The consumer in 2010
Consumers today are feeling a lot more positive than they did in December - 36% of the population believe it is a good time to buy again. Richard Waring of Millward Brown reports
14 April 2010
The latest national consumer sentiment survey, conducted in March and exclusive to ShelfLife, shows that the Irish population is gradually emerging from the worst of the recession, increasingly willing to spend and optimistic about the year ahead.
Post 9/11 2001, Irish consumer confidence to spend was temporarily shaken, but recovered well by 2005. As we began 2009, only a minority remained bullish, although for those with money there were bargains to be had. Since, or despite of, the budget last December, consumer confidence to start spending again has recovered very significantly, to where 36% of the population believe it is a good time to buy again. This is a clear sign that the Irish consumer is ‘mentally’ starting to emerge from the recessionary mindset. Clearly not everyone is, or will, as even during the height of the boom some never benefitted.
Some would argue that fear was half of what drove us into the recessionary mindset, therefore optimism about the year ahead maybe half of what will pull us out. It is therefore very encouraging that less than half of the population believe that the economic situation will continue to get worse over the next 12 months. Most believe we have at least bottomed out and nearly one in four of the country now believes that things are actually economically getting better.
It is very clear that the magnitude of the recession was always going to change the Irish consumer. As we now start to emerge, there are a number of clear trends that are emerging.
We’ve all heard it – staying in is the new going out. People are spending more time in their own home. People are getting back to cooking and baking – they have the time and it’s cheaper. All this bodes well for retailers to take advantage of. It is less about convenient quick meals of the boom and more about the experience they are creating at home. If people cannot treat themselves by going out, they will try and treat themselves at home by spending a little extra on a bottle of wine, box of chocolates or cooking ingredients. It is a fallacy to think that it is all about price. As the consumer emerges from the recession it will be more about value and less focus purely on price. Many have been forced to forfeit their brand of choice but the desire to buy these brands has not disappeared, it has just been temporarily suspended due to finances.
The fear and insecurity of the recession has driven a growing human need to connect with others. Perhaps there is a greater need for emotional fulfilment in times of economic uncertainty. This is very good news for small and local retailers as consumers are actively looking for strong relationships, to feel part of the community and to feel valued.
3 Charity Mindedness
Consumers are increasingly conscious of companies that link with charities. Fair trade products are doing well. Observe the extraordinary generosity of the Irish people to Haiti. The other social issue that has perhaps unexpectedly grown during the past 18 months is the environment. The excesses of the boom have driven people to increasingly value the more basic aspects of life. These are all issues that retailers can easily bring to their store.
A sense of stability is absolutely critical in 2010 so that this emerging consumer confidence is not shaken any more than it already has been. While many might naturally blame the Government, being forced into an election could add to uncertainty or give a sense of renewal and moving beyond the recession. While over seven in 10 believe that the country is on the wrong track, it is encouraging that a growing proportion increasingly believes we are now going in the right direction. If NAMA proves to be successful, this should be very positive in building on the current consumer confidence.
All the evidence points to a consumer who is increasingly optimistic about the year ahead and is starting to loosen their firm grip on household spending. As they do, they will increasingly seek value rather than just the cheapest, and those who have been forced to compromise on their preferred brands, due to financial circumstances, will start to reconsider them again. We might not yet be at the end of the recession, but it certainly appears to be the beginning of the end.