credit crunch april 09

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: [email protected]

May 2009

CREDIT CRUNCH:

WHERE YOUR CONSUMERS ARE AT TODAY

PHASE 4 [FULL REPORT]E X P R E S S I O N SB R A N D P L A N N I N G

mailto:[email protected]

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 - 2

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

Expressions Planning Credit Crunch - 5Prominence

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Recreational

Reserved

Retrenchers

Not overly concerned about serious economic issuesRecognise situation as an opportunity to review

& reduce household expenditureElements of regaining control of expenses

Participation is about cutting back:- not cutting out

Perceive household as vulnerable to unemploymentNeed to be proactive, manage their household expenses

Matter of prioritising expenditureCutting back & out without being too puritanical

Experiencing economic difficulties; adjusting & adaptingDesperate 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

Driven by a need to conform to situationConscious that conspicuous consumption is

not socially or politically correctSelectively join in but will also exploit opportunitiesRelatively confident they will not be impacted on

Reality

DYNAMICS: POLARISING RECESSION


Recreational

Reserved

Retrenchers

Reality

RealityReality

Recreational

Reserved

Retrenchers

Evidence the recession is polarising

Retrenchers now (April) feeling less insecure

They feel the worst has happened

Period of uncertainty now over:- experienced redundancy

- threat now abated

Consequently this segment is contracting

Either into Reserved or Reality

Two prominent recessionary attitudes:

- relatively confident- reality of recessionReality

RECESSIONARY CONSUMER TYPOLOGIES: SUMMARY


Recreational SummaryNeed to conformSelectively join in

Exploit opportunitiesRelatively confident

Reality SummaryExperiencing economic

difficultiesDesperate measures

Progressive cut out policyLearning to adjust

Retrenchers SummaryVulnerable to unemployment

Need to be proactivePrioritising expenditure

Cutting out & back

Reserved SummaryNot overly concerned

Opportunity to review & reduce expenditure

Regaining control Cutting back, not cutting out

RECREATIONAL MINDSET


Context

Crisis

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…” 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…”

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 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…”

RECREATIONAL MINDSET (Cont’d)


Considerations

Brands

Feel an opportunity to review household expenditure More about exploiting offers than consolidating:

- minimizing expenditure & getting greater value:

“…Sky are doing some good offers…” 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 Recession more about being seduced to remain loyal to

existing suppliers:- exploiting an opportunity

RECREATIONAL MINDSET (Cont’d)


Summary

Confident, to an extent complacent

Perceive situation as an opportunity to exploit

Voyeuristic and vulture mentality

Not prepared to compromise on lifestyle

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


Context

Younger couples, some professionals (teachers, librarian, IT workers)

Feel relatively secure in job; unemployment not an issue Focus is on maintaining lifestyle by efficient finances Concern is about the future and future planning

Crisis

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:

“…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)


Considerations

Brands

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 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…”

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 € 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

RESERVED MINDSET (Cont’d)


Summary

Feeling of being prepared

Gaining control of expenditure

Prioritising values

Refreshing attitude to extravagant consumerism

Adopting more family and free entertainment

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


Context

Crisis

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 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…”

Concerned about unemployment Experience of friends, family and colleagues who have been

made redundant Work in sectors vulnerable to downturn (building related,

catering, manufacturing, etc) Anxiety about surviving through meeting essential commitments

RETRENCHERS MINDSET (Cont’d)


Considerations

Brands

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:

“…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

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)- 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

RETRENCHERS MINDSET (Cont’d)


Summary

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

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


Context

One or both partners made redundant or hours shortened Immediately impacting on household finances and emotions Take desperate and immediate expenditure decisions:

- driven by necessity Pride prevents consideration of outside financial planning and help Reluctance to talk to mortgage provider or landlord

Crisis

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…” 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)


Considerations

Brands

Radical change of life Minimising expenditure and impact on family:

“…you know there are plenty of us out there and there will be plenty 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…” 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)


Summary

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

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


Recreational

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

out, etc)

Non Euro destinations attractive (Turkey)

How already begun to make plans

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 attract customers

Disappointment that holiday companies are not discounting more; exploit situation to their advantage

Spending in preparedness of holiday (clothes, equipment, etc)

HOLIDAYS AND LEISURE (Cont’d)


Retrenchers

Family holiday a low concern

Element of concern about kids missing out

Compensate by involvement with clubs (scouts & youth) & holiday clubs

Summer plans involve staying with family & friends or cheap alternatives

Family days out including picnics to be self sufficient

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 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



Gyms

Beginning of year saw gym membership under review by Retrenchers, Reserved & Reality categories

Retrenchers & Reserved more confident over economic outlook 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



Holidays: exploitation

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

not as badly impacted on:

“…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: viability

Holidays were evident sign of greater optimism & less insecurity At the beginning of the year Retrenchers were not considering a holiday,

now open to offers 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


Recreational

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

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…”

Magazine purchasing not impacted on by recessionBuying from a small portfolio of preferred titles

Purchase tends to be routine as part of weekly shoppingConsequently buying from supermarket rather than

newsagentTend to buy on impulse, being attracted to cover & content

“…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

MAGAZINES (Cont’d)


Retrenchers

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

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…”

Cut back on magazine buying at the beginning of the yearStill 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 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



Escapism

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’

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



Magazine redundancy

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 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…”



Practicalities

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 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



Gardening

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 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


Recreational

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 shopsAppreciate new season’s clothes

Prompted to shop for new outfits for events & holidaysWant value for money; more likely to interrogate quality of

offeringsGrocery 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

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)


Retrenchers

Some still avoiding unnecessary shopping; others justifying clothes shopping due to seasonal change

Shopping excursions more controlled than previouslyMore likely to shop to a prescribed budget & less tempted to exceed this

Exercising tighter financial constraintPrepared to experiment with new shops for clothes & food

Previous grocery experimentation has now become an established routineAdopted 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 purposefulClothes 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 costsTendency 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)


Centres & Malls

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 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)


Shopping: supermarkets

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)

These additional supermarkets were used selectively with footfall either 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)


Shopping: internet

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

Husbands were particularly enthusiastic about online shopping:- 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

Banks and bankers

America & George W Bush

UK & Gordon Brown

Empire building entities


Inherent greed of banksShort term profit at whatever cost

Individuals driven by the incentives of banking bonus

OPEC& energy

companies

Lack of regulation & control of banking marketExploitation of naïve market & investors:

- Bernard MadoffBush’s support for oil industry

Courting & lack of control of financial marketUK economy dependent on service & financeBrown’s denial of the boom & bust economic

cycle & lack of preparation

Specifically oil related companiesInability to regulate demand & supply &

consequently:- control retail price of energy

Exploitation of developing economies; Brazil, Russia, India & China (BRIC)

Moving production & HQs from UK to source & benefit from cheap production & tax opportunities

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:- banking paralysis, risk aversion or greed

Perceived as nationalisation of high street financesSavings & mortgages now state dependent

International, some foreign owned, monolithic businesses looking for hand outs

Retrenchment of foreign companies perceived as exploiting 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

Recently confirmed by record profits for Shell & BPCall for windfall tax on energy companies displaced by

complexity of the economic situation

Banks & bankers

Energy companies

BANK AID: TOP DOWN ECONOMICS


Government intervention focussed on:

“…helping the perpetrators…”

“…rewarding the guilty…”

Undermines consumers’ faith in credible solutions

Compounding this mistrust is ineffectiveness of 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

Shoring-up the System

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

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

Belief consumers being excluded from economic considerations – fundamental flaw:

“…we are the economy…”

“…they shouldn’t have given billions to the banks but thousands to each family…that’s the way to start the

recovery…”

credit crunch april 09

Economy & Finance

credit crunch context

economic future consumers

economic support consumers

year long review expressions

recent economic difficulties

consumers confident

concerned need

imminent threat opportunity