Credit Crunch April 09


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Credit crunch impact on UK consumersexploring; shopping, leisure, holidays, DIY, gardening & magazines

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Credit Crunch April 09

  1. 1. CREDIT CRUNCH: WHERE YOUR CONSUMERS ARE AT TODAY EXPR ESSIO N S B R A N D P LA N N IN G PHASE 4 [FULL REPORT] Julian Rodway Expressions Planning Limited 416a King’s Road London SW10 OLJ Tel: +44 (0)20 7376 3356 Fax: +44 (0)20 7376 3447 Email: May 2009
  2. 2. CREDIT CRUNCH CONTEXT  The last quarter of 2008 was a dress rehearsal for 2009  The UK economy experienced record rises in fuel, impacting on: • Home heating • Transport costs • Production costs  Compounding these fundamental costs was the credit crunch  From a consumer perspective the world was changing: • Mortgage companies were failing  Icons of consumerism were crumbling: • High street shops were closing  Banks were bailed out: • Motor manufacturers were looking for economic support Consumers were experiencing the cold winds of change Expressions Planning Credit Crunch - 1
  3. 3. A YEAR LONG REVIEW  Expressions conducted 4 groups in April 2009: • 2 in Birmingham • 2 in London  In each location one group was conducted amongst: • Consumers confident about their economic future • Consumers experiencing recent economic difficulties and concern over jobs  The aim is to understand the current environment: • Select 8 households for an ethnographical study  The intent is to follow the fortunes of these 8 families monthly over the year  In this fourth phase we explored 4 categories • Leisure • Magazines • DIY • Gardening  We invite you to submit other categories and specific questions to be explored during the subsequent monthly interviews  This is a free service Expressions Planning Credit Crunch - 2
  4. 4. RECESSIONARY MINDSETS: RECREATIONAL TO REALITY Expressions Planning Credit Crunch - 3
  5. 5. RECESSIONARY CONSUMER TYPOLOGIES Driven by a need to conform to situation Confident Conscious that conspicuous consumption is not socially or politically correct Selectively join in but will also exploit opportunities Recreational Relatively confident they will not be impacted on Not overly concerned about serious economic issues Recognise situation as an opportunity to review & reduce household expenditure Reserved Elements of regaining control of expenses Participation is about cutting back: - not cutting out Perceive household as vulnerable to unemployment Need to be proactive, manage their household expenses Retrenchers Matter of prioritising expenditure Cutting back & out without being too puritanical Concerned Experiencing economic difficulties; adjusting & adapting Reality Desperate measures need to be enforced by many Optimistic belief means some adopt a progressive cut back/out policy Learning to adjust to a different set of priorities Prominence Expressions Planning Credit Crunch - 4
  6. 6. DYNAMICS: POLARISING RECESSION Evidence the recession is polarising Retrenchers now (April) feeling less insecure Recreational Recreational They feel the worst has happened Period of uncertainty now over: - experienced redundancy Reserved Reserved - threat now abated Consequently this segment is contracting Either into Reserved or Reality Retrenchers Two prominent recessionary Retrenchers attitudes: - relatively confident Reality Reality Reality - reality of recession Reality Expressions Planning Credit Crunch - 5
  7. 7. RECESSIONARY CONSUMER TYPOLOGIES: SUMMARY Reserved Summary Recreational Summary Not overly concerned Need to conform Opportunity to review & reduce Selectively join in expenditure Exploit opportunities Regaining control Relatively confident Cutting back, not cutting out Reality Summary Retrenchers Summary Experiencing economic Vulnerable to unemployment difficulties Need to be proactive Desperate measures Prioritising expenditure Progressive cut out policy Cutting out & back Learning to adjust Expressions Planning Credit Crunch - 6
  8. 8. RECREATIONAL MINDSET  Economically comfortable; adopt a secure attitude to employment  Typically working in public sector or companies supporting essential services  Boast about low mortgages or tracker mortgages Context  Perceive themselves as financially astute  Not prepared to alter their lifestyle but less overt about it: “…we‟re still going skiing but feeling a bit guilty about it…”  Voyeurs of crisis; a topic of discussion not an imminent threat  Opportunity for some to carefully and covertly exploit: “…at least you can now negotiate over prices…” “…you can now get a builder and at a reasonable price…” Crisis  Critical of the ‘doom & gloom’ of economic news; considered an irritant: “…the media don‟t help, full of depressing stories…” “…stopped listening to Radio 4…too depressing…” Expressions Planning Credit Crunch - 7
  9. 9. RECREATIONAL MINDSET (Cont’d)  Feel an opportunity to review household expenditure  More about exploiting offers than consolidating: - minimizing expenditure & getting greater value: “…Sky are doing some good offers…” Considerations  Concern over value of sterling & foreign holidays  For the brave an opportunity for investments: “…house prices are going to fall…they‟ll be some bargains about…”  Belief in buying brands unshaken; not going to compromise  Conversely, many aware of brands being discounted: - from chocolate biscuits to BMWs  Resist changing established and efficient shopping habits Brands  Recession more about being seduced to remain loyal to existing suppliers: - exploiting an opportunity Expressions Planning Credit Crunch - 8
  10. 10. RECREATIONAL MINDSET (Cont’d)  Confident, to an extent complacent  Perceive situation as an opportunity to exploit  Voyeuristic and vulture mentality  Not prepared to compromise on lifestyle Summary  Respect need to be less conspicuous consumers  More likely to buy a bigger car at reduced rate: - than a smaller more economical car  Crisis is about selectively joining in when it suits them Expressions Planning Credit Crunch - 9
  11. 11. RESERVED MINDSET  Younger couples, some professionals (teachers, librarian, IT workers)  Feel relatively secure in job; unemployment not an issue Context  Focus is on maintaining lifestyle by efficient finances  Concern is about the future and future planning  Impact is by association; house prices have fallen  Constraining plans for family improvements: “…we wanted to move to a bigger house this year…”  Talk about friends and relatives being affected; second hand experience: Crisis “…my brother-in-law‟s badly hit, he‟s a builder…”  Period of reconsidering financial situation, reviewing expenses  Sensitive to the plight of others; cutting back part of conformity: “…you see people buying more economy lines…so you think you might too…” Expressions Planning Credit Crunch - 10
  12. 12. RESERVED MINDSET (Cont’d)  Reference the need to budget and consider expenditure carefully  Future plans involving big ticket items or household improvements put on ice  Holiday plans have become less extravagant & UK based due to the £: - no longer able to enjoy cheap € Considerations  Looking to make savings where possible without sacrifice  Mood of being prepared for worse times: - preparing a plan to cope - a phased strategy from cutting back to cutting out  Still remaining loyal to ‘icon’ brands (washing products, butter, cereals, etc): - switching where deemed less important: “…I‟m not down to buying the economy own labels but Brands cutting back where possible…it is a sign of the times…”  Challenge mentality towards expenditure: “…I feel as if I have to justify what I buy to myself…” Expressions Planning Credit Crunch - 11
  13. 13. RESERVED MINDSET (Cont’d)  Feeling of being prepared  Gaining control of expenditure  Prioritising values  Refreshing attitude to extravagant consumerism  Adopting more family and free entertainment Summary  Turning from consumerism to culture  Need to justify purchases; element of guilt over extravagance  Seeking to compensate when cut back: - indulgent meal in rather than a night out  Initiating family values and appreciating of money management Expressions Planning Credit Crunch - 12
  14. 14. RETRENCHERS MINDSET  Concerned about unemployment  Experience of friends, family and colleagues who have been made redundant Context  Work in sectors vulnerable to downturn (building related, catering, manufacturing, etc)  Anxiety about surviving through meeting essential commitments  Driven by the need to be prepared  Having a sort of plan, campaign management  Unspoken expectation of at least one partner’s income being affected Crisis  Have often reviewed household finances and cut down and out: “…we haven‟t pared back to the bones …but should it happen we know we can be more ruthless…” Expressions Planning Credit Crunch - 13
  15. 15. RETRENCHERS MINDSET (Cont’d)  Staged reduction in unnecessary expenditure and lifestyle  Desire to implement drastic cuts after Christmas: “…we knew we had to do it but wanted to have a good Christmas first for everybody…”  All household bills and outgoings reviewed: - some subscriptions cut out (mobile phones, Sky, etc) Considerations - some services switched to exploit offers (dual fuel discounts, cheaper suppliers, etc) - some cut back (basic Sky package, selling 1 car, etc)  Desire to revisit mortgage but concern about ‘opening a can of worms’  Want to be living as expediently as possible; weaning themselves off credit  Some brands non negotiable (coffee, cereal, shampoo, toothpaste, etc)  Perceived as false economy  All discretionary expenses cut back  Experiment with other stores and own label products: Brands “…I‟ve always driven past Morrison‟s to get to Sainsbury‟s but now I‟m converted…excellent fresh fruit and veg…”  A period of redefining household tastes and expectations  Trading down whenever possible and practical Expressions Planning Credit Crunch - 14
  16. 16. RETRENCHERS MINDSET (Cont’d)  Planning for the worst  Learning to live on a reduced budget  Challenging past consumer aspirations  Acclimatising the family; changing tastes and expectation  Learning different shopping regimes Summary  Seek non extravagant rewards and treats  Family based activities evident  Parental concern on children not being the innocent victims  Prepared to compensate children and family with small shared indulgences Expressions Planning Credit Crunch - 15
  17. 17. REALITY MINDSET  One or both partners made redundant or hours shortened  Immediately impacting on household finances and emotions  Take desperate and immediate expenditure decisions: Context - driven by necessity  Pride prevents consideration of outside financial planning and help  Reluctance to talk to mortgage provider or landlord  Living through economic turmoil  Perceived themselves as victims, want to apportion blame  Government and banks cited as being responsible for ‘the mess’: “…it‟s about people in power playing with our lives…” Crisis  Adopt a pessimistic view of the future: “…I‟m 48, I‟m not likely to get another job in engineering again…or at all!” Expressions Planning Credit Crunch - 16
  18. 18. REALITY MINDSET (Cont’d)  Radical change of life  Minimising expenditure and impact on family: “…you know there are plenty of us out there and there will be plenty Considerations more but you don‟t want your kids to be affected…”  Evident psychological impact  Brands are luxuries that need to be justified: “…it‟s only a few pence more for Heinz and they can tell the difference even if I hide the tin…”  Challenge is to survive on a reduced budget  Economies are essential, not optional: “…heating or eating…” Brands  Significant change in shopping and eating habits: “…now buying more vegetables and cooking from scratch…found some really good recipes…”  Discount stores now offer a shopping relevance: “…now go to Aldi first…what I can‟t get there I get at Tesco‟s…” Expressions Planning Credit Crunch - 17
  19. 19. REALITY MINDSET (Cont’d)  Challenges and changes family life  Learning to cope with circumstances  For some adoption of different value systems  Different coping strategies; resignation to optimism  In a changing world brand loyalty perceived as a luxury  Consumers looking for survival strategies Summary  However cheap does not always represent value  Need to treat themselves and family  Distractions deemed important; family outings, gaming consoles  Discovery of a different set of values and consuming experiences: - eg swapping culture or exchanging items on EBay Expressions Planning Credit Crunch - 18
  20. 20. HOLIDAYS AND LEISURE Expressions Planning Credit Crunch - 19
  21. 21. HOLIDAYS AND LEISURE Leisure activities unaffected by economy Still members of gyms, sports clubs etc Holiday plans more impacted on by Euro rate rather than home economy Expectation that flights & hotels would be cheaper to Recreational attract customers Disappointment that holiday companies are not discounting more; exploit situation to their advantage Spending in preparedness of holiday (clothes, equipment, etc) More confident of economy now Prepared to plan for holiday with certain constraints Conscious of exchange rate but still deem foreign holidays better value (weather, entertainment, eating Reserved out, etc) Non Euro destinations attractive (Turkey) How already begun to make plans Expressions Planning Credit Crunch - 20
  22. 22. HOLIDAYS AND LEISURE (Cont’d) Beginning of year put off any holiday plans & cancelled club subscriptions Now reviewing situation, thinking about a more modest holiday Euro & economic situation make a UK holiday a Retrenchers more prudent consideration Still thinking about plans; could be prompted to book by an attractive offer Appear to be waiting for last minute bargains; expect to be able to take advantage of situation Family holiday a low concern Element of concern about kids missing out Compensate by involvement with clubs (scouts & youth) & holiday clubs Reality Summer plans involve staying with family & friends or cheap alternatives Family days out including picnics to be self sufficient Expressions Planning Credit Crunch - 21
  23. 23. HOLIDAYS AND LEISURE (Cont’d)  Beginning of year saw gym membership under review by Retrenchers, Reserved & Reality categories  Retrenchers & Reserved more confident over economic outlook Gyms  Recognised need to maintain health: - self awareness & satisfaction - & maintain health & dynamism  Still evident belief that one needs to be fit to fight recession  Element of consumers justifying club & sports membership: - value & contribution to health - positive disposition generally  For some returning to gym & exercise discipline initially difficult but still rewarding Expressions Planning Credit Crunch - 22
  24. 24. HOLIDAYS AND LEISURE (Cont’d)  Recession exploitation evident with holidays  As previously seen with cars general sense of disappointment  Anticipation consumers would be able to exploit economic situation & take advantage of ‘bargain offers’  Many disappointed over the lack of promotions & genuine offers  Recognise exchange rate partly responsible, as well as belief other countries Holidays: not as badly impacted on: exploitation “…we were thinking of going to France & Spain but it is very expensive, especially when you consider the exchange rate but I suppose the recession‟s not as bad over there…”  Many of these consumers (Recreational & Reserved) were looking on the internet for holiday bargains  These consumers tended to have made & confirmed holiday plans  Exchange rate was a key consideration in selecting destination (San Francisco & Turkey) Expressions Planning Credit Crunch - 23
  25. 25. HOLIDAYS AND LEISURE (Cont’d)  Holidays were evident sign of greater optimism & less insecurity  At the beginning of the year Retrenchers were not considering a holiday, Holidays: now open to offers viability  However consider the need to be reserved, consequently UK destinations deemed more appropriate  Concern over cost of UK holiday & weather  Belief that overall foreign holiday is better value if they can find holiday at the right price Expressions Planning Credit Crunch - 24
  26. 26. HOLIDAYS AND LEISURE: LEARNING  For the confident consumers holiday plans had not been impacted by the recession  These consumers are disappointed that offers and promotions are not more generous  These consumers were looking forward to exploiting the situation to their advantage  For all the exchange rate against the Euro has impacted upon destinations  Some considering a UK holiday due to economy  Others concerned over the value of UK holidays (believed to be expensive and no guarantee of good weather)  Others considering non Euro destinations such as Turkey  Those who cancelled club membership at the beginning of the year are beginning to reconsider their decision  Some missed the social activity, others the exercise  Once again the need to rationalise and justify membership  This was being done by the need to be fit to fight the recession  Overall the more confident consumers were returning to old leisure habits in terms of eating out, however with less regularity Expressions Planning Credit Crunch - 25
  27. 27. MAGAZINES Expressions Planning Credit Crunch - 26
  28. 28. MAGAZINES Magazine purchasing not impacted on by recession Buying from a small portfolio of preferred titles Purchase tends to be routine as part of weekly shopping Consequently buying from supermarket rather than newsagent Tend to buy on impulse, being attracted to cover & content Recreational “…I know which magazines I normally buy and I look to see which ones interest me that particular week…” In addition to impulse buying there was an element of subscription in this group Magazine subscription often received as a present & thought to be an appropriate gift item for family & friends Similar profile to the recreational consumers Magazines seen as discretionary purchase but believed to offer good entertainment value Spoke of cutting back on magazines but now slipped back into buying cycle Also tend to buy from supermarket but more sporadically Reserved Buy magazines for escapism & entertainment: - want an aspirational element Attracted by human interest stories: “…I bought several magazines recently that were featuring Jade Goody, I was interested in her story…” Expressions Planning Credit Crunch - 27
  29. 29. MAGAZINES (Cont’d) Cut back on magazine buying at the beginning of the year Still conscious over the expense of magazines & tend to buy now with more consideration: “…I used to see one I liked & pick it up, now I browse through it to make sure there‟s articles I want to read…” Amongst these consumers magazines now appear to Retrenchers have greater consideration & value: - element of recycling amongst family & friends: “…previously I would have thrown in the recycling bin once I‟d read them but now I pass them on…whether it‟s the recession or recycling generally…” Evident desire for escapism; did not want to read about the economy Magazines deemed a luxury that could not be justified Also seen as a personal item & discretionary purchases needed to be more family centric Often the recipient of recycled magazines: “…my sister gets Hello & Ok and she passes them onto Reality me when she‟s finished with them…” Some justification of opportunistic magazines such as Take A Break; perceived as entertainment value & contained competitions: “…I‟ve just started buying one & doing the competitions, hoping to win something…” Expressions Planning Credit Crunch - 28
  30. 30. MAGAZINES (Cont’d)  Many respondents wanted escapism from the reality of the recession  Looked to magazines to entertain & inspire  Whilst there was an element of human interest, they did not want to read about or be reminded of the reality of the recession  Recently magazines were thought to have adopted a ‘make & mend’ Escapism attitude: - this was deemed appropriate & acceptable  The idea of home centric activities & economising tips (such as clothes swap) were accepted as they put a new, involving and entertaining spin on the economic climate  Interestingly there was still a desire to read about stars’ & celebrities’ lives as well as extravagant lifestyles Expressions Planning Credit Crunch - 29
  31. 31. MAGAZINES (Cont’d)  Several believed magazines had become poor value: - due to cover price & contents  These consumers, prompted by the recession, had begun to review their spending patterns: - discretionary items like magazines needing to be justified Magazine redundancy  Several respondents spoke of weekend newspapers & insert magazines replacing specific titles: “…the weekend newspapers keep me occupied…I don‟t need or have time to read magazines any more…”  For specific interests the internet was now thought to have replaced specialist magazines: - perceived as more authoritative & interactive: “…if I want to know something about a specific subject I will go onto the internet now rather than buy a specialist magazine…you can visit blogs and ask specific questions…” Expressions Planning Credit Crunch - 30
  32. 32. MAGAZINES (Cont’d)  In addition to these respondents buying general titles, there was an interest in home related topics  The recession had caused several to consider home extensions driven by Practicalities the belief of builder availability & cheaper prices  Allied to this was a desire to invest savings in the home rather than receive marginal interest rates  This led to the purchase of home related magazines for ideas, not only in terms of extensions, but decoration as well  Paradoxically there was a desire amongst the more confident to invest in their homes in the belief of it being a tangible asset Expressions Planning Credit Crunch - 31
  33. 33. MAGAZINES (Cont’d)  More confident consumers (Recreational & Reserved) liked the idea of growing their own vegetables  But several argued this was impractical due to space or time  For Retrenchers & Reality the notion of growing vegetables was given greater consideration  The idea was seen as rewarding, offering a healthy, productive & occupying pursuit Gardening  The attractiveness of home grown vegetables could not be solely justified in terms of cost; there needed to be other attractive benefits (eg health & hobby): “…basic vegetables are so cheap by the time you‟ve bought the seeds or plants you could have bought better quality for less money…” “…we‟ve thought about growing tomatoes every year but my father in law does that & comes around with bags of tomatoes that they can‟t get rid of…”  For many the idea of reading about growing vegetables & planning was possibly more attractive than the actuality  This new found enthusiasm for vegetable growing amongst family & friends need careful cultivation & guidance  This was thought the role of magazines & newspaper articles Expressions Planning Credit Crunch - 32
  34. 34. MAGAZINES: LEARNING  Consumers are looking for escapism from recession laden media: • magazines that deflect them from this were greeted with enthusiasm  Magazine shopping for a few was about subscription, but for most magazines were bought on impulse  For many of these consumers magazines were bought as part of the supermarket provision shop, with consumers quickly scanning covers for articles of interest  Purchase behaviour had changed marginally with consumers now needing to be more convinced of the content and value of the read  There was also amongst some a desire to recycle magazines amongst family and friends  Specific magazines were losing their authority to the internet  For some the price of magazines had risen to the extent they were no longer a trivial item but a considered purchase  Consumers are seeking value in this market with value being judged by the degree of relevance and interest the magazine has to offer, not necessarily the number of pages Expressions Planning Credit Crunch - 33
  35. 35. SHOPPING Expressions Planning Credit Crunch - 34
  36. 36. SHOPPING At the beginning of the year highly critical over the state of shops; described as ‘jumble sale like’ & ‘tacky’ Constant sales did not attract custom; acted as a disincentive to go shopping Now more complimentary over the state of shops Recreational Appreciate new season’s clothes Prompted to shop for new outfits for events & holidays Want value for money; more likely to interrogate quality of offerings Grocery shopping unaffected by recession; report no change in shopping rhythms or purchase patterns Believe the mall & high street shopping experience is now improved Less window shoppers, however still feel the shopping buzz or spirit is less evident Reserved Likely to report malls & shopping areas quiet Empty shops considered intimidating for these shoppers & detract from excitement of shopping Share value concerns of Recreationals Expressions Planning Credit Crunch - 35
  37. 37. SHOPPING (Cont’d) Some still avoiding unnecessary shopping; others justifying clothes shopping due to seasonal change Shopping excursions more controlled than previously More likely to shop to a prescribed budget & less tempted to exceed this Exercising tighter financial constraint Prepared to experiment with new shops for clothes & food Retrenchers Previous grocery experimentation has now become an established routine Adopted different stores or different stores for specific goods: “…Morrison‟s fresh food is so much better than Sainsbury‟s so I go there for my fresh produce but I still prefer some of the Sainsbury‟s lines…” Still exercising tight fiscal control, especially on grocery shopping but likely to reward economies with occasional treats Luxuries permitted provided they reward the whole family Do not indulge in recreational shopping; shopping has to be purposeful Clothes shopping limited to necessary replacements Shop keenly for bargains where possible but do not want to do too much shopping around More likely to be buying from catalogues to spread costs Reality Tendency to feel uncomfortable in shopping centres & malls Maintain their shopping routines; namely weekly provisional shops daily topped up by smaller purchases for fresh produce Tendency to buy from local shops & be disciplined in terms of only buying what they know will be consumed Expressions Planning Credit Crunch - 36
  38. 38. SHOPPING (Cont’d)  Several consumers were feeling more confident with the economy  These more confident shoppers were returning to regular leisure shopping trips  Commonly visiting shopping centres/malls  Previously (February) they were critical over the state of shops & the lack of „shopping spirit‟ in such places  Now believe shops have improved with new season’s offerings Centres & Malls  However still report a lack of shopping excitement & enthusiasm  Malls & shops are thought less busy & lacking the essential shopping buzz: “…you see people in there but they‟re not really shopping, no one‟s carrying any bags…no one‟s looking excited anymore…it‟s window shopping…” Expressions Planning Credit Crunch - 37
  39. 39. SHOPPING (Cont’d)  As reported on in Phase 2 the less confident consumers (Retrenchers & Reality) had devised shopping strategies to cope  Several strategies involved restricting unnecessary purchases by: - discipline - using a smaller trolley/basket  Several had altered their shopping patterns, often introducing a further supermarket into their shopping portfolio (Aldi & Morrison’s) Shopping:  These additional supermarkets were used selectively with footfall either supermarkets being driven by: - excellent offers - excelling in fresh fruit/bread  Additionally amongst the Reality respondents there was more frequent daily shopping; topping up on necessary items as and when required  These consumers were more likely to be buying on demand  Needed reassurance that what was bought would be used Expressions Planning Credit Crunch - 38
  40. 40. SHOPPING (Cont’d)  The more confident respondents reported an increase in internet shopping  Driving this was a convergence of factors: - convenience offered - lack of shopping spirit at malls/centres  Internet shoppers tended to be using the internet for more functional items such as small household goods rather than clothes Shopping:  Husbands were particularly enthusiastic about online shopping: internet - avoidance of unnecessary trips - practicality & functionality  Men liked the ability to compare prices & specifications  Concerns with internet shopping lay in: - credit card security - hassles over delivery/collection Expressions Planning Credit Crunch - 39
  41. 41. SHOPPING: LEARNING  Shoppers are now polarising  More confident consumers are returning to patterns which echo past behaviour  Reality consumers have dramatically changed their shopping rhythms and routines  Retrenchers experimented and have experience different shopping outlets and challenged their shopping practices  Retrenchers are more likely now to have a wider portfolio of supermarkets and be using them selectively  The more confident consumers were critical over the austerity of economy lines  Reactive marketing was considered appropriate in supermarkets but not for clothes shopping  Consumers were critical over the condition of high street shops at the beginning of the year, this has now subsided  All consumers are looking for value, not necessarily cheap prices  The recession has and is impacting on consumers’ attitudes to shopping  Consumers are beginning to question unnecessary consumerism  Consumers need to justify purchases Expressions Planning Credit Crunch - 40
  42. 42. OBSERVATIONS Expressions Planning Credit Crunch - 41
  43. 43. OBSERVATIONS AND ANOMOLIES  It would appear that consumers are becoming polarised over the economy  The group identified at the beginning of this study as Retrenchers were moving to become either more Reserved, or being hit by the recession and dropping into Reality  Many believed the worse was over and there was less uncertainty over redundancy, but this did not mean they felt secure  Consequently there was more consumer optimism and less uncertainty experienced at this time  Consumers pointed to ‘green shoots of recovery’, such as world stock markets improving and the G20 meeting  Recessionary gloom had been replaced by swine flu fears  Consumers were becoming tired of considering the recession; its impact was felt to be one of creating pessimism and a puritanical lifestyle approach  Many consumers were impatient with this and wanted to return to consumeristic optimism  Blame was directed at bankers, but also at the Government in terms of its handling of the situation  However consumers were tired of Brown and banker bashing and wanted closure on this to enable them to move on  It would appear that consumers are becoming impatient with the recession but reluctant to embrace their old consumerist attitudes and behaviour Expressions Planning Credit Crunch - 42
  44. 44. PRINCIPAL LESSONS  Economic recession is about a collective consciousness  Individuals will be affected but react differently  Marketing opportunities are about understanding different consumers’ needs and desires  An economic recession need not result in consumer psychological depression and brand pessimism  Indulgences and rewards are sought as displacements and distractions  Consumers had experience of experimenting with different regimes and behavioural patterns  Some had changed shopping behaviour and consumeristic attitude  Experience has prompted a short term challenge; now more conscious of value: • Need to justify purchases to self and others  Marketeers need to help this process, providing a product purchase rationale  Need to replace a unique selling proposition (USP) with a purchase prompt and justifier  Consumers are becoming bored with the pessimism of the recession: • Sense of ‘economic ennui’ Expressions Planning Credit Crunch - 43
  45. 45. PRINCIPAL LESSONS (Cont’d)  Evident desire to move on but need a catalyst to provoke and prove change  Distractions are seized upon to displace the prominence and threat of recessionary gloom: • Swine flu  The economic up turn will begin when consumer confidence begins to return Green shoots of recovery are about consumers spending, not bankers lending Expressions Planning Credit Crunch - 44
  46. 46. ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER Expressions Planning Credit Crunch - 45
  47. 47. APPORTIONING BLAME Inherent greed of banks Short term profit at whatever cost Banks and bankers Individuals driven by the incentives of banking bonus Lack of regulation & control of banking market Exploitation of naïve market & investors: America & George W - Bernard Madoff Bush Bush’s support for oil industry Courting & lack of control of financial market UK economy dependent on service & finance UK & Gordon Brown’s denial of the boom & bust economic Brown cycle & lack of preparation Exploitation of developing economies; Brazil, Empire Russia, India & China (BRIC) building Moving production & HQs from UK to source & entities benefit from cheap production & tax opportunities Specifically oil related companies OPEC Inability to regulate demand & supply & & energy consequently: companies - control retail price of energy Expressions Planning Credit Crunch - 46
  48. 48. PROBLEM RESOLUTION AND CONSUMER REACTIONS US & UK Governments bail out banks Tax payers’ money used to ‘bank aid’ the system Radical reduction of bank rate to ‘defibrillate’ chronic economic solutions A sop to the UK consumer with a reduction of VAT Resentment that perceived catalyst should be reactively supported Frustration that first trench of funds not distributed: Banks & bankers - banking paralysis, risk aversion or greed Perceived as nationalisation of high street finances Savings & mortgages now state dependent International, some foreign owned, monolithic businesses looking for hand outs Empire building Retrenchment of foreign companies perceived as exploiting entities UK; workers & government economic hospitality Perception of companies having lost interest in UK: - emerging BRIC economies View these companies were profiteering by escalating retail fuel costs Energy Recently confirmed by record profits for Shell & BP companies Call for windfall tax on energy companies displaced by complexity of the economic situation Expressions Planning Credit Crunch - 47
  49. 49. BANK AID: TOP DOWN ECONOMICS Government intervention focussed on: “…helping the perpetrators…” “…rewarding the guilty…” Undermines consumers’ faith in credible solutions Shoring-up the Compounding this mistrust is ineffectiveness of System Government intervention: “…lent the banks billions but not doing anything with it…” “…lowest bank rate for 100 years but I‟m still being charged 6% on my mortgage…” From a consumer perspective recent measures have been: - reactionary and restricted - ill conceived and executed Emphasis has been on securing the status quo: - saving the decrepit system that caused the problem Expressions Planning Credit Crunch - 48
  50. 50. CONSUMER CENTRIC: BOTTOM UP ECONOMICS Lack of trust in banking systems & bankers Concern over security of savings & honouring loans Disillusioned with structures & regulations Disappointment of banks parental positioning & control and exposed management Resentment over public monies bailing out banking system Re-engineering & gearing Impact on consumer is to inflate uncertainty & insecurity Most consumers perceive themselves as victims of the crisis & still vulnerable to unforeseen events Causes many consumers to consolidate & reduce spending: “…it‟s like a rabbit caught in the headlights… freezes…” Rather than kick-starting the economy the measures cause consumer economic paralysis “…they shouldn‟t have given billions to Belief consumers being excluded from economic the banks but thousands to each considerations – fundamental flaw: family…that‟s the way to start the “…we are the economy…” recovery…” Expressions Planning Credit Crunch - 49