How will shoppers be impacted by the budget?

5 March 2021

In his budget, the Chancellor unveiled a number of measures to support jobs and the British people. Many of these measures are likely to further boost shopper sentiment in the short-term. These include:

  • Extension of the furlough scheme to September 2021
  • 5% VAT rate for hospitality, accommodation and leisure retained until September
  • Duty on beers, wines and spirits and fuel will remain unchanged
  • Special welfare provisions extended

The Office for Budget responsibility now predicts that the economy will grow faster than previously reported.

  • GDP will return to pre-crisis levels by the middle of next year – six months earlier than previously expected
  • Unemployment is expected to peak at 6.5% instead of 11.9% expected last July

See our latest analysis of the budget and the Office for Budget responsibility report.

Latest shopper insight

How will shoppers react to the key measures of the budget?

The top findings from the latest ShopperVista Update report designed provides us with an up-to-date view on how British shoppers are thinking and feeling.

1. Improving shopper confidence

Even before the budget announcement, shopper confidence increased for the second month running to -4 in February, the highest level since January’20. Expect shopper confidence at an overall level to be boosted in the short term as the economy opens up and more people receive the vaccine.

2. Financial confidence – a divide emerging

With the announcements of planned restrictions easing, shoppers have responded with the highest levels of financial confidence we have seen for a year. However, what is becoming clearer is the difference within the population. More ABCs believe they will be better off in the year ahead. In contrast, more DEs believe they will be worse off in the year.

It will be interesting to see if the key measures in the budget will improve financial confidence among those in the lowest affluence groups.

In the short-term, the lower forecast for unemployment is good news, meaning that thousands of people will not now become unemployed. However, it should be remembered that furlough is not a complete replacement for the normal wage, so anyone furloughed is still likely to be feeling financial strain. The freezing of income tax thresholds from next year will mean 1.3 million more people paying income tax and one million more paying the higher rate of tax.

Staying close to the impact on different groups will be vital.

3. Increased shopping around

With reduced number of COVID-19 cases, shoppers have become more confident to shop around food and grocery stores. The average number of food and grocery stores visited has increased to 11.5 from 11.1 in January. Expect to see shopping around to continue to increase as shoppers once again feel more confident shopping in-stores.

4. Making the most of shopping trips

Given that food and grocery shopping is the only activity many people can currently complete shoppers are taking different things into consideration when deciding where to shop. This includes having an enjoyable experience. It will be interesting to see if this will this expand shopper repertoires in the longer term.

5. Online usage continues to evolve

The average number of online food and grocery stores used increased again in February. This may be driven by online shoppers using newer online offerings for example, HelloFresh or Deliveroo. This experimenting is now impacting overall shopper habits keeping the number of fascias visited high despite fewer store trips.

6. Keeping it simple with promotions

Buying products on promotion is one of the savvy shopping tactics we know shoppers use to control their spending. To make promotional activity compelling to shoppers, transparency is vital. There is room for further improvement when it comes to how easy they are to understand and make a value assessment.

If you want any further detail, ShopperVista subscribers can see the full Shopper Update report.

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