Frugality is the new craze sweeping the nation; or at least it seems to be.
Asda CEO Andy Bond has reported a 40 per cent increase in sales of cooking ingredients, alongside a similar drop in the sale of certain ready meals. The Daily Telegraph is printing recipe ideas to help its readers make the most of their leftovers.
Elsewhere, waiting lists for allotments are growing, the University of Sheffield reportedly has formed a student knitting society and the website ‘Stitch & Bitch’ announces such style icons as Geri Halliwell and Madonna are partial to a bit of “knit one, pearl one” during the long winter evenings.
Does this mark a step change in consumer spending patterns with “make do and mend” replacing “get out there and spend” as the mantra of the UK consumer?
Andy Bond seems to think so, for some consumers at least, rightly pointing out the great depression of the 1930s and the Second World War had a long-term impact on the spending habits of our grandparents’ generation.
This hair shirtism may be a little overplayed.
Apparently, Asda is still shifting plenty of champagne and olives, while one of the leftovers recipes in the Telegraph addresses the burning issue of what to do with those unwanted lobster shells. Don’t even ask the price of six balls of cashmere wool to knit a cardigan.
The question is an important one for companies and investors. Being close to your customer is a vital ingredient of business success and it becomes the imperative when many pre-conceived notions about current and future circumstances are being challenged on a daily basis.
One year ago, no-one would have expected consumers to be more concerned about the financial stability of their banks than the interest rate on their savings. A couple of banking collapses and government bail-outs later and the world, and bank advertising, look very different.
Similar, though less dramatic, challenges face many industries, from the automotive sector through to fashion. The challenge is to understand your customers and their needs before perhaps even they do, and be there with the right product, at the right price, in the right place. This has never been easy, and is becoming more difficult by the day. However, when the economy does turn the corner, there will be significant rewards for the businesses that have managed it.
* Owen Trotter is an investment partner at Key Capital Investment