The UK had a difficult 2022 in economic terms. Consumers grappled with a cost of living crisis, faced with sky-high energy costs, rising inflation and climbing interest rates, caused partly by the COVID-19 pandemic and the Russian invasion of Ukraine. All of this economic uncertainty had a demonstrable impact on consumer confidence. But before we delve into transaction and search data, let’s look at some key facts and figures.
Facts and Figures
In late 2022, Consumer confidence was at its lowest sustained level in 50 years in the UK, mainly due to high energy costs, rising inflation and climbing interest rates:
One of the most significant challenges facing consumers in late 2022 was rising energy costs. Household energy bills in the UK rose by 54 per cent in April 2022 and were due to increase a further 80 per cent in October. However, the government stepped in with the new Energy Price Guarantee, which resulted in a 27 per cent increase in October 2022. A further increase of 20 per cent is due in April 2023, so the outlook going forward is still bleak.
In January 2022, the UK’s inflation rate was 5.5 per cent. By November 2022, it reached 10.7 per cent after a high of 11.1 per cent in October, a 41-year high. Increases in the cost of consumer goods, underpinned by high demand from consumers and supply chain problems, have been major drivers of inflation in the UK.
Interest rates also rose sharply in 2022 to a base rate of 3.50 per cent in December, compared to a base rate of 0.50 in February.
Gauging Consumer Confidence
The Consumer Confidence Index (CCI) is a survey that measures how optimistic or pessimistic consumers are about their financial situations. But other methods will give you a good picture of how consumers feel about their finances and the economy more generally. For example, others ways to gauge consumer confidence in the UK includes looking at how much people spent over the Black Friday weekend and how often they visited eCommerce websites with the intention of making purchases.
According to Barclaycard Payments, which processes nearly £1 in every £3 spent on credit and debit cards in the UK, the volume of Black Friday payment transactions in the UK was up 3.2 per cent compared to 2021. Three days later, on Cyber Monday, the volume of payments made was up 5 per cent compared to 2021. However, the Washington Post pointed out that even though shoppers spent record amounts over the long Black Friday weekend, $35.4 billion over five days, inflation could mean that consumers are spending more for less.
To gauge how customers felt about their finances over the Black Friday weekend, we looked at daily website traffic data for the top 50 eCommerce websites. Across the five-day period from Thanksgiving to Cyber Monday, we observed that traffic in both the US and the UK was down compared to 2021.
Interestingly, traffic to the top 50 eCommerce brands in the US was down only 2.9 per cent year-on-year compared to 2021, whereas it was down 10.7 per cent YoY compared to 2021 in the UK. We also looked at Amazon’s combined website traffic and app usage over the five-day Black Friday weekend. Web traffic and app usage were up by 1.2 per cent year-on-year in the US, whereas it was down 10.7 per cent in the UK. These figures suggest that customer confidence was significantly lower in the UK than in the US. However, it’s important to note that Black Friday generally receives more attention in the US than in the UK.
Will Consumer Confidence Recover in 2023?
Consumer confidence took a big hit in 2022. The Consumer Confidence Index, transaction data, web traffic and app usage data all pointed to very low consumer confidence in the UK. However, there is a silver lining. Experts believe that the cost of living crisis will start to abate in the second half of 2023 when inflation starts to drop back. The consensus is that it may take until 2024 for the UK economy to return to normality. But what can companies do in the meantime to attract and retain customers?
Going Forward: The Case for Live Data Monitoring
With consumer confidence at a low point, brands must do all they can to attract and retain customers. However, to truly understand consumer wants and needs and conduct effective competitor analysis, brands in all sectors must leverage data analytics.
That’s where we come in. Threesixty, onefourzero’s one-stop monitoring tool, provides brands with an aggregate view of any sector, brand, product or service alongside key competitors in an easy-to-digest format. The platform gives brands all the data they need at their fingertips—market size, share and growth, engagement and user experience, marketing efficiencies and positioning, customer cohorts and sentiment, sales, pricing and conversion and commercial performance and benchmarking. Up-to-the-minute data allows brands to make data-driven decisions rather than relying on gut instinct.
If you’re interested in discussing how the threesixty platform would benefit your brand, please don’t hesitate to get in touch with us.