help drive growth in the leisure market. Our research shows that experiences that tap into the booming health and wellness trend are amongst the most popular. But it is undoubtedly the more unusual that carry the greatest value as the young, in particular, look for unique experiences that they can share on social media,” says Duckett.
What’s brewing for fermented foods
Fermented foods have picked up a media buzz in recent years. According to Mintel research, 68% of UK adults say that actively looking after your gut health is essential to your overall health, rising to 72% of ages over-55.
“Advocates credit fermented foods with providing various health benefits, including supporting gut health, boosting the immune system and helping to control sugar cravings. The European Food and Safety Authority has not approved any claims for fermented foods, but that hasn’t stopped mass-market consumers from buying into the hype,” says Duckett. “Given the heightened interest in products which support gut health, this is a trend which is likely to continue in the future, with further new product development only likely to drive its appeal among consumers.”
Pot snacks get image overhaul
An influx of new products and brands fuel the rising statistics regarding pot snacks. The student staple has seen volume and value sales rocket between 2016-18, rising 26.3% in value (from £179 million in 2016 to £226 million in 2018) and 17.4% in volume.
“The notable focus on quality, healthiness and authenticity in new product development has helped to drive sales in the instant pot snacks category in recent years. The strong convenience factor of pot snacks combined with an improved image—thanks to these innovation themes—is expected to sustain future growth for this segment,” says Duckett.
Beauty consumers are nation’s most ethical shoppers
Today’s beauty consumers are the most ethically aware. Mintel research finds UK consumers the most likely (47%) to take ethical considerations into account before purchasing beauty and personal care goods. A close second, 44% of British consumers make ethical considerations before buying in-home food and drink, while 39% of consumers take into account ethical considerations before buying clothes or visiting foodservice outlets such as restaurants or pubs.
“Modern consumers are looking too brands to be moral and ethical on their behalf. Beauty is notably the most common area where people consider how ethical a brand is before buying. Much of this can be attributed to the sector’s focus on animal welfare and plastic waste reduction, two of the most important ethical issues for consumers today,” says Duckett. “However, it also reflects how both well-known and indie beauty brands are taking a forthright and active approach in tackling a broader spectrum of ethical issues, with brands such as Fenty Beauty focusing consumers on issues relating to equality, diversity and inclusivity, while The Body Shop has reignited its mission to end animal testing globally.”
* have not drunk alcohol in the 3 months to November 2018
**12 months to November 2018