Credit Crunch Feb 09

CREDIT CRUNCH:

WHERE YOUR CONSUMERS ARE AT TODAY
EXPR ESSIO N S
B R A N D P LA N N IN G
PHASE 2 [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: julian@expressionz.com

March 2009

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

A YEAR LONG REVIEW

 Expressions conducted 4 groups in February 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 was 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 first in home study we explored 4 categories
• Health issues
• Fresh produce
• Entertainment
• Shopping
 We invite you to submit other categories and specific questions to be explored during the
subsequent monthly interviews
 This is a free service


RECESSIONARY MINDSETS: RECREATIONAL TO REALITY


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

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


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…”


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


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


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…”


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…”


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


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…”


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


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


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!”


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…”


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


HEALTH ISSUES & PRODUCTS


HEALTH ISSUES AND PRODUCTS

Prepared to invest in appearance & health
Keen to adopt a healthy lifestyle & prepared to
fund it
Recreational Enjoying family life, indulging children:
- karate & swimming lessons
Take advantage of promotions & offers
Enjoy indulging children with out door equipment
(eg bicycles)

Less indulgent expenditure, including clothes
Belief in health & need to invest in it
More about maintaining the status quo
Reserved May pull back from extravagant products:
- especially for the household
Becoming less concerned about fashion:
- respecting ‘need’ not ‘want’ philosophy


HEALTH ISSUES AND PRODUCTS (Cont’d)

Gym membership early victim of recession
Conversely aware of need to present a fit image
Exercise deemed a good release of recessionary
anxiety
Retrenchers Belief need to be fighting fit
Some replacement of gym routines with home
exercise (walking the dog)
Concerned about appearance but reluctant to
start diets (need to buy new clothes)

Health more of a basic necessity
Shopping for economy products
Adopt a more grounded approach to hyperbolic
claims
Exercise thought to counter anxiety
Reality
Life thought to have changed in this context
Walking or cycling more; greater use of public
transport
Health concerns more focused on a balanced
diet



 Fitness was perceived as an ingrained attitude
 Prompts polarising attitudes: addiction or avoidance
Evident concern over being ‘fighting fit’ to cope with the recession


Context Need to present an energetic & youthful image:
- especially with the threat of unemployment
 Element of improving or regaining self confidence through physical
appearance

 Gym membership regarded as discretionary expenditure
 Perceived as a personal indulgence that could not be justified when
Gyms
cutting back:
“…I used to go swimming nearly everyday…I miss not going to the
gym, it was escapism…no I won’t go to the public pool, it wouldn’t
be the same…”
 However, amongst the more secure, gym membership can be
rationalised:
“…we have family membership & both of us use it..I pay extra for the
crèche…”



Alternative to
 Running & jogging considered free alternatives to gym membership:
gym
“…still get the exercise buzz, but without the monthly charge…”
 Some undertaking exercise regimes at home
 Dog walking also cited as exercise routine
 Evident signs of missing gym membership; aspect of self pampering &
rewarding
 Danger of breaking future routines, danger of distancing lapsed members

 Whilst the credit crunch was an opportunity to diet & adopt healthy
routines, there was a lack of incentive:
Dieting
“…it’s not as if you can go out & buy a new outfit when you’ve lost the
weight…”
 Amongst Reality & Retrenchers the move was to more comfort food:
“…you want something hot & filling…not salads…”
 Dieting was resisted due to ‘self obsession’ & wrong season



 Favourite toiletries were thought non negotiable
 Considered essential to appearance & self confidence
 Many women were prepared to compromise on general toiletries:
Toiletries
- family soaps & shampoo brands were readily exchanged for own
label
- however personal cosmetics, skin care and hair care brands could
be justified:
“…I’m not prepared to experiment with cheap shampoos. I know what
suits my hair…buying cheap ones would be false economy…”
 Family was also being encouraged to use more economically
 Men’s toiletries, especially shaving, appear to be more vulnerable than
women’s


HEALTH ISSUES AND PRODUCTS: LEARNING

 A positive approach to health appears to directly influence self esteem
 Retrenchers and Reality consumers have noticeably less energy and confidence
 Gym visits and a proactive health attitude are early casualties
 Gym subscription is perceived as a luxury
 Conversely these two groups are arguably in most need of stress reducing exercise
 Belief by some that they need to present a fit and energetic persona:
• To prevent redundancy or be competitive in the job market
 Expensive household toiletries likely to be replaced with economy versions
 Reluctance to sacrifice trusted personal toiletries and cosmetics
• Perceived as essential and cost effective
 Incentive to diet often missing (such as holidays, new appearance):
• Conversely concern over cost of new wardrobe
 Opportunities to reach out to struggling consumers:
• Deals or off peak membership
 Toiletry brands need to justify price premium by amplifying benefits


FRESH PRODUCE (FRUIT, VEG & FLOWERS)


FRESH PRODUCE

Buying into prepared market for convenience
Real vegetables for real cooking (Sunday lunch)
Often mums with small children
Shopping tends to be more health &
Recreational convenience oriented
Looking for shelf seduction & inspiration
Want reassurance over nutrition
Unlikely to shop whole fixture, selective products
Less likely to be price sensitive or aware

Adopt a pragmatic view to prepared fruit & veg
There if they need the convenience
Concern is more on freshness & taste than cost
Purchase of fruit & vegetables has not been affected
Reserved
Belief there are more loose products on offer
Still subscribe to belief in organic as healthier option
Some shopping farmers’ market for taste, health
benefit & recreational appeal


FRESH PRODUCT (Cont’d)

Looking for bargains
Shopping for fresh produce was ‘hands on’:
- they select their produce
Loose preferred to bagged
Prepared to see beyond the leaves & dirt, more
Retrenchers
tolerant of different sizes & shapes
Looking to avoid waste, only buying what will be eaten
Fruit bowl & cut flowers victim of recession:
- but with exceptions (Valentines, Mother’s Day)
Some experimentation with markets for fresh produce
& value shopping
Practised economy cooks
Cooking from scratch due to necessity
Perceived as healthy & economical food
Focus is on main vegetables & fruit
Only buy different offers if on promotion
Reality
Flowers deemed an unaffordable luxury
Prepared to buy from markets or supermarkets
Willing to prepare vegetables
Want to ensure this is no wastage
Salads regarded as an expensive meal option


FRESH PRODUCE (Cont’d)

 Greater appreciation & focus on fresh produce driven by:
- reversion to ‘proper’ cooking & more traditional meals
- appreciation of wholesomeness of fresh fruit & vegetables
 Fresh produce now a more complex decision requiring consideration of:
- air miles & seasonality
- organic issues
- packaging & processing
 Most were looking for a quality and convenience balance:
Context
“…I don’t mind washing them but if I can get them ready for the pan at
a few pence more then it’s worth it for me…”
 Reluctance to appear irresponsible by buying pre-prepared or exotic
offers
 Adopt a more considered and controlled approach:
- not prepared to waste fruit and vegetables
 Less likely to buy on impulse



Organic
 For most organic was not a consideration
 Perceived as expensive with only a marginal health benefit
 Conversely organic believers were still subscribing to the superior health
& taste promise

Seasonality  Less of an issue with Reserved & Recreational consumers
 Used to having a wide selection on offer throughout the year
 More of a concern amongst Retrenchers & Reality consumers
 Out of season & exotic fruit perceived as very expensive
 Rationalise fuel for either transport or heating:
- dramatically increases cost
 Concern over being seen as extravagant



 Evident resistance to over packaging
 For the economy minded packaging added to the cost:
- & prevented them from inspecting the fruit & vegetables
 For Reserved & Recreational consumers packaging was seen as
occasionally unnecessary:
Packaging
- lacking eco ethics
 Steam cooking makes sense of packaging & preparation for these
shoppers
 Pre-prepared & packed could be justified by no wastage and convenience


PRODUCE: LEARNING

 As budgets become tighter consumers retrench to wholesome fresh foods
 Willing to spend time preparing vegetables (time rich, money poor)
 Reluctance to paying for excessive stalks, leaves or dirt
 Evidence of trimming at fixture
 Want to ‘feel’ the products to make their own selection:
• Packaging acts as a barrier
 Still a role for pre-prepared food but needs to be justified:
• Convenience, no wastage and variety
 Concern over pre-prepared is still on nutrition, taste and for some hygiene
 Organic devotees remain convinced of health & taste superiority:
• Additionally believe price difference is now marginal
 Fruit bowls and more exotic vegetables appear to be victims of the times for some
 However, there is still a market for prepared fruit and vegetables providing it is
competitive in terms of variety, convenience or wastage
 Flowers as a self purchase are a luxury:
• Perhaps need re-positioning as a token present (husbands)
• Or joint promotions with suitable gift options


ENTERTAINMENT IN & OUT OF HOME


ENTERTAINMENT IN & OUT OF HOME

Few changes to entertaining patterns & expectations
Still going out as often & to known places
Limitations are less financial & more about family
circumstances – babysitters & other commitments
Social life more likely to be impacted by others:
“…meet up with my girlfriend once a month for a meal…she
Recreational
phoned to say she can’t afford it, her husband’s a builder…”
Again experience of the Credit Crunch is via a third party
They have aspirations & entertainment expectations
Want to invest in home entertainment: Sky & HD TV:
“…can afford them now as we have more money each month
[tracker mortgage]…”
Cautious about indulging but still feel they deserve strokes &
rewards
Claim to be cutting down on the frequency of going out but not
down trading:
“…when we got out for a meal we go for a good one…I don’t
want to spend money & be disappointed…”
Reserved
Selected interest in meal deals; more effective if from a chain
already used
Currently reviewing home entertainment with a view to
economising not eliminating
Drinking at home perceived as saving, tendency to buy more
Evidence of trading up on wines as a justifiable extravagance

ENTERTAINMENT IN & OUT OF HOME (Cont’d)

Cut back on entertainment, extent dependent on Credit Crunch
mentality
Less frequent nights out or more control over budget:
“…we’ll still go out for a drink but won’t stay as long…stopped
buying rounds…I think people understand these days…”
“…can’t afford to spend £30-40 on a Friday night anymore…”
Retrenchers
Still celebrate family occasions but looking for cheaper options
Deal sensitive; actively aware of promotions
Usually already reviewed home entertainment options; cut
back or cut out Sky
Cable/satellite TV regarded as a luxury & therefore vulnerable:
- conversely internet seen as educational & helpful

Celebrate family occasions at home with relatives & friends
Going out was rarely an option: a selfish indulgence
Discovered other family activities & amenities:
- local parks, children’s clubs:
“…the internet when some time ago…if the kids want to use it
they go to the library…”
Reality Home entertainment limited to terrestrial & Freeview
Occasional history of debt issues with Sky:
“…we ran a large bill…I’ve now paid it off but we miss it as
we’re a sporting household…”
Some drinking at home but thought of as an extravagance:
“…if the kids see us drinking it’s not fair on them…he wants a
new pair of football boots…”



 Still want entertainment & occupation
 Argue it is a distraction from reality
 Going out for meals, drinks, entertainment considered discretionary:
- consequently easy to enforce savings
 Most have become accustomed to multiple channel TV:
Context
- through non terrestrial broadcast
 Attuned to programmes on demand
 Going out of the home for entertainment also adult centric:
- can be perceived as selfish if imposing family economies
 Some preparation to invest in household as entertainment hub

Cut back
 Sky/Virgin services tend to be first line economies
 Respondents either paring back to basic packages or cutting out



 Meal deals tend to work amongst select groups
Meals out
- seduce Retrenchers to go out and spend
- appease guilt or concerns of the Reserved
 Coupons only seem to be effective if the restaurant is already known:
- promotes pleasant memories & known expectations

 All aware of supermarket meal deals
Meal in
 Actively taken up by Retrenchers and Reserved
 However perceived from different perspectives:
- Retrenchers: celebration of an occasion
- Reserved: compensation for a meal out



Drink out
 Cut back on by most
 Perceived as self indulgence:
- denying partner pleasure
- spending family money

 Compensating for less drinking on licence was more at home
Drink in
 Reserved can indulge in small home entertainment extravagances:
- buying better wine
- accompanying treats, crisps, dips, etc
 Retrenchers can justify pleasures as compensation for not going out


ENTERTAINMENT IN & OUT OF HOME: LEARNING

 Need for entertainment as a reward and/or a distraction
 Economically impacted families discovering different entertainments
 Exploiting community facilities and recreational clubs:
• Especially children
 Adults giving children more freedom and independence to participate
 Greater appreciation of going out and more consideration given to staying in
 Non terrestrial TV first line economy to be cut out or cut back
 Concern is consumers justify decision by deriding service:
“…a thousand channels and nothing to watch on any of them…”
 If they believe this they will be difficult to re-recruit when they can afford the service
 Meal deals both in and out of home need to be indulgent and exciting:
• Not be perceived as compensation
 Opportunity for more proactive marketing offers for in home entertaining


SHOPPING – FOOD & CLOTHES


SHOPPING – FOOD & CLOTHES

Shopping still a recreational activity
Family shopping trips at weekends virtual day out
Taken advantage of ‘continuous & closing down’ sales
Whilst exploiting offers criticism over extended sales
Claim certain shops are like jumble sales (Miss Selfridge)
Detract from pleasure of shopping
Recreational
Supermarket behaviour relatively unaffected
Still buying same brands & items: usually unaware of key
prices
Purchasing what they want
Also critical of drab economy packaging & excessive sale
merchandising
Conscious of Credit Crunch environment
Described as a continuous sale since before Christmas
High St & malls considered to be less attractive:
- fewer people, less ‘spirited’
Aspiration, excitement & extravagance appears to have gone:
“..miserable looking people looking at things they can’t afford
Reserved
& buying stuff they don’t need but is cheap…”
Little change in shopping habits or patterns


SHOPPING – FOOD & CLOTHES (Cont’d)

Window shopping normally involves some token buying +
additional expense on coffee or lunch
Consequently staying away from shops
Concern over being tempted to spend & reminded of situation
Significant changes in supermarket shopping strategy:
- introducing different outlets & more frequent & smaller shops
Retrenchers
Adopting a more controlled regime; restocking rather than
needless shopping
Trading down to own label offers or economy where they can
Use of smaller local outlets for daily shops
Believe in smaller shops; they are less likely to be seduced by
unnecessary produce, more in control, conscious of budget

Shopping to a budget
Exploit offers, collect vouchers, network of price watch friends:
“…we swap details of the various promotions…”
Coupons promote brand switching, not unnecessary purchase
Cost of shopping includes transport so use local shops for daily
Reality essentials, topped up with larger provision shopping
Trolley strategy: use smaller trolley or basket to limit shop
Aware of mark down time & shop discounted section
Shop ruthlessly to achieve budget, can’t afford to be tempted
Tend to have a set & disciplined shopping regime
Matches an organised weekly meal plan to avoid waste



 Many consumers cannot afford to be loyal to a particular supermarket
 Evidence of reviewing different outlets
 Adoption of selective shopping regimes:
“…Morrison’s is very good for vegetables…looks very fresh &
attractive so I shop there now for fresh stuff…”
 General concern over frivolous shopping:
- avoidance of waste
 Some switching to smaller stores for a more controlled shop:
Supermarkets
“…I’m now shopping in Somerfield…I find it cheaper as there is less
to tempt me…”
 Those economising are making more frequent small shopping forays:
- supplemented by a weekly provision shop
 Noticeable restrictions and controlled shopping strategies:
- using a basket rather than a trolley
- selecting a small trolley
- switching to scanning to keep track of prices & total cost



 Clothes shopping severely restricted amongst Retrenchers & Reality
Non
 Recreational & Reserved have been taking advantage of extended
supermarket
sales
 However these current shoppers are becoming critical of retail
environment:
- too many sales
- empty malls
- miserable window shoppers
 Perceived as detracting from shopping enjoyment & experience
 Some showing interest in online shopping as experience becoming more
functional than fun


SHOPPING – FOOD & CLOTHES: LEARNING

 2 groups appear to be relatively unaffected economically:
• Recreational and Reserved
 Shopping habits more impacted by the environment, especially non food shopping
 Critical of extended sales, lack of new stock and depressing shopping environments
 Some using the internet more as shopping has become more functional and less fun
 Other 2 categories, Retrenchers & Reality, are actively avoiding non essential shopping
 Even window shopping was thought of as dangerous and depressing:
• Due to bringing home the reality of the situation
 Consumers more likely to shop and support their preferred shops for clothes shopping
 Conversely evident vogue to sample different supermarkets
 Comparisons are made on the total experience:
• With a view to adopting a more selective shopping regime
 This behaviour could challenge the ‘one-stop, one-shop’ habit:
• Introducing fragmented shopping loyalties


OBSERVATIONS AND ANOMOLIES

 For many recessionary reaction did not impact on the household until January
 Evident desire to enjoy Christmas before embarking on a belt tightening regime
 Possibly due to New Year resolutions and/or job anxiety, there was a noticeable health
undercurrent
 Some respondents thought survival of the recession was about being fit:
• Presenting a younger and more active person
• This possibly accounts for the rise in male toiletries and tans
 Whilst belt tightening began in January, the sales proved too tempting an opportunity for
many:
• An opportunity to shop and save
• Hence the rise in January of retail sales
 Despite banks being perceived as the perpetrators of the situation:
• None had switched banks
 View that the economic world may change after Barack Obama’s inauguration


OBSERVATIONS AND ANOMOLIES (Cont’d)

 Interestingly green issues appear to have been subjugated by economic concerns:
• Perceived as short term vs long term interests
 Seeds of a changing form of consumerism from ‘want’ to ‘need’:
• With some even challenging ‘need’
 Signs of entrenchment to home for entertainment
 Also exploiting community facilities:
• Museums, libraries, parks, pools, gyms, etc


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 are more open to experiment with different regimes and behavioural patterns
 Status quo is challenged by many wanting to make economies and efficiencies
 Consumers need to be able to justify paying premiums:
• need greater belief in product delivery, physically or psychologically
 Brands with a strong personal attraction are less at risk
 Cheap substitutions more likely on more functional items


PRINCIPAL LESSONS (Cont’d)

 Entertainment is perceived as a first line economy:
• Reducing out of home expenditure: mandatory
• Reducing in home regular commitments: optional
• Compensating by indulgent in home evenings
 Even amongst the most vulnerable consumers reluctance to be too puritanical
 Reluctance to markedly concede family living standards despite their situation

Living through the recession, even for vulnerables, is initially about
adjusting, not abstaining… (yet)


ECONOMICS AND RECESSION: ACCORDING TO THE CUL-DE-SAC CONSUMER


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

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


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


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…”


Credit Crunch Feb 09

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