Meet the post recession consumer

Date: October 2013

Quick snap-shot: The post recession consumer

2

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

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August

CBI says UK economy to grow by 1.2% in 2013

Output rose 0.7 per cent

between April and June!

UK inflation expected to fall

to 2.7%

Economic Headlines

5

September so far

Consumer confidence on the rise!

UK inflation rate falls to 2.7% in August

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

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:

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0%

5%

10%

15%

20%

25%

30%

35%

40%

2010 2011 2012 2013

% o

f co

nsu

me

rs li

stin

g th

eir

mai

n f

ear

s as

:

Main fears for the next six months

Not being able to make ends meet

My standard of living dropping

Impact of government cuts

Getting further into debt

A friend of family member having employment problems

Losing my current job

“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

8

52% 53%

61%

2010 2012 2013

Which of the following statements most closely reflect your views:

There are still a few companies I trust.

Source: 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

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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 PAY BONUSES

SHAREHOLDERS ACCOUNTABILITY

GOVERNMENT ENVIRONMENT

MANAGEMENT FOREIGN OWNERSHIP

How satisfied or unsatisfied are you with how big business capitalism operates in Britain at the moment?

15%

20%

0%

5%

10%

15%

20%

25%

2012 2013

Satisfied

60% 51%

0%

20%

40%

60%

2012 2013

Dissatisfied

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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Holidays No 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:

15

“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

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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?

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Game changing… some industries have responded:

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20% 19%

14% 14% 13%

12%

10% 10%

8% 7%

6%

3%

0%

5%

10%

15%

20%

25%

• 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

Thank you!

jamesendersby@opinium.co.uk

@opiniumresearch & @jamesenders

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Our unique offering is centred around three key areas:

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