Consumer confidence has risen to its highest level for 18 months but job fears still remain. The latest Consumer Confidence Index, released by market research company Nielsen and the British Retail Consortium (BRC), shows an increase to 75 - a ten point gain on the all-time low of 65 we saw in April. But will it be enough to guarantee a good Christmas?
That is still weak compared with the figures from two and three years ago but reflects slightly more people feeling positive about their own job prospects and finances.
Justin Sargent, Managing Director at Nielsen said, “When we saw confidence pick up between April and June we felt there was a definite and tangible change in the mood of the nation, however, we were cautious as quite often when economies rise out of recession there can be false starts, blips. This latest poll shows that the confidence of the nation continues to improve, though consumers remain very guarded and we are still a long way from the confidence levels we saw prior to the economic meltdown.”
British Retail Consortium Director General Stephen Robertson said, “These figures suggest it will be a long, slow climb out of recession for many customers but some do now have their feet on the first rung of the ladder. There’s no question the general mood of customers is better than a year ago, when conditions were dire, but improvement has been slow so far. Half of consumers believe we’ll still be in recession in a year’s time. More than half are worried about jobs and their own finances and that will hold back full scale retail recovery well into next year.”
A fifth of people now believe job prospects in Great Britain will be ‘good’ or ‘excellent’ over the next twelve months compared with 14% in June and 11% in April. 24% think they will be ‘bad’ compared with 26% in June and 42% in April.
But adding those who think job prospects are ‘not so good’ to those who say prospects are ‘bad’ shows more than three quarters (77%) are still feeling negative and that is more than in April (66%).
Sentiment about personal finances has improved marginally. Slightly fewer people feel that their own personal finances are ‘not so good’ (46% versus 49% in April) with 36% of people saying their own personal finances are ‘good’ or ‘excellent’, up from 29% in April.
Attitudes towards spending on discretionary items are more positive now with fewer people feeling ‘not so good’ (down 6 points since April to 41%) and more people feeling that now is a ‘good’ time to buy the things they want and need. (Up 5 points since April to 31%).
While concerns about the economy and job security are easing, concerns over debt and work/life balance are increasing. Debt is currently our biggest worry with 15% of people saying this, up from 10% a year ago. And, as the pressure over job prospects remains very real, and people in employment work harder, there has been a big increase in the number of people feeling that their work/life balance is their biggest concern (from 4% in October 2008 to 9% in October 2009). Shoppers are noticing that inflation is slowing and concerns over food bills, utility bills and fuel prices are all down on 12 months ago.
There is evidence to suggest that lifestyles and habits have changed for many people in Great Britain with 70% of people claiming that they have changed their spending in order to save on household costs. When asked how they cut down on spending in order to stay within their budget, top strategies cited by consumers were:
- Spending less on new clothes (68%)
- Trying to save on gas and electricity (66%)
- Cutting down on takeaways (64%)
- Switching to cheaper grocery brands (59%)
Some customers believe the recession will permanently change their behaviour. Even when the economy returns to growth, more than half of consumers say they will still aim to save on gas and electricity (54%), cut down on takeaways (38%) and switch to cheaper groceries (34%).
Justin Sargent added, “It seems that consumers have implemented a number of strategies to stay within their budgets and they intend to persist with some of these even when times become easier. This foray into a more frugal way of life for some may well turn out to be something that shapes lifestyles for many years to come.”
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