inspiring consumer confidence in challenging economic times · 2020-05-23 · deloitte llp is a...
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Inspiring consumer confidence in
challenging economic times
Graham Pickett
Lead Partner – Travel, Hospitality & Leisure
June 2013
© 2013 Deloitte LLP
Inspiring consumer confidence in challenging economic timesAgenda
Overcoming
barriers to
growth
Prospects for
the UK
consumer
economy
The crisis
continues
Europe in a global
context
© 2013 Deloitte LLP
Developing nations remain key driversAs developing nations remain key to global economic growth, prevailing Eurozone crisis continues
to threaten Europe’s role in the global economy.
2.2%
-0.2% -0.5%
0.6%
7.8%
5.5% 5.3%
3.1%
5.5%
3.7% 3.6%
1.6%
0.3% 0.1%0.8%
7.5%
4.7% 5.0%
3.0%
2.2%
4.2%
2.9%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
US Europe(EU27)
Euro Area Japan China India Otherdeveloping
Asia
LatinAmerica
MiddleEast
Africa Russia,Central
Asia, andSoutheast
Europe
Global growth of Gross Domestic Product (%)
2012 2013(Projected)
Source: The Conference Board Global Economic Outlook 2013
© 2013 Deloitte LLP
International corporates turn decisively expansionaryInternational market exposure provides opportunities for growth
Source: Economics & Markets Research, Deloitte LLP, London
Index of corporate expansion: International & UK-facing corporates
© 2013 Deloitte LLP
Support for European unity on declineWhile support for Euro is still strong in major European countries, favourability for the European
Union continues to decline, thus putting stress on political will to keep EU together.
52%
60%
66%
71%
69%
64%
67%
66%
69%
63%
0% 20% 40% 60% 80%
Italy
Spain
Germany
Greece
France
Support for Euro currency (% Keep the Euro)
2013
2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2007 2009 2010 2011 2012 2013
EU Favourability (% Favourable)
Germany United Kingdom Spain France
Source: Pew Research Center (The New Sick Man of Europe: the European Union)
© 2013 Deloitte LLP
Euro breakup fears easing, but risks remain
Source: Economics & Markets Research, Deloitte LLP, London
37%
26%
36%
27%
22%18%
2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1
Average probability of euro secession
Probability assigned by UK CFOs to the likelihood of any of the existing members of the euro area not being in the single currency
in the next 12 months (%)
© 2013 Deloitte LLP
Eurosystem imbalances narrow but remain wide
Source: Institute of Empirical Economic Research - Osnabrück University
-600
-400
-200
0
200
400
600
800
1000
Jan-0
3
Apr-
03
Jul-0
3
Oct-
03
Jan-0
4
Apr-
04
Jul-0
4
Oct-
04
Jan-0
5
Apr-
05
Jul-0
5
Oct-
05
Jan-0
6
Apr-
06
Jul-0
6
Oct-
06
Jan-0
7
Apr-
07
Jul-0
7
Oct-
07
Jan-0
8
Apr-
08
Jul-0
8
Oct-
08
Jan-0
9
Apr-
09
Jul-0
9
Oct-
09
Jan-1
0
Apr-
10
Jul-1
0
Oct-
10
Jan-1
1
Apr-
11
Jul-1
1
Oct-
11
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
Net Balance with the Eurosystem/Target (EUR billions)
Germany Greece Spain France Italy
© 2013 Deloitte LLP
Europe’s unemployment woes continueBenefiting from its education and skill development policies, Germany continues to maintain a
lower unemployment rate than its European peers.
Source: Eurostat
Germany
United Kingdom
Spain
France
Italy
0%
5%
10%
15%
20%
25%
30%
2007 2008 2009 2010 2011 2012 2013
Unemployment rate (%)
Germany United Kingdom Spain France Italy
© 2013 Deloitte LLP
Europe remains a key destination for UK travellers
Source: ONS
Spain19.7%
France15.5%
USA5.3%
Irish Republic5.0%Italy
4.7%Germany
4.1%Portugal
3.4%
Netherlands3.4%
Greece3.2%
Belgium2.9%
Rest of the World32.9%
Countries visited by UK residents in 2012 (as % of total overseas visits)
© 2013 Deloitte LLP
Confidence and travel go hand in handG
Source: ONS, GB Day Visits Survey
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
-40
-35
-30
-25
-20
-15
-10
-5
0
UK Consumer Confidence v/s Day Visits expenditure by UK residents
Consumer Confidence Barometer Index
Day Visits expenditure by UK residents (GBP million)
2000
2100
2200
2300
2400
2500
2600
2700
2800
2900
3000
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
Jan-1
0
Ma
r-1
0
Ma
y-1
0
Jul-1
0
Sep-1
0
No
v-1
0
Jan-1
1
Ma
r-1
1
Ma
y-1
1
Jul-1
1
Sep-1
1
No
v-1
1
Jan-1
2
Ma
r-1
2
Ma
y-1
2
Jul-1
2
Sep-1
2
No
v-1
2
Jan-1
3
Ma
r-1
3
UK Consumer Confidence v/s UK resident’s outbound spending
Consumer Confidence Barometer IndexUK residents' outbound spending (GBP million - seasonallyG
© 2013 Deloitte LLP
Consumers taking control of their debt
Source: BBA - Credit Card Statistics
60%
62%
64%
66%
68%
70%
72%
74%
76%
78%
80%
50,000
52,000
54,000
56,000
58,000
60,000
62,000
64,000
66,000
68,000
70,000
Jan '0
8
Apr
'08
Jul '0
8
Oct '0
8
Jan '0
9
Apr
'09
Jul '0
9
Oct '0
9
Jan '1
0
Apr
'10
Jul '1
0
Oct '1
0
Jan '1
1
Apr
'11
Jul '1
1
Oct '1
1
Jan '1
2
Apr
'12
Jul '1
2
Oct '1
2
Jan '1
3
UK Credit card debt outstanding and % of outstanding balances bearing interest
Credit outstanding (GBP million)
Percentage of outstanding balances bearing interest (%)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
UK Credit cards in issue v/s Active card accounts
Number of cards in issue (thousands)
Number of active accounts (thousands)
© 2013 Deloitte LLP
Household spending predicted to improve, albeit slowlyGrowth forecast to remain below levels experienced during 1990s consumer boom
Source: ONS and Office for Budget Responsibility (OBR)
-4%
-2%
0%
2%
4%
6%
8%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Household expenditure growth (%)
OBR forecasts an average
growth 1.7%
Decade to the economic
downturn 1998-2007
average growth ~ 4%
Forecasts
© 2013 Deloitte LLP
3% 3%2%
5% 5%
8%9%
20%
3% 3% 3%
5% 5%
7%
9%
19%
0%
5%
10%
15%
20%
25%
Selling anexpensive
electrical item
Downsizing:moving into asmaller home
Upgrading:moving into alarger home
Buying a car Buying a majorhome
appliance
Buying anexpensive
electrical item
Homeimprovements
Long breakholiday
UK consumers major purchases for the next three months
Q1 2012 Q1 2013
Consumers will still not compromise on their holidaysUK Consumer spending expectations for major purchases
Source: Deloitte Consumer Tracker (Q1 2013)
© 2013 Deloitte LLP
Majority of corporates now focused on growthImproving situation allows business to switch out of survival mode
© 2013 Deloitte LLP
Business leadership seen as key for the new growthAs consumers and government are unable to kick start the economy
© 2013 Deloitte LLP
In summary – overcoming barriers to growth
Keep it SIMPLE however, in everything you do!
Know your consumer1
2
3
4
Retain focus on your cost base
Differentiate your product &
services
Demonstrate value for money
5Target emerging consumers
6
7
Invest for growth
Agile businesses thrive in a rapidly
changing environment
8 5 forces of digital disruption
© 2013 Deloitte LLP
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