Credit Crunch April 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 4 [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

May 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 April 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 is 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 fourth phase we explored 4 categories
• Leisure
• Magazines
• DIY
• Gardening
 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

DYNAMICS: POLARISING RECESSION

Evidence the recession is
polarising
Retrenchers now (April) feeling
less insecure
Recreational Recreational
They feel the worst has
happened
Period of uncertainty now over:
- experienced redundancy
Reserved Reserved
- threat now abated
Consequently this segment is
contracting
Either into Reserved or Reality
Retrenchers
Two prominent recessionary
Retrenchers attitudes:
- relatively confident
Reality
Reality
Reality - reality of recession

Reality


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


HOLIDAYS AND LEISURE


HOLIDAYS AND LEISURE

Leisure activities unaffected by economy
Still members of gyms, sports clubs etc
Holiday plans more impacted on by Euro rate rather
than home economy
Expectation that flights & hotels would be cheaper to
Recreational
attract customers
Disappointment that holiday companies are not
discounting more; exploit situation to their advantage
Spending in preparedness of holiday (clothes,
equipment, etc)

More confident of economy now
Prepared to plan for holiday with certain constraints
Conscious of exchange rate but still deem foreign
holidays better value (weather, entertainment, eating
Reserved
out, etc)
Non Euro destinations attractive (Turkey)
How already begun to make plans


HOLIDAYS AND LEISURE (Cont’d)

Beginning of year put off any holiday plans &
cancelled club subscriptions
Now reviewing situation, thinking about a more
modest holiday
Euro & economic situation make a UK holiday a
Retrenchers
more prudent consideration
Still thinking about plans; could be prompted to
book by an attractive offer
Appear to be waiting for last minute bargains;
expect to be able to take advantage of situation

Family holiday a low concern
Element of concern about kids missing out
Compensate by involvement with clubs (scouts &
youth) & holiday clubs
Reality
Summer plans involve staying with family & friends
or cheap alternatives
Family days out including picnics to be self
sufficient



 Beginning of year saw gym membership under review by Retrenchers,
Reserved & Reality categories
 Retrenchers & Reserved more confident over economic outlook
Gyms
 Recognised need to maintain health:
- self awareness & satisfaction
- & maintain health & dynamism
 Still evident belief that one needs to be fit to fight recession
 Element of consumers justifying club & sports membership:
- value & contribution to health
- positive disposition generally
 For some returning to gym & exercise discipline initially difficult but still
rewarding



 Recession exploitation evident with holidays
 As previously seen with cars general sense of disappointment
 Anticipation consumers would be able to exploit economic situation & take
advantage of ‘bargain offers’
 Many disappointed over the lack of promotions & genuine offers
 Recognise exchange rate partly responsible, as well as belief other countries
Holidays: not as badly impacted on:
exploitation “…we were thinking of going to France & Spain but it is very expensive,
especially when you consider the exchange rate but I suppose the
recession‟s not as bad over there…”
 Many of these consumers (Recreational & Reserved) were looking on the
internet for holiday bargains
 These consumers tended to have made & confirmed holiday plans
 Exchange rate was a key consideration in selecting destination (San Francisco
& Turkey)



 Holidays were evident sign of greater optimism & less insecurity
 At the beginning of the year Retrenchers were not considering a holiday,
Holidays:
now open to offers
viability
 However consider the need to be reserved, consequently UK destinations
deemed more appropriate
 Concern over cost of UK holiday & weather
 Belief that overall foreign holiday is better value if they can find holiday at
the right price


HOLIDAYS AND LEISURE: LEARNING

 For the confident consumers holiday plans had not been impacted by the recession
 These consumers are disappointed that offers and promotions are not more generous
 These consumers were looking forward to exploiting the situation to their advantage
 For all the exchange rate against the Euro has impacted upon destinations
 Some considering a UK holiday due to economy
 Others concerned over the value of UK holidays (believed to be expensive and no
guarantee of good weather)
 Others considering non Euro destinations such as Turkey
 Those who cancelled club membership at the beginning of the year are beginning to
reconsider their decision
 Some missed the social activity, others the exercise
 Once again the need to rationalise and justify membership
 This was being done by the need to be fit to fight the recession
 Overall the more confident consumers were returning to old leisure habits in terms of
eating out, however with less regularity


MAGAZINES


MAGAZINES

Magazine purchasing not impacted on by recession
Buying from a small portfolio of preferred titles
Purchase tends to be routine as part of weekly shopping
Consequently buying from supermarket rather than
newsagent
Tend to buy on impulse, being attracted to cover & content
Recreational
“…I know which magazines I normally buy and I look to
see which ones interest me that particular week…”
In addition to impulse buying there was an element of
subscription in this group
Magazine subscription often received as a present &
thought to be an appropriate gift item for family & friends

Similar profile to the recreational consumers
Magazines seen as discretionary purchase but believed to
offer good entertainment value
Spoke of cutting back on magazines but now slipped
back into buying cycle
Also tend to buy from supermarket but more sporadically
Reserved
Buy magazines for escapism & entertainment:
- want an aspirational element
Attracted by human interest stories:
“…I bought several magazines recently that were
featuring Jade Goody, I was interested in her story…”


MAGAZINES (Cont’d)

Cut back on magazine buying at the beginning of the year
Still conscious over the expense of magazines & tend to
buy now with more consideration:
“…I used to see one I liked & pick it up, now I browse
through it to make sure there‟s articles I want to read…”
Amongst these consumers magazines now appear to
Retrenchers have greater consideration & value:
- element of recycling amongst family & friends:
“…previously I would have thrown in the recycling bin
once I‟d read them but now I pass them on…whether it‟s
the recession or recycling generally…”
Evident desire for escapism; did not want to read about
the economy

Magazines deemed a luxury that could not be justified
Also seen as a personal item & discretionary purchases
needed to be more family centric
Often the recipient of recycled magazines:
“…my sister gets Hello & Ok and she passes them onto
Reality
me when she‟s finished with them…”
Some justification of opportunistic magazines such as
Take A Break; perceived as entertainment value &
contained competitions:
“…I‟ve just started buying one & doing the competitions,
hoping to win something…”



 Many respondents wanted escapism from the reality of the recession
 Looked to magazines to entertain & inspire
 Whilst there was an element of human interest, they did not want to read
about or be reminded of the reality of the recession
 Recently magazines were thought to have adopted a ‘make & mend’
Escapism
attitude:
- this was deemed appropriate & acceptable
 The idea of home centric activities & economising tips (such as clothes
swap) were accepted as they put a new, involving and entertaining spin
on the economic climate
 Interestingly there was still a desire to read about stars’ & celebrities’
lives as well as extravagant lifestyles



 Several believed magazines had become poor value:
- due to cover price & contents
 These consumers, prompted by the recession, had begun to review their
spending patterns:
- discretionary items like magazines needing to be justified
Magazine
redundancy  Several respondents spoke of weekend newspapers & insert magazines
replacing specific titles:
“…the weekend newspapers keep me occupied…I don‟t need or have
time to read magazines any more…”
 For specific interests the internet was now thought to have replaced
specialist magazines:
- perceived as more authoritative & interactive:
“…if I want to know something about a specific subject I will go onto
the internet now rather than buy a specialist magazine…you can
visit blogs and ask specific questions…”



 In addition to these respondents buying general titles, there was an
interest in home related topics
 The recession had caused several to consider home extensions driven by
Practicalities the belief of builder availability & cheaper prices
 Allied to this was a desire to invest savings in the home rather than
receive marginal interest rates
 This led to the purchase of home related magazines for ideas, not only in
terms of extensions, but decoration as well
 Paradoxically there was a desire amongst the more confident to invest in
their homes in the belief of it being a tangible asset



 More confident consumers (Recreational & Reserved) liked the idea of
growing their own vegetables
 But several argued this was impractical due to space or time
 For Retrenchers & Reality the notion of growing vegetables was given
greater consideration
 The idea was seen as rewarding, offering a healthy, productive &
occupying pursuit
Gardening
 The attractiveness of home grown vegetables could not be solely justified
in terms of cost; there needed to be other attractive benefits (eg health &
hobby):
“…basic vegetables are so cheap by the time you‟ve bought the seeds
or plants you could have bought better quality for less money…”
“…we‟ve thought about growing tomatoes every year but my father in
law does that & comes around with bags of tomatoes that they can‟t
get rid of…”
 For many the idea of reading about growing vegetables & planning was
possibly more attractive than the actuality
 This new found enthusiasm for vegetable growing amongst family &
friends need careful cultivation & guidance
 This was thought the role of magazines & newspaper articles


MAGAZINES: LEARNING

 Consumers are looking for escapism from recession laden media:
• magazines that deflect them from this were greeted with enthusiasm
 Magazine shopping for a few was about subscription, but for most magazines were
bought on impulse
 For many of these consumers magazines were bought as part of the supermarket
provision shop, with consumers quickly scanning covers for articles of interest
 Purchase behaviour had changed marginally with consumers now needing to be more
convinced of the content and value of the read
 There was also amongst some a desire to recycle magazines amongst family and
friends
 Specific magazines were losing their authority to the internet
 For some the price of magazines had risen to the extent they were no longer a trivial
item but a considered purchase
 Consumers are seeking value in this market with value being judged by the degree of
relevance and interest the magazine has to offer, not necessarily the number of pages


SHOPPING


SHOPPING

At the beginning of the year highly critical over the state of
shops; described as ‘jumble sale like’ & ‘tacky’
Constant sales did not attract custom; acted as a
disincentive to go shopping
Now more complimentary over the state of shops
Recreational Appreciate new season’s clothes
Prompted to shop for new outfits for events & holidays
Want value for money; more likely to interrogate quality of
offerings
Grocery shopping unaffected by recession; report no
change in shopping rhythms or purchase patterns

Believe the mall & high street shopping experience is now
improved
Less window shoppers, however still feel the shopping buzz
or spirit is less evident
Reserved Likely to report malls & shopping areas quiet
Empty shops considered intimidating for these shoppers &
detract from excitement of shopping
Share value concerns of Recreationals


SHOPPING (Cont’d)

Some still avoiding unnecessary shopping; others justifying clothes
shopping due to seasonal change
Shopping excursions more controlled than previously
More likely to shop to a prescribed budget & less tempted to exceed this
Exercising tighter financial constraint
Prepared to experiment with new shops for clothes & food
Retrenchers Previous grocery experimentation has now become an established routine
Adopted different stores or different stores for specific goods:
“…Morrison‟s fresh food is so much better than Sainsbury‟s so I go there
for my fresh produce but I still prefer some of the Sainsbury‟s lines…”
Still exercising tight fiscal control, especially on grocery shopping but likely
to reward economies with occasional treats
Luxuries permitted provided they reward the whole family

Do not indulge in recreational shopping; shopping has to be purposeful
Clothes shopping limited to necessary replacements
Shop keenly for bargains where possible but do not want to do too much
shopping around
More likely to be buying from catalogues to spread costs
Reality
Tendency to feel uncomfortable in shopping centres & malls
Maintain their shopping routines; namely weekly provisional shops daily
topped up by smaller purchases for fresh produce
Tendency to buy from local shops & be disciplined in terms of only buying
what they know will be consumed


SHOPPING (Cont’d)

 Several consumers were feeling more confident with the economy
 These more confident shoppers were returning to regular leisure
shopping trips
 Commonly visiting shopping centres/malls
 Previously (February) they were critical over the state of shops & the lack
of „shopping spirit‟ in such places
 Now believe shops have improved with new season’s offerings
Centres & Malls
 However still report a lack of shopping excitement & enthusiasm
 Malls & shops are thought less busy & lacking the essential shopping
buzz:
“…you see people in there but they‟re not really shopping, no one‟s
carrying any bags…no one‟s looking excited anymore…it‟s window
shopping…”


SHOPPING (Cont’d)

 As reported on in Phase 2 the less confident consumers (Retrenchers &
Reality) had devised shopping strategies to cope
 Several strategies involved restricting unnecessary purchases by:
- discipline
- using a smaller trolley/basket
 Several had altered their shopping patterns, often introducing a further
supermarket into their shopping portfolio (Aldi & Morrison’s)
Shopping:  These additional supermarkets were used selectively with footfall either
supermarkets being driven by:
- excellent offers
- excelling in fresh fruit/bread
 Additionally amongst the Reality respondents there was more frequent
daily shopping; topping up on necessary items as and when required
 These consumers were more likely to be buying on demand
 Needed reassurance that what was bought would be used


SHOPPING (Cont’d)

 The more confident respondents reported an increase in internet
shopping
 Driving this was a convergence of factors:
- convenience offered
- lack of shopping spirit at malls/centres
 Internet shoppers tended to be using the internet for more functional
items such as small household goods rather than clothes
Shopping:
 Husbands were particularly enthusiastic about online shopping:
internet
- avoidance of unnecessary trips
- practicality & functionality
 Men liked the ability to compare prices & specifications
 Concerns with internet shopping lay in:
- credit card security
- hassles over delivery/collection


SHOPPING: LEARNING

 Shoppers are now polarising
 More confident consumers are returning to patterns which echo past behaviour
 Reality consumers have dramatically changed their shopping rhythms and routines
 Retrenchers experimented and have experience different shopping outlets and
challenged their shopping practices
 Retrenchers are more likely now to have a wider portfolio of supermarkets and be using
them selectively
 The more confident consumers were critical over the austerity of economy lines
 Reactive marketing was considered appropriate in supermarkets but not for clothes
shopping
 Consumers were critical over the condition of high street shops at the beginning of the
year, this has now subsided
 All consumers are looking for value, not necessarily cheap prices
 The recession has and is impacting on consumers’ attitudes to shopping
 Consumers are beginning to question unnecessary consumerism
 Consumers need to justify purchases


OBSERVATIONS


OBSERVATIONS AND ANOMOLIES

 It would appear that consumers are becoming polarised over the economy
 The group identified at the beginning of this study as Retrenchers were moving to
become either more Reserved, or being hit by the recession and dropping into Reality
 Many believed the worse was over and there was less uncertainty over redundancy, but
this did not mean they felt secure
 Consequently there was more consumer optimism and less uncertainty experienced at
this time
 Consumers pointed to ‘green shoots of recovery’, such as world stock markets improving
and the G20 meeting
 Recessionary gloom had been replaced by swine flu fears
 Consumers were becoming tired of considering the recession; its impact was felt to be
one of creating pessimism and a puritanical lifestyle approach
 Many consumers were impatient with this and wanted to return to consumeristic
optimism
 Blame was directed at bankers, but also at the Government in terms of its handling of
the situation
 However consumers were tired of Brown and banker bashing and wanted closure on this
to enable them to move on
 It would appear that consumers are becoming impatient with the recession but reluctant
to embrace their old consumerist attitudes and behaviour


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 had experience of experimenting with different regimes and behavioural
patterns
 Some had changed shopping behaviour and consumeristic attitude
 Experience has prompted a short term challenge; now more conscious of value:
• Need to justify purchases to self and others
 Marketeers need to help this process, providing a product purchase rationale
 Need to replace a unique selling proposition (USP) with a purchase prompt and justifier
 Consumers are becoming bored with the pessimism of the recession:
• Sense of ‘economic ennui’


PRINCIPAL LESSONS (Cont’d)

 Evident desire to move on but need a catalyst to provoke and prove change
 Distractions are seized upon to displace the prominence and threat of recessionary
gloom:
• Swine flu
 The economic up turn will begin when consumer confidence begins to return

Green shoots of recovery are about consumers spending, not bankers lending


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 April 09

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