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Mid- to upscale retailers along with charities and travel companies are among the brands that are set to feel the biggest effects of the Coalition’s decision to cut Child Benefit for many families from January 7, new analysis from global data company Acxiom has found.
In particular, households with three children aged under 16 and a single income of £60,000 to £65,000 - just above the higher threshold of the salary bracket where the benefit cut will be applied - face tough choices as they stand to lose £2,449 annually.
Acxiom’s analysis of its nationally representative InfoBase database, covering 90% of UK households, and its Personicx consumer classification system, has identified the families, demographics, spend and brands most affected as households curb discretionary spend* to make up the shortfall caused by losing Child Benefit. It shows:
• In the retail sector, Waitrose, Tesco and Sainsbury’s are the grocers most likely to see average basket size shrink as these families rein in their supermarket spending. This group currently forks out £230 per month more than a family in the same income bracket with just one child (£100 on food, £130 on other packaged goods)
• Holiday companies such as TUI brands Thomson and First Choice can also expect a drop in revenue from people in this group. In particular, trips to the US seem likely to be shelved, while further bad news for the travel sector is that these households have previously taken up to three holidays a year, a number which could also be under threat
• Charity donations also face reductions. The data analysis shows organisations focused on children’s welfare, Third World causes, disaster relief and the environment could take a hit as they are the charities these households are most likely to contribute to. Charities likely to be affected include NSPCC, Save The Children and Amnesty International.
The analysis revealed additional insights about families with three or more children which brands in various sectors should consider when planning marketing campaigns for the year ahead (all of the financial comparisons below are made against a family in the same income bracket, but with one child only):
• Finance: They spend three times less on planning for the future via savings and investments
• Entertainment: Eating and drinking out is £70 higher per month
• Technology: Spend on personal technology is £36 per month higher
• Fashion: Total spend on clothing and footware is £70 per month higher
• TV: This group is more likely to subscribe to satellite or internet TV packages
• Communication: They have a strong preference for email communications when receiving brand messages, and a low preference for post, telephone and social network communication.

Jed Mole, European Marketing Director, Acxiom, said: “Our analysis clearly shows big and hidden discrepancies between the types of families that will be affected by the changes to Child Benefit awards. For some it was money used to fund luxuries, for others it represents the loss of key income spent on essentials. One thing is clear, marketers cannot assume all households will react in a similar fashion, and must be more discrete in their analysis and approach.
“People with three or more children will find ways to cut back on expenditure just to stand still financially – and that could be bad news for brands which will now be seen as nice-to-haves rather than must-haves.”
Mole added: “To combat this impact, brands can use the analysis to pinpoint which households are thinking of shelving the goods and services they offer, and where they are located, to develop marketing offers that make them think again. Of course, there’s also an opportunity for more budget-oriented brands to move in and serve the increasingly cost-conscious needs of the family.
“Furthermore, the message needs to be communicated in the right way too as this group prefers receiving communications from brands via email rather than post, phone or other digital media which are not as highly regarded.”

Published on: 4:07PM on 11th January 2013