With every media storm that erupts whenever a utility supplier announces a tariff increase, consumers are reminded to consider changing suppliers as a means of managing their household budgets. It’s upmarket consumers who are most likely to act on this advice, although that wasn’t the case a few years ago.
Changing supplier is by no means a majority activity. Only 16% of British households have changed electricity supplier and 13% gas supplier in the last 12 months. This level has remained consistent: in 2007, 17% reported having changed electricity supplier and 18% gas supplier. But the profile of switchers has changed. Ten years ago DE social-grade households were the most likely to switch, perhaps as the most cost-conscious, or perhaps as ‘late adopters’ of the practice. Today, AB social-grade households are 20% more likely than the average household to change their arrangements. It may be that ABs have become more used to ‘shopping around’. Indeed, when asked whether they intend to make a change in the next 12 months, they are 40% more likely to say that they are.
The vast majority of us have consolidated our arrangements into taking both gas and electricity from the same supplier. Overall 89% of households with a gas contract take their electricity from the same company. The figure is above 90% for all the major individual suppliers bar one: British Gas. With only 79% of its gas customers also taking its electricity service, it still has a growth opportunity.
Prior to privatisation and the opening up of the utilities industry to competition, concerns were different. In previous generations the opportunities for British Gas came from growth in the number of households installing central heating. At the start of the 1970s, 29% of British households had central heating, and only 10% had gas-fired heating. By the early 1990s this had increased five-fold: 53% of households had gas central heating in 1993, with 66% of households heated in total.
It’s long-term trend analysis – such as this information drawn from the continuous TGI study – including the historical data held within the Archive for Market and Social Research (AMSR), that allows us to understand how consumer behaviour has changed. When large-scale decisions such as those taken by utility companies are involved, understanding long-term trends can be crucial. They let us see how the sector has evolved, and consider how it might continue to do so.
Looking ahead, we might expect developments with smart devices and the ‘internet of things’ to have market impact. If their greater engagement with the market in terms of switching is any guide, we might expect AB social-grade households to be the early adopters. But it will be important to track the speed of adoption in order to maximise the opportunities that will be presented over the coming years.
TGI (Target Group Index) is a continuous survey which has been carried out in Great Britain since 1969, based on 25,000 adults per annum, who provide information on their use of all major products, brands and services. Media exposure, attitudinal and demographic data are also included. Kantar, who own and operate the TGI (Target Group Index), are making major donations of data to AMSR.
To explore the TGI archive within AMSR, click here. (This link to the archive contents will open as a separate page)