the post recessionary consumer - they've traded down and they like it
DESCRIPTION
The recession is finally over. 2013 has seen many encouraging signs of increasing consumer confidence and positive economic growth. UK businesses have been told to look forward to a bumper Christmas. But don’t expect consumers to permanently return to their pre-recessionary spending habits any time soon. There is a new normal out there, many consumers have traded down, some of them have loved it and brands that are quick to realise this will run effective campaigns that outflank their rivals. Opinium ResearchTRANSCRIPT
Meet the post recession consumer
Date: October 2013
Quick snap-shot: The post recession consumer
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Loads of good news to talk about and signs of
recovery
Consumer confidence at an all time high
Decreasing levels of financial based fears
1/3rd say they trust companies less than
they did last year
Spending intention levels completely flat
They have traded down and they like it!
Unsatisfied with big-business
The Good
The Bad
The opportunity or threat?
The Good News
4
August
CBI says UK economy to grow by 1.2% in 2013
CBI says UK economy to grow by 1.2% in 2013
UK growth forecasts upped
again as confidence hits four-
year high
UK growth forecasts upped
again as confidence hits four-
year high
Economy 'firing on all
cylinders' says economistsEconomy 'firing on all
cylinders' says economistsOutput rose 0.7 per cent between April and June!Output rose 0.7 per cent between April and June!
UK inflation expected to fall to 2.7%
UK inflation expected to fall to 2.7%
Surging exports boost UK economic recovery
Surging exports boost UK economic recovery
Economic Headlines
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September so far
Bank upgrades forecast
for economyBank upgrades forecast
for economy
Britain's recovery overtaking rivals:
Experts double growth predictions for this year.
Britain's recovery overtaking rivals:
Experts double growth predictions for this year.
Recovery 'Better Than Forecast'Recovery 'Better Than Forecast'
Consumer confidence on the rise!Consumer confidence on the rise!
UK inflation rate falls to 2.7% in August
UK inflation rate falls to 2.7% in August
UK economy is turning corner, George Osborne says
UK economy is turning corner, George Osborne says
Economic Headlines
Positive signals - finally
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• There is a buoyant mood!
• Consumers encouraged by signs of progress in the UK economy
• This improving sentiment continues to be driven by growing confidence in the current economic situation
Lloyds Banking Group Consumer Sentiment
Index reaches a new high of 114 points in July
Source: http://www.lloydsbankinggroup.com/media1/economic_insight/spending_power_report_page.asp
A reduction in financial fears
• Fear is a major driver of consumer behaviour
• The Opinium Consumer Hopes, Fears and Spending Intentions Tracker asks consumers to indicate their main
hopes and fears and then tries to understand their spending intentions across a number of areas
• Our graph below shows how UK consumers are becoming less fearful across six financially-based themes as we
move further away from recession:
7
“What are your main fears for the next six months?”
Source: Opinium Hopes & Fears Report: 2,000 UK consumers 2013
Trust is still relatively low but some positive signals
8Source: Lansons/Opinium annual Trust Survey
The UK’s most trusted companies*
1 M & S
1 John Lewis
3 Amazon
4 Co-op / Co-op Bank
5 Sainsbury's
6 Tesco
7 Virgin
8 ASDA
9 Boots
10 Samsung
11 Waitrose
12 Nationwide / Nationwide Building Society
12 Apple
14 Sony
15 BT
16 Morrison's
16 Argos
18 Debenhams
18 Philips
20 Small / local / independent companies
• “Please list the companies you say you would trust?”
The Bad News
• Despite all this good news - trust levels are fairly low
• Consumers are still struggling to trust big business
• In the 2013 Opinium Trust Survey, run with Lansons Communications:
We should still be concerned about trust
10
A third of UK adults said they trust companies less than they did last year
Source: Lansons/Opinium annual Trust Survey
Big Business in 2013: Improvement but still huge issues
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GREED TAX AVOIDANCE CUSTOMER SERVICE
CORRUPTION/DISHONESTY UNFAIR SOCIETY
SOCIAL RESPONSIBILITY POWER PAYBONUSES
SHAREHOLDERS ACCOUNTABILITY GOVERNMENT
ENVIRONMENT
MANAGEMENT FOREIGN OWNERSHIP
How satisfied or unsatisfied are you with how big business capitalism operates in Britain at the moment?
Why do you say you are dissatisfied with how big business capitalism operates in Britain at the moment?
Source: Lansons/Opinium annual Trust Survey
Despite the good news – spending intentions are flat
• Our research shows no significant changes in spending intentions across the major categories we track
• In fact the 2013 data is almost a mirror image of our 2011 and 2012 surveys
• Which means that although economic fears are subsiding, this is not having an immediate effect on spending
intentions
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HolidaysNo change
Leisure & Entertainment
Eating & Drinking
Non-essentials
No change
No change
No change
Source: Opinium Hopes & Fears Report: 2,000 UK consumers 2013
The Opportunities or Threats for Brands
The Recession: Changing lifestyles
• During the course of the recession UK consumers across all socio economic groups planned to and eventually
did change their lifestyles:
o Reducing or postponing their spending
o Trading down
o Making more use of the internet to compare and select the best offers
o Often compromising on quality to reduce their spending
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“On the high street I like to use my
Smartphone to check if I am actually getting
the best deal.”
“ I no longer buy branded
household goods.”
“I buy my fresh produce from Waitrose and
everything else from ASDA.”
“We’ve significantly reduced our expenses as a family. We no longer eat
out and have not taken a holiday in four years.”
“I use cheaper brands and shop at cheaper
stores and supermarkets.”
Source: Opinium Consumer Focus Groups
Getting a kick out of trading down
• Pleasantly surprised by what they have found on their way down the ‘frugal ladder’; some are quite proud of
their achievements
• Different groups of people have experienced different recessions, but there is evidence that even those on
higher incomes have traded down on certain products, as finding a deal becomes the new ‘splash-out’
experience:
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“I used to show off my expensive purchases,
now I'm almost ashamed to spend
more than I should.”
“ If I don’t feel like I got a deal then I’m not actually that keen on
buying.”
“ It’s become un-cool to spend too much so me and my friends always seem to
be competing over who can get more for less.”
“Not sure what all the fuss was about. Higher priced items are
usually overrated anyway.”
“My job situation has improved but I
don’t think we’ll change back to
the way we were.”
Source: Opinium Consumer Focus Groups
Getting a kick out of trading down
16
I think I will stick with lower priced items even if I am able to afford more expensive ones*75%
I don't anticipate returning to buying higher priced items in the near future*72%
I no longer prefer higher priced items*59%
Higher priced items are not worth the money*60%
In general I found the lower priced items were just as good as the higher priced items*79%
*37%UK consumers that traded down to lower price brands
said that “they performed better than expected”
Source: *Opinium Consumer Omnibus: 2,000 UK consumers: 13th– 16th September 2013
Parting Thoughts
• The landscape has shifted. The new frugal consumer is unlikely to go back to spending beyond his or her means on
discretionary purchases. It’s time to reassess who your customer segments are and how they behave. Focus on what
customers want and need now; don’t assume things will ever get back to ‘normal’.
• Price wars will only get you so far. Are you trustworthy? Are you transparently honest? Environmentally friendly? Do
you provide an authentic experience? Do you provide value? Revisit the proposition you offer your customers – is it
fit for purpose?
• Your website is a crucial explanation of your brand and proposition. You know what you’re trying to say, but does
your customer?
• It’s time to get serious about service. One bad experience, one tweet, could cause a stampede. Are you on top of
your customer service as well as your social media channels?
• Are you using your existing customer data to uncover hidden competitive advantages unavailable to your
competitors? If not, why not?17
Game changing… some industries have responded:
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• Question: Which organisations have provided you with the best customer service during the last 12
months. Please select one or more categories and type in the name of the organisation(s) that provided
you with the good customer service and use the boxes to explain the reasons for your choice(s):
Source: Opinium Consumer Omnibus: 2,000 UK consumers
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