How families are adapting to the new economic reality

Rises in the cost of living have been at the forefront of the news cycle since the start of the year.

Today, it has been revealed that the rate of inflation in the UK has hit 9.1%. In the US, inflation rose to 8.6% - both figures represent 40-year highs in their respective countries.

Monetary policy implemented by governments worldwide were integral to help businesses and families ride out the events of 2020 and 2021. However, these policies are now contributing towards inflationary pressures which have destabilised currencies at a global scale, increasing the price of goods and services as a result. Additionally, global supply chain issues have caused huge spikes in the cost of household necessities and the cost of living. How is the typical family dealing with this economic challenge?

According to Parents Insights data, 3 of the top 5 family concerns globally are money related, with concerns over the economy and money growing by +17% and 47% respectively, year-on-year. Money and living costs are the top two largest family concerns amongst UK parents – concerns over the latter have grown 20x year-on-year. Clearly, parents are feeling the full force of inflation on their family expenditure and are adjusting their spending habits accordingly. Understandably, families are cutting back on spending on their leisure time, where parents in the UK with money worries are -8% less likely to go on holiday than average, and -19% likely to go to the cinema. In Canada, where concerns over the cost of living have increased 8x in the last year, the amount of parents who consider value for money integral to a product purchase have increased +13% year-on-year.

Spending cuts are also being implemented in everyday expenditure, too. One of the most prominent ways families are trying to cut their daily costs is through their choice of grocery store. In the US, the number of parents who buy their groceries from organic grocer Whole Foods has decreased -26% over the last year, meanwhile discount bulk retailer Sam’s Club has grown in popularity +21% over the same period. In the UK, the popularity of discount grocer Aldi has increased +43%, while competitor Lidl grew by +17%.

Looking forward, how will the changing economic landscape impact consumption habits? We anticipate an increase in the number of subscription-based revenue models, as families look to spread costs over the long term as opposed to paying up front for products and services. In the US, 54% of parents believe that the future of retail for family products will be rental.

Read the full blog here.