Consumer confidence worrying for everyone

Stephan Shakespeare
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WHAT do politicians, retailers, the media and market researchers have in common?

They are all talking and worrying, about “consumer confidence”.

Over three quarters of the UK population think the economy is the most important issue facing the country and the Bloomberg/YouGov Household Economic Activity Tracker shows 55 per cent expecting their household’s financial situation to worsen in the next year (only 19 per cent expect improvement).

Anxiety about the economy is changing how people shop; a recent YouGov survey found 32 per cent of the UK population has shopped in pound stores in the last three months. Despite this “value retailers” like Primark are not immune, having recently posted poor results.

Retailers are in a race to understand how today’s fragile consumer confidence translates into tomorrow’s category behaviours so we’ve looked at results from YouGov’s “Category Predictor” which identifies categories “at risk” of down trading in the next quarter. We can’t cover everything here but some of the key points are:

• Consumer confidence affects sub-categories differently. Take consumer electronics as an example. Shoppers are much more likely to trade down on software and games (-48 per cent) over the next three months than on computers e.g. laptops (-19 per cent).

• There are strong regional variations. Around 72 per cent of shoppers in the South West intend to trade down on software and games compared to only 42 per cent in London. This suggests that retailers may need regional strategies to deal with varying levels of consumer confidence.

• There is compelling evidence that understanding customers and their category confidence levels is key to prospering in a downturn. For example, 40 per cent of Argos’ customers say they are looking to save on computers. That compares to only 22 per cent of John Lewis customers looking to make savings.

So retailers need to understand not only their brand but also the trends within their sector and the wider economic environment in which they operate.

Stephan Shakespeare is chief executive of YouGov.