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10th December 2007, Oxford
‘The economy’ has been highlighted as the most major concern for consumers in the coming six months according to findings from the Nielsen-BRC Consumer Confidence Survey. This is the first time ‘the economy’ has topped the list since the survey began in 2003 and signifies a weakening of consumer sentiment.
The survey, polled by market research company Nielsen and the British Retail Consortium, asked over 1,000 consumers about their thoughts and feelings on job prospects, personal finances, spending intentions and major concerns. Almost a third of consumers said ‘the economy’ was their main concern in the coming 6 months. This is a significant rise from mid-year when 22% cited ‘the economy’ as a major concern and an even bigger jump from the same time a year ago, when 17% felt ‘the economy’ was a major concern ranking 7th at this time.
Consumers were also asked what would be their biggest worry in the event of an economic downturn. 43% said inflation, 40% said unemployment and 37% said interest rate rises. One in five said property prices falling.
Consumer confidence has recovered slightly from the four year low seen in mid-2007, but caution remains as consumers worry about their spending ability and the economy. This will come as little comfort to retailers who are depending on the crucial Christmas trading period to give a much needed boost to annual sales figures.
Kevin Hawkins, Director General, BRC comments: “Retailers are facing a very challenging year. Not only is a severe slowdown in consumer spending likely, but retailers’ share of this spend is set to fall significantly, which will ratchet price competition up still further. Last weeks cut was only a first step to reviving consumer confidence. If interest rates do not fall further and disposable incomes continue to weaken, confidence levels and consumers’ willingness to spend will continue to decline, which is bad news for all consumer-facing business. The Bank must take further action to ease the burden on households and help restore consumer confidence.”
When asked about spending intentions, 36% of consumers felt positive about it now being a ‘good’ or ‘excellent’ time to spend, compared with 44% at the same time a year ago – a fifth less. Compared to the same time last year, 50% more people believe that it is now a ‘bad’ time to buy the things they want and need. 15% cited this in the latest survey while only 1 in 10 cited this at the same time last year. A further 46% of respondents said that the time was ‘not so good’.
While consumer sentiment about the economy has declined, they are feeling more upbeat about their personal finances than they did earlier in 2007, with a third fewer consumers saying they think their personal finances will be ‘bad’ than they did mid-year. 54% of consumers said they feel their personal finances will be good or excellent in the coming 12 months, up from 50% mid-2007 and 51% last year. Nielsen and the BRC believe that the prospect of interest rate cuts is behind this improvement.
In the last year, the way consumers are intending to spend their spare cash in the next 12 months has changed, and could cause further concern to retailers. Consumers said they will be less likely to spend on new clothes, DIY and new technology than they were a year ago, with more people now intending to put their spare money into savings, up to 38% from 32% a year ago, making it the number one choice of what to do with spare cash. Paying off debts has increased to 32% from 30% a year ago, while putting spare money into retirement funds and investments has increased to 13% from 11% a year ago.
Nielsen and the British Retail Consortium (BRC) believe that slow wage growth, interest rate rises, high petrol prices, increasing food prices and growing uncertainty in the housing market have caused consumer sentiment to weaken since last year. Already Nielsen is reporting slowing growth for the grocery sector in the lead-up to Christmas 2007 when compared to Christmas 2006 and the BRC has reported weak overall retail sales growth for November.
Mike Watkins, Senior Manager, Retailer Services, Nielsen concludes: “Consumers will be thinking twice about splashing out this Christmas. A higher cost of living is putting the squeeze on the consumer wallet and it will be ever more important for retailers to offer real value to Christmas shoppers. We are seeing continuing low level sales growth in the grocery sector with an increasing reliance on promotional offers to drive business. Considering the fact that consumers are intending to spend less on clothes and technology among other things, I expect high street retailing will also need to sell through on promotion in the run up to Christmas. Looking forward into 2008 I expect caution to remain with us, with confidence returning only when the pressure on consumers’ monthly budgets falls.”
NOTES TO EDITORS
Nielsen’s Consumer Confidence survey polls over 26,000 consumers in 47 countries around the globe. It is used to gauge the sentiment and confidence in the economy, look at expenditure and saving patterns and understand people’s major concerns. The CCS is polled online. 1,000 respondents were polled in the UK.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing information (ACNielsen), media information (Nielsen Media Research), online intelligence (NetRatings and BuzzMetrics), mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA. For more information, please visit, www.nielsen.com
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