How Retailers Can Adapt to UK Consumers’ Cost-Conscious Mindset

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How Retailers Can Adapt to UK Consumers’ Cost-Conscious Mindset

As the cost-of-living crisis deepens, UK consumers are prioritising value and loyalty over brand heritage. Dentsu’s latest report reveals how retailers must adapt to win trust, spend, and long-term loyalty.

As the cost-of-living crisis tightens its grip, British consumers are making it clear: flashy branding and feel-good marketing are no longer enough. They want real value—and they want it now. 

According to the latest Consumer Navigator Report, value and affordability have overtaken traditional brand drivers as UK shoppers rethink how and where they spend their money.

Surveying 4,800 respondents across five EMEA markets—including 2,000 in the UK—the report paints a clear picture: British consumers are focusing firmly on financial prudence. Over half (52%) now say that value for money is the most influential factor in retail purchasing decisions, followed by loyalty schemes (44%). In contrast, elements like customer experience (21%), brand heritage (16%), and brand values (15%) have taken a backseat.

The findings reflect the deep and ongoing impact of economic strain. In the UK, 52% of shoppers have already cut back on spending over the past year, and a striking 80% believe the economy is in poor shape. With 46% expecting conditions to worsen in the next 6 to 12 months, the message for retailers is clear: adapt or fall behind.

Essentials Take Priority, Discretionary Spend Declines

As budgets tighten, shoppers are funnelling their spending into necessities. Groceries (62%) and basic clothing and footwear (35%) are commanding more wallet share, while discretionary categories are suffering. Purchases of designer clothing (down 70%), new technology (66%), and household appliances (72%) are being delayed or skipped altogether.

However, the report sees this moment not just as a crisis, but as an opportunity for brands to reset and realign.

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Three Key Strategies for Retailers

To stay ahead of changing shopper behaviour, retailers should consider the following approaches:

  1. Prioritise Value for Money
     Position products as both affordable and high-quality. Consumers are looking for smart buys, not just cheap ones. 
  2. Strengthen Loyalty Schemes
     With loyalty now ranking as a major purchase driver, robust rewards programs that resonate across age groups—particularly older shoppers—can build lasting connections. 
  3. Refine Brand Messaging
     While saving is top of mind, consumers still crave small indulgences. Brands should strike a tone that acknowledges financial hardship while offering moments of attainable enjoyment. 

The Rise of Digital Retail—and Social Commerce

The digital revolution in retail continues apace. Dentsu’s research shows that 20% of UK shoppers plan to buy directly through social media platforms in 2025—a figure that jumps to 37% among Gen Z. Instagram and TikTok are no longer just sources of inspiration; they are fast becoming transactional platforms.

Other trends gaining traction include:

  • Websites (45%) and apps (28%) continuing to serve as critical shopping channels 
  • Second-hand marketplaces (33%) gaining momentum amid affordability concerns 
  • In-store experiences still matter, with two-thirds of shoppers valuing the physical shopping environment 

To stay relevant, retailers must embrace this new digital ecosystem by:

  • Investing in social commerce
     Incorporate seamless shopping experiences into social platforms with short-form, compelling content. 
  • Enhancing digital convenience
     Streamline app and website user journeys to reduce friction and meet shoppers’ expectations for ease. 
  • Connecting channels
     Build omnichannel strategies that blend online and offline experiences to serve customers wherever they are.

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Creating Meaningful Connections in Hard Times

Flora Kong, Client Managing Director at Carat UK&I, a dentsu company, underlines the importance of a customer-first mindset. “As purse strings tighten, retailers are under immense pressure to deliver meaningful connections. It’s not enough to simply offer savings—brands need to create value, inspire trust, and build experiences that stand out from the crowd.”

Kenyatte Nelson, Chief Membership and Customer Officer at Co-op, said, “As consumers continue to battle the cost-of-living crisis, the retail industry needs to step up. Our price match initiative, both online and in stores, is one example of how we’re listening and responding. Dentsu’s report reinforces the importance of tuning in to what matters most to our customers.”

The retail landscape is shifting—fast. Shoppers are not only more price-conscious but also more discerning. For brands, the road to loyalty isn’t paved with discounts alone; it requires empathy, innovation, and a deep understanding of what shoppers truly value.

Retailers that evolve with agility, invest in digital transformation, and build authentic, value-driven relationships will be the ones that not only survive but thrive in this new era of consumer behaviour.

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