Consumer spending and confidence

After a long period of high consumer spending and confidence, both fell to record lows following the beginning of the economic downturn. High levels of personal debt and rising unemployment mean consumers are feeling the squeeze. Although consumers are still pessimistic and it is likely that confidence will remain fragile for some time to come, confidence has been rising since April 2009. However, consumerism is well embedded in British society and spending has also begun to pick up.

What are the implications?

  • In an attempt to stimulate the economy, revive consumer spending and confidence and assist mortgage holders (see housing market), the BoE has cut interest rates to their lowest level ever.
  • Pressure on all sectors to cut prices as empowered consumers seek discounts.
  • A long deep recession and rising numbers of insolvent companies if levels of consumer spending do not pick up suffiently.
  • Tightened consumer spending may impact on levels of individual giving, although evidence from previous recessions is that giving does not fall as much as may be expected..
  • High cost ethical products and services risk being the first thing consumers cut back on as they tighten spending and cost overrides other concerns. Other luxuries may also suffer such as membership subscriptions, as well as social enterprise activity, particularly where it is consumer oriented.

Moving forward

An economic slowdown is impacting on many consumer choices.

  • Do you understand which of your products and services (including memberships, events etc) might be perceived as luxuries by your stakeholders?

Which products and services stakeholders are willing to pay for is changing.

  • Does your organisation need to rethink pricing structures and which services could be offered free and which charged for? This may be challenging as it requires rethinking finance and income generation models.

As all income streams come under pressure, there will be more competition for (potentially fewer) charitable donations.

  • Are there tactics that your organisation can use to make your income streams more resilient (for example by converting donors to regular, planned giving using monthly direct debits)?

Consumers and supporters are looking to cut their spending and save money.

  • Can your organisation explore opportunities for more in-kind support, such as new streams of volunteers as parts of the workforce need to change careers or gain new skills?

Want to know more?

Prudence a green virtue

Published by: The Guardian – a left-of-centre broadsheet

Date: June 2008

Format: Web

What is it?

This is a “Comment is Free” discussion piece suggesting that the economic downturn may have a positive impact on environmental issues.

How useful is this?

This article is useful in giving an alternative perspective on a popular topic. In particular, is explores how challenges such as rising energy and food prices will raise the profile of sustainable development. The public responses to the article give an impression of broader views on the subject, but are of variable quality.

GfK NOP Consumer Confidence Barometer

Published by: GfK NOP – an international market research company

Date: Monthly

Format: Web

What is it?

The latest press release referencing the most recent data. The index itself is a measure of consumer confidence, based on monthly survey data. It is based on actual and predicted changes in individual finances and in the general economy. A brief commentary is also given on the website.

How useful is this?

This is a respected and well-known index, giving a useful measure of overall confidence. However, it omits demographic nuances in confidence, but as a measure of overall consumer confidence, it is worth monitoring. Although headline results are given in press releases, details of results require a subscription.

British Retail Consortium: Retail Stats and Info

Published by: British Retail Consortium – a Membership organisation for retailers

Date: Monthly

Format: Web

What is it?

This provides data on key areas of consumer spending, including: clothing and footwear; food and drink; electrical; and DIY and hardware. It also gives data on consumer demographics and consumer satisfaction.

How useful is this?

The BRC is a membership organisation for retailers and the data and other services provided reflect those interests. Nevertheless, this is a good starting point for anyone looking to explore trends in consumer spending.

Nationwide Consumer Confidence Index

Published by: Nationwide – a Building Society

Date: Monthly

Format: PDF

What is it?

Data on a broad range of indicators of consumer confidence. It includes data on the current and expected state of employment, the economy and spending, as well as other relevant indicators.

How useful is this?

The commentary is limited but this provides a useful comparison to the Consumer Confidence Barometer. The website also provides a data archive as well as details on the methodology.

 

Last updated at 14:38 Wed 23/Sep/09.

Discuss

How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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