United Kingdom: reaching the consumer - SwiftERM

flag United Kingdom UNITED KINGDOM: REACHING THE CONSUMER

Consumer Profile

United Kingdom: reaching the consumer. Like many Western countries, the United Kingdom has an aging population. The average age is 40.5 in 2020, compared to 39.5 in 2010. According to the latest World Bank data, people under 14 represent 17.7% of the population while people over 65 represent 18.5% of the total. The population growth rate is 0.53%. On average, there are 2.4 people per household. According to the Office for National Statistics, the number of households grew by 0.9% since the previous year to 27.8 million in 2019, an increase of 6.8% over the last 10 years.

The number of people living alone has increased by a fifth over the last 20 years, driven mainly by increases in men aged 45 to 64 years living alone. Regarding the ratio of men to women, women represent 49.6% of the total population. 83.2% of the population lives in urban areas for 2020. London and its surroundings are high density areas, and there are other densely populated areas in the centre such as around Manchester and Liverpool, but also around Edinburgh and Glasgow as well as in South Wales, around Cardiff, and east of Northern Ireland.

The main cities are London, Birmingham, Liverpool, Nottingham and Sheffield. In the United Kingdom, 81% of adults aged 25-64 have completed upper secondary education, higher than the OECD average of 78%. This is slightly truer of men than women, as 82% of men have successfully completed high-school compared with 81% of women. In terms of employment,  75% of people aged 15 to 64 in the United Kingdom have a paid job, above the OECD employment average of 68%.

Some 86.7% of the active population is employed while 12.7% are entrepreneurs and self-employed. The sectors employing the most manpower are wholesale and retail sales (14.13%), health and social services (12.53%), scientific and technical occupations (8.56%), support and service (8.51%), education (8.44%), manufacturing (7.74%), hotels and restaurants (6.85%) and construction (6.78%).

 

Purchasing Power

The GDP per capita PPP is approximately USD 48,709. People in the United Kingdom earn USD 43 732 per year on average, slightly more than the OECD average of USD 43 241. In the United Kingdom, the average household net adjusted disposable income per capita is USD 28 715 a year, lower than the OECD average of USD 33 604. consumer spending in the UK increased, reaching approximately over 1.38 trillion British pounds in 2019.

McKinsey survey reports that in October 2020 consumer confidence on economic recovery has reached its lowest level, since the beginning of the COVID-19 crisis. Many have delayed purchases as a result of the crisis, adopting new habits to save money and becoming more mindful of how they spend. Income inequality, as measured using the Gini coefficient, has been broadly stable over the past ten years with disposable income reaching 34.6% in financial year ending 2020.

The income of the richest 20% of people was over six times higher than the poorest 20% in 2020. According to the Office for National Statistics, the gender pay gap among all employees was 15.5% in 2020, down from 17.4% in 2019. There was a fall in the gender pay gap within the managers, directors and senior officials occupation group in 2020.

 

 

Consumer Behaviour

The United Kingdom is a mass consumer society, even though ecological and responsible consumption is growing. The main factors influencing purchase are price, quality, design, brand or environmental benefits. After-sales service should also be considered and claims are common. The British are increasingly buying online, thus online commerce is an important market. Regarding the choice of product origins, 6 British out of 10 say that UK origin is as important as price. Brand loyalty will often depend on price.

Virtually all adults aged 16 to 44 years in the UK were recent internet users (99%) in 2019. Social networks are also important in the purchase decision. The penetration rate is 58%, and Facebook is the main network. Facebook and Instagram influence the choice of travel destinations. Influence is stronger for those under 24 and over 55. 57% of Britons are worried about the amount of personal data shared online, the usage  and their rights.

COVID-19 pandemic has affected consumer behavior: 63% of UK consumers have changed stores, brands or the way they shop; up to 50% consumers have decrease spending on most discretionary categories. More of the United Kingdom consumers are shifting to online purchases and services, and many intend to continue after COVID-19 subsides.

Ethical and environmental business practices are becoming increasingly important. Sales of organic products have increased in the last years. Data from the market research company Nielsen shows organic food and drink sales grew by 6.1% – almost double the 3.2% growth of non-organic food and drink products – in the year ending May 2020. Purchases of organic products are generally made in independent stores or delivered at home. Respect for the environment also encourages the circular economy and the second-hand market. According to eBay, there have been 30 percent more secondhand sales in June 2020, compared to March.

 

Household Consumption Expenditure

Sector Percentage
Housing, water, electricity, gas and other fuels 26.0%
Transport 13.0%
Various goods and services 12.0%
Culture and leisure 9.0%
Restaurants and leisure 9.0%
Food and non-alcoholic beverages 8.0%
Clothing and shoes 5.0%
Furnishings, household equipment, everyday maintenance of the house 5.0%
Alcoholic beverages, tobacco and narcotics 3.0%
Communication 1.0%
Health 1.0%
Education 1.0%

Source: OECD Stats, 2017.

 

In the United Kingdom, payment cards are widely used. Of the 164 million transactions in 2016, 100 million were made with debit cards, 59 with credit cards and 5 with private cards. Household debt stands at 86.35% of GDP, a relatively high level in Europe and rising. The outstanding debt to households is 428 billion pounds in 2018. The average debt per capita is 37,000 pounds, and 61% of the inhabitants have a debt. Consumer credit is rising in the UK, but is slowing. They mainly finance vehicles, education costs and durable goods. Consumer credit is expected to continue to grow at a slow pace.

 

 

Behaviour

Home and garden equipment, appliances, hobbies, culture, personal care, vehicles, drugs, audio-visual equipment, alcoholic and non-alcoholic beverages, food services, shoes, clothing, food, dishes and household utensils and telephony.

Citizens advice
, Several causes including consumer protection
Which? , Consumer Association
Ambudsman Association , Consumer resolution

Behaviour

 

Population in Figures

Total Population:
66,834,405
Urban Population:
83.7%
Rural Population:
16.3%
Density of Population:
275 Inhab./km²
Men (in %)
49.3%
Women (in %)
50.6%
Natural increase:
0.56%
Medium Age:
39.0
Ethnic Origins:
European origin (about 87%), African origin (about 3%), Indian (about 3%), Pakistani (about 2%), mixed (about 2%) and other origin (about 3%). (Office of National Statistics)
 

Population of main metropolitan areas

City Population
London 12,090,254
Birmingham 1,919,346
Manchester 1,885,530
Leeds 1,181,206
Newcastle 1,065,336
Glasgow 956,593
Liverpool 943,613
Sheffield 898,347
Nottingham 849,372
Bristol 815,137

Source: OECD, 2012 – Latest available data.

 

Age of the Population

Life Expectancy in Years
Men:
79.5
Women:
83.1

Source: United Nations, Population division, World Population Prospects., 2009 – Latest available data.

 
Distribution of the Population By Age Bracket in %
Under 5:
6.0%
6 to 14:
11.4%
16 to 24:
13.2%
25 to 69:
57.6%
Over 70:
11.8%
Over 80:
4.7%

Source: United Nations, Department of Economic and Social Affairs, Population Division. – Latest available data.

 

Household Composition

Average Age of the Head of the Household 51.0 Years
Total Number of Households (in million) 25.7
Average Size of the Households 2.4 Persons
Percent of Households of 1 Person 29.1%
Percent of Households of 2 Persons 28.5%
Percent of Households of 3 or 4 Persons 27.7%
Percent of Households of 5 Persons and More 6.0%

Source: Central Survey Unit, 2006-2007; Trends in Europe and North America, The statistical yearbook of the Economic Commission for Europe, UNECE., 2008 – Latest available data.

 

Consumption Expenditure

Purchasing Power Parity 2018 2019 2020 2021 (e) 2022 (e)
Purchasing Power Parity (Local Currency Unit per USD) 0.68 0.68 0.69 0.68 0.68

Source: IMF – World Economic Outlook Database, Latest Available Data

Definition: Purchasing Power Parity is the Number of Units of a Country’s Currency Required to Buy the Same Amounts of Goods and Services in the Domestic Market as USD Would Buy in the United States.

Note: (e) Estimated Data

 
Household Final Consumption Expenditure 2017 2018 2019
Household Final Consumption Expenditure
(Million USD, Constant Price 2000)
1,851,348 1,880,605 1,900,901
Household Final Consumption Expenditure
(Annual Growth, %)
2.2 1.6 1.1
Household Final Consumption Expenditure per Capita
(USD, Constant Price 2000)
28,026 28,297 28,442
Household Final Consumption Expenditure
(% of GDP)
65.7 n/a n/a

Source: World Bank, Latest Available Data

 
Consumption Expenditure By Product Category as % of Total Expenditure 2017
Housing, water, electricity, gas and other fuels 26.0%
Transport 13.0%
Other goods and services 12.0%
Recreation and culture 9.0%
Restaurants and hotels 9.0%
Food and non-alcoholic beverages 8.0%
Clothing and footwear 5.0%
Furnishings, household equipment and routine maintenance of the house 5.0%
Alcoholic beverages, tobacco and narcotics 3.0%
Communication 1.0%
Health 1.0%
Education 1.0%

Source: OECD Stats, Latest available data

 
Information Technology and Communication Equipment, per 100 Inhabitants 2012
Telephone Subscribers 130.8
Main Telephone Lines 52.6
Cellular mobile subscribers 130.8
Internet Users 87.0
PCs 80.2

Source: International Telecommunication Union, Latest available data

Marketing opportunities

 

Media in Which to Advertise

Television

Advertising on TV is expensive but reaches consumers massively. For 2016 as a whole, ad spend grew 3.7%, reaching GBP 21.4 billion, marking the seventh consecutive year of market growth. TV advertising’s growth in 2016 was driven by a 12.6% rise in video-on-demand ad revenues.

Main Televisions
BBC (British Broadcasting Corporation)
BBC World
ITV
Channel 4
ITN

Press

In regional or local newspapers, it is suited only for a product with strong potential in a specific region. Specialised magazines are worth considering to reach a focused target. In recent years, printed newspaper circulations have been sliding while online readership has surged. In 2016 the slide in print media continued and ad spend on national newspaper brands fell 10% to GBP 10.1 billion. The national newspapers segment remains important however and the UK is the biggest market in Europe for number of readers of national newspapers.

Main Newspapers
The Independent
The Times
The Sun
Daily Telegraph
Metro
The Guardian
The Economist

Mail
Direct mail can be personalised, customised, targeted and very creative. The volume of direct mail has increased by 87% in the last 10 years, even though in 2016 direct mail dropped 10.4% to GBP 1.7 billion.
In Transportation Venues

Used in major cities on the side of buses and taxis. Also as posters and flat-panel videos in the street. Digital out-of-home was up by over a quarter, but despite its digital growth, the sector saw spend recede overall by 0.6% during the first quarter of 2017.

Market Leaders:
Verifone Media (agency)
JC Decaux UK
Clear Channel UK

Radio

There are many radio stations at national, regional and local level, with a substantial audience. Some stations do not accept advertising. Digital radio offers new channels representing specific interests, with more opportunities for precise targeting. They can also display text, which means advertisements can also include telephone numbers, product information and offers. In 2016 the radio advertising market grew by 5.4% to reach GBP 646 million.

Main Radios
BBC Radio National services.
Virgin radio – national commercial pop and rock station
Talk Sport – national commercial sports station
Classic FM – national commercial classical music station

Web

Online ad spend continues to grow via internet revenues, including digital across news and magazine brands, TV and radio. Digital formats continued to dominate, with internet ad spend up 13.4% to GBP 10.3 billion for the 2017. Mobile accounted for 99% of this growth, with ad spend for mobile platforms scoring a record increase of 45.4% to GBP 3.9 billion. There were more than 60 million internet users in the UK in 2016, nearly 93% of the population (Internetlivestats). Around 64% of British people have an active social media account, with Facebook being the leading platform.

Market Leaders:
Jellyfish
AUK
Media Agency Group

Main Advertising Agencies
Saatchi & Saatchi
Publicis Groupe SA
WPP Group plc
Dentsu Aegis
 

Main Principles of Advertising Regulations

The information in this section is subject to change and regular updating during the UK’s post-Brexit transition period. We will publish the updated information as soon as it becomes available.
Beverages/Alcohol

The rules have been strengthened particularly with the intention of protecting the young in the four areas where they may be considered vulnerable to alcohol misuse: sexual behavior, immoderate drinking, youth appeal and anti-social behaviour.

In the United Kingdom, the Advertising Standards Authority has banned several ads that don’t comply with the restrictions in the EU directives. Nevertheless, starting January 31st 2020, the date of the UK’s departure from the EU, the UK will no more incorporate new EU legislation into its national regulation.

In Scotland, the Alcohol Act of 2010 introduced a number of restrictions on discounts and special offers related to alcohol products. Promoters are therefore urged to seek legal advice before carrying out alcohol promotions in Scotland. For more information visit the website of the Advertising Standards Authority.

Cigarettes

On 14 February 2003 the Tobacco Advertising and Promotion Act 2002 came into force, prohibiting the advertising and promotion of tobacco products. It does not, however, cover advertisements for rolling papers or filters and does permit certain tobacco advertising at point of sale. The relevant EU directives banning tobacco advertising apply within the United Kingdom, in addition to UK laws restricting tobacco advertising.

The EU Tobacco Advertising Directive bans tobacco advertising in printed media, radio, and internet as well as the sponsorship of cross-border events or activities. Since we are now post-Brexit the UK will no more incorporate new EU legislation into its national regulation, but the agreement todate is adoption until further notice.. For more information visit the website of the Advertising Standards Authority.

Pharmaceuticals/Drugs
The advertising of medicinal products in the UK is controlled by a combination of legislation and codes of practice. The 2 main ones are: the Medicines (Advertising) regulations 1994 and the Medicines (Monitoring of Advertising) Regulations 1994. Consult the text on the website International Comparative Legal Guide Series. The advertising of medical products is regulated by the European Council Directive 2001/83/EC.
Nevertheless, starting January 31st 2020, the date of the UK’s departure from the EU, the UK will no more incorporate new EU legislation into its national regulation.
You can consult the UK Government’s guide on how to promote pharmaceutical products here.
Other Rules
As a general rule, all marketing and advertising must be: an accurate description of the product or service, legal, decent, truthful, honest, socially responsible (not encouraging illegal, unsafe or anti-social behaviour). Consult the UK advertising codes here.
Use of Foreign Languages in Advertisement
Retailers must ensure that all goods they sell display the compulsory information, in English, on each item. Generally, if an advertisement contains any foreign languages or signs, the advertiser must provide an English translation for them.
Organizations Regulating Advertising

Advertisers Standards Authority
Committee of Advertising Practice
Ofcom

 

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