U.K. shoppers shifting spending toward retailers with lowest prices for immediate savings, but ultimately seek value; retailers trading purely on low price 'will only attract the most disloyal shoppers': Nielsen
November 4, 2011
(British Retail Consortium)
With customers caught between high inflation and minimal wage growth, rising utility bills are customers' biggest concern for the next six months. Two thirds of customers plan to try to save on their gas and electricity.
An overwhelming eighty-six per cent of customers believe the country is still in recession and jobs fears have increased.
The latest GB Consumer Confidence Survey from Nielsen - a leading provider of insights and analytics into what consumers watch and buy - and the British Retail Consortium (BRC) does show the overall Consumer Confidence Index was up one point in Q3 compared with Q2. But, with unemployment reaching a 17-year high, the proportion of consumers thinking job prospects for Britain will be negative over the next year worsened three percentage points to 76 per cent.
The GB Consumer Confidence Survey is part of Nielsen's global survey. Established in 2005, it tracks consumer confidence, major concerns and spending intentions among more than 28,000 internet consumers in 56 countries.
Increasing utility bills were the biggest or second biggest concern for 32 per cent of GB respondents, followed by the economy (28 per cent) and job security (22 per cent).The worry over each of these has intensified since Q2.
On the positive side, the Q3 GB survey suggests British shoppers are adapting better to the realities of the economic downturn. The number of consumers now feeling negative about the state of their personal finances is at its lowest level for more than a year (58 per cent). The proportion worried about debt is down (four points to 14 per cent) on the previous quarter, while the proportion saying they have ‘no spare cash' has eased for the first time in 18 months (from 32 to 25 per cent). And the proportion of British consumers feeling negative about their ability and willingness to spend has eased four percent since Q2 (to 68 percent).
Nielsen managing director for UK & Ireland, Chris Morley, comments: "Consumer confidence stabilised in Q3, but the high cost of petrol and energy bills continues to put pressure on already squeezed shopper budgets.
"Shoppers are remaining cautious and managing what they spend more closely, and this is leading some supermarkets to experience volume declines.
"But not all shoppers are feeling the downturn in the same way. One in four reports having to cope with having no spare cash, which suggests the downturn is impacting some people more than others.
"Overall, most shoppers remain fickle and are shifting spend towards retailers that offer the most immediate savings. But shoppers want more value - other than just cheap prices - so retailers trading purely on low price will only attract the most disloyal shoppers."
British Retail Consortium Director General Stephen Robertson said: "There's not much to be cheerful about here. Consumer confidence has barely improved on the previous quarter and is still lower than at any time last year. Even though this week's figures show the economy growing by 0.5 per cent, 86 per cent of people believe we are still in recession and only 11 per cent think that will change in the next twelve months.
"Utility bills are people's biggest concern with over half trying to save on gas and electric bills, confirming that rising costs and low wage rises are putting disposable incomes under huge pressure. With jobs fears mounting and no relief in sight this year, retailers are braced for a difficult Christmas."
Looking further afield, the global consumer confidence index fell one point to 88. Confidence also dropped one point in the US (77), China (104) and Germany (87).
Asia Pacific continues to dominate the list of most optimistic countries with seven of the top 10 highest consumer confidence scores hailing from this region. India (121) remained the most optimistic in Q3; Hungary (37) the least.
European nations in general remain among the most pessimistic. Across the euro zone, the looming debt crisis and extreme volatility of financial markets are taking their toll on confidence levels, particularly in France (down 13 to 56), Spain (down four to 56), and Italy (down three to 52), resulting in scores well below the European average of 74.