Consumer confidence drops to lowest level since 1990, but is it all bad news?
29th Jul 2016
News this morning that confidence among consumers has dropped to its lowest level in 26 years isn’t going to be easy to find a silver lining on. But as retailers surviving The Great Recession (an event the IMF found to be the worst financial crisis since Depression), is the threat of a true Brexit all bad news for Britain?
British consumer morale fell to -12 this month, compared to -1 in June, bringing in the biggest decline in GfK’s monthly Consumer Confidence Index since March 1990.
"We've seen a very significant drop in confidence, as is clear from the fall in each of our key measures," GfK head of market dynamics Joe Staton said.
"Its future trajectory depends on whether we enter a new period of damaging economic uncertainty or restore confidence by embracing a positive stance on negotiating a new deal for the UK."
But everything’s not lost. According to data released by Deloitte earlier in the week, consumer confidence by their ratings had remained the same since before the referendum. Whether we’re about to face another recession in the UK or not, as we saw from the past ten years of financial uncertainty, there will always be areas where retailers can flourish, even in the most unlikeliest of circumstances.
Survival of the fittest
The high street has never been anything but cut-throat, and times of hardship, as difficult as they are to manage, do have a knack of weeding out the brands that just weren’t built to last. The last recession saw the loss of countless household names, but it also forced the nation to re-evaluate exactly why it loved HMV and Habitat, but wouldn’t miss Comet or Woolworths, and spend the next ten yeas of its collective conscience wondering where to shop after Borders vanished. When only the strongest ideas and brands survive, the end result is a high street that can withstand any geo-economic fall-out. Or it will at least be on fighting form to try.
The growth of the sharing economy
While household brands fell by the wayside, the later years of the recession witnessed the growth of Airbnb, Uber and Netflix, three companies that have totally revolutionised their respective industries. Based on connecting demand to space capacity or spare assets, PwC now believes the sharing economy is worth USD 15 billion now, and could grow to USD 335 billion by 2025. With consumers keen to share the commodities they already own, instead of buying new, retailers will need to get creative with how they can remain involved in those sharing paths. Research from JustPark at the end of last year found that London is the third-biggest creator of sharing economy start-ups in the world. If retailers want to remain ahead of the curve, they better get investing in some of that intel.
Investment pieces and growth in a minimalist lifestyle
When consumers are buying products, you can bet they’ll be making sure it’s the right one. We saw this trend in the past recession, with heritage and heirloom pieces becoming so popular, even vague notions towards that expression of maintaining standards and values- (think of the Keep Calm and Carry On posters or the success of The Great British Bake Off) became ingrained in the nation’s outlook. If there are more years of economic uncertainty to come, it’s like the new trend for de-cluttering and minimalist lifestyles will contribute to the idea of buying once, and buying right. Brands that are well-placed for luxury purchases and long-lasting products will benefit from an instinctive move away from fast fashion and impulse buys.
Research conducted by Deloitte at the start of the year found that 2016’s retail trends were likely to focus on delivering relevant and personalised experiences. Customers are likely to begin expecting retailers to fulfil their needs immediately, if not predict their needs, and as a result, the transaction itself will no longer be the main event, but part of a seamlessly integrated experience. What that means for retailers is that instead of focusing on one purchase per customer, it’s likely that investing in building brand relationships across every channel and touch point possible will bring about the most fulfilling gains for a business.
My Retail Media
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