Cost-of-living crisis not driving UK consumers to budget retailers

As the impact of the cost-of-living crisis begins to bite, signs indicate that UK consumers are prioritising quality goods over budget bargains when it comes to their online retail spend.

That’s according to the latest IMRG Capgemini Online Retail Index, which tracks online sales for 200 retailers.

Since March, online sales for budget retailers have fallen -16% Year-on-Year (YoY), while premium retailers (-9%) and their mid-market counterparts (-5%) have fared significantly better. This is particularly the case for mid-market retailers, who saw positive growth in July at +4% (and June at +1%).

Taking a closer look at the Average Basket Value (ABV) to understand the trends behind these figures, the rise in spend for mid-market goods between January (£106) and July (£146) hints at Brits being unable to let go of high-quality items so compromising with mid-market options in an attempt to balance new budget constraints.

More movement in general within the ABV for both the premium and mid-market categories also points to discounting being used as a tactic to boost sales – something budget retailers (who’s ABV has remained flat) have little scope to do. 

Simon Binge, Commerce Senior Manager, Customer Transformation at Capgemini, said: “With mounting economic pressures and very little positive news on the horizon, it’s telling that UK consumers are opting for quality compared to price in the value equation.

“Whilst there are signs of trading down, consumers are still unwilling to compromise on quality and are being helped by discounting in higher price points. It remains to be seen, however, whether this behaviour – and retail promotional activity survives the potential worsening of economic conditions in Autumn and beyond.”

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