Measuring consumer confidence in an uncertain world

Stuart McDonald, head of insight and trade marketing, News International Commercial, gives the lowdown on the company’s “Consumer Eye” research

The debate still rages on as to whether we have seen the last of this recession and I’m not here to add to that; I’ll leave that up to the journalists to debate. What I can tell you is that the recession has left us with a new consumer – a changed consumer, who considers value to mean more than just price.

Back in November 2008, we were entering a stage of uncertainty, where our advertising clients were desperate for up to date information and clarity into the consumer psyche. To provide a timely finger on the pulse of the nation, we launched our own consumer confidence survey via our in-house 20,000 strong consumer panel called the “Consumer Eye”.

Our confidence measure is calculated by subtracting those that state they are feeling pessimistic towards items of their overall personal household financial situation from those that state they are feeling optimistic.

The eighth wave of this quarterly dip is being released this month. Findings to date have given us valuable insights that have been utilised in over 250 meetings. Internally, it helps our editorial and marketing teams shape the content and promotions we offer and provides further support to our customer marketing activity.

Despite the belief that the recession is over, our confidence measure is still negative at -30, and has been getting worse since a (relative) peak of -20 at this time last year. Those with the highest confidence rating (but still negative) are the relatively carefree young men (16 to 34), whereas those with children, women and 30 to 50 year olds in the DE demographic category.

The biggest areas of concern on our survey at the moment are:

  1. Fuel costs
  2. Utility bills (of interest since the last wave was conducted in summer)
  3. Savings
  4. Grocery costs (despite price promotions from the grocers, but likely to be the impact grocery bills have on disposable income)
  5. The economy (always a low scorer, due to it being a catch-all term that no-one fully understands, but they constantly hear is bad)

Part of our survey also asks which areas people are cutting back (or increasing) their spend and those areas where they expect to change spend levels in the coming months. We noticed early on that there has been a re-classification of some previously considered ’luxury’ items as now being essentials; holidays, going out and digital TV subscriptions have not been affected to the extent that we initially thought. Despite all of this, the greatest fears of today’s consumers read like a political manifesto; higher taxes, immigration and health.

Harrods opened their dedicated Christmas floor in early August – crazy you may think, but our research shows that a fifth of consumers start their planning for the festive season during the height of summer. Asking family and friends is still the most important route to getting recommendations on presents. Our research into ’Word of Mouth’ this summer showed that media and marketing generates 47% of all brand conversations and that 93% of conversations happen offline. This is good news for traditional media, but we know online is growing in relevance.

We are also witnessing changes in purchase behaviour with nearly a fifth of consumers claiming that they will only be purchasing gifts online this year. Conversely, a similar figure claim that they will only visit stores for browsing and purchasing, with 52% stating they will do a mixture of the two.

With key words from consumers being ’cautious’ and ’optimistic’, we have seen changes in behaviour which we think are likely to outlast the negative consumer confidence scores. Primarily these will be:

  • Researching online / shopping around more
  • Using vouchers & coupons (remember when this was seen as being cheap?)
  • Looking for value (the definition of which means different things to different consumer groups), witness the rise of Martin Lewis’s Money Saving Expert site over the last two years.

We aim to continue this research for the foreseeable future, even after we (hopefully) return to positive consumer confidence scores, to track consumer trends and report back to our advertising clients on the implications of their behaviour. Just don’t expect me to try and predict when that might be.

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