Consumer confidence drops

5 November 2010

A steep increase in the number of people fearing for their jobs has driven a fall in consumer confidence in Great Britain according to the latest Consumer Confidence Survey, released today by market research company Nielsen and the British Retail Consortium (BRC).

Three-quarters of people questioned in the quarterly survey - which asks people their thoughts and feelings on job prospects, personal finances, major concerns and spending intentions - said that job prospects in the country will be ‘not so good’ (48%) or ‘bad’ (26%) over the coming year. That compares with 20 per cent who felt they would be ‘bad’ in the Quarter 2 (Q2) survey.

Also contributing to the drop in the confidence index is a worsening of sentiment over personal finances. There has been a six percentage point increase in the number of people who believe that prospects for their own personal finances are ‘not so good’, with 48 per cent believing this now compared with 42 per cent in Q2 and a further 13 per cent now believing that their own personal finances are ‘bad’.

When looking at major concerns, ‘the economy’ remains the nation’s biggest concern though this has eased somewhat. In Q2, 39 per cent of people cited ‘the economy’ as either their first or second biggest concern. This has now fallen to 26 per cent as people’s worries turn from the economy in general to their own ability to cope. Since the Q2 survey, there has been a significant rise in the number of people who are concerned about increasing utility bills (from 15% to 23%), food prices (from 12% to 20%) and personal debt (from 19% to 20%).

Chris Morley, Group Managing Director Nielsen UK & Ireland, commented:

"This survey was conducted in anticipation of the recent spending review which outlined the extent of budget cuts. It tells us that consumers are clearly concerned about inflation on petrol, utility bills and food shopping, underpinned by a sustained and increasing worry over jobs. With such unease about covering basic costs, it is not surprising that many people claim they have no spare money to spend and that the majority are attempting to make savings.

“The level and depth of promotions in the grocery sector remains at an all - time high and taking advantage of these offers is just one way that shoppers are making savings. We expect similar tactics to be employed on the high street to help drive seasonal spending and we watch with interest to see if this will release some pressure on consumer confidence leading up to Christmas."

Stephen Robertson, British Retail Consortium Director General, said:

“Consumer confidence is now down to its lowest for a year and these results suggest prospects for the early part of next year are fragile. People’s fears about their job prospects for 2011 are the main cause. Despite tentative indicators of recovery, four out of five people still think we’re in recession and more than half believe that won’t have changed by next autumn.

“With spare cash short and cutting back rising up the household agenda, a strong revival in consumer confidence is likely to be some way off.”

Other findings from the survey include:

§ The global Consumer Confidence Index stands at 90 so sentiment in Great Britain is lags significantly behind the average – Out of 53 countries polled, GB confidence ranked 38th.

84 per cent of people think that the country is still in recession and only 20 per cent believe we will be out of it within the next year.

When asked what they spend spare cash on, 26 per cent of people claimed they have ‘no spare cash’.
More people say they are trying to save on household expenses than did in Q2. 70 per cent now say they are budgeting in this way compared with 63 per cent in May.

The most popular strategies people are employing to cut back on household expenses are ‘try to save on gas and electricity’ (65%), ‘switch to cheaper grocery brands’ (60%), cut ‘down on take-aways’ (60%), ‘spend less on new clothes’ (59%).

Once the economy has improved, 56 per cent of people say they intend to continue try to save on gas and electricity, 39 per cent on takeaways and 31 per cent intend to continue trying to spend less on groceries.

About the Nielsen Global Consumer Confidence Survey

The Nielsen Global Consumer Confidence Survey was conducted between September 3 and September 21, 2010 and polled over 26,000 consumers in 53 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America about their confidence levels and economic outlook. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. The sample has quotas based on age and sex for each country based on their internet users, and is weighted to be representative of internet consumers and has a maximum margin of error of ±0.6%.

The full report is available here:
http://www.brc.org.uk/downloads/GB_CCS_Q3_2010.ppt

About The Nielsen Company

The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in approximately 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com.

About the British Retail Consortium

The British Retail Consortium (BRC) is the UK’s leading retail trade association. It represents the entire range of retailing from large multiples and department stores, small independents, food and non-food, store-based and online.

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