deloitte consumer tracker q2 2020 · 2020-07-25 · the deloitte consumer tracker q2 2020 –...

A tentative recovery aheadThe Deloitte Consumer TrackerQ2 2020

The Deloitte Consumer Tracker Q2 2020

ContentsQ2 2020 at a glance 03

Consumer confidence 04Deloitte consumer confidence index 05Individual measures of consumer confidence 06Consumer confidence about their levels of debt 07Consumer confidence about their levels of household disposable income 08Consumer confidence about their children’s education and welfare 09Consumer confidence about job security 10Consumer confidence about job opportunities 11Consumer confidence about their general health and wellbeing 12

The wider economy 13Inflation has more than halved since the start of the pandemic in the UK 14Government support limits impact of pandemic on unemployment 15Consumer credit registers record decline 16Savings ratio at highest in four years 17

Consumer spending 18Consumer spending in the last three months – essential vs discretionary spending 19Consumer spending in the last three months by category 20Inflationary pressures could have also been at play in some categories 21

Retail 22Retail sales (excl. fuel SA) 23Online sales 24Grocery shopping by channel 25Purchases of product and service categories by channel 26

Consumer Products 27Mixed sector performance during lockdown 28Major shift in channel mix 29Ongoing subscription delivery services (1/2) 30Ongoing subscription delivery services (2/2) 31

Leisure 32UK consumer leisure spending in the last three months 33Leisure spending in the last three months by category 34UK consumer leisure spending in the next three months 35Leisure spending in the next three months by category 36Leisure activities likely to be resumed as restrictions ease 37

Automotive 38UK car registrations (1/3) 39UK car registrations (2/3) 40UK car registrations (3/3) 41Planned car purchases 42Affordability of car repayments 43

Outlook 44Outlook for consumer spending 45Consumer spending in the next three months 46The last word 47The Chief Economist’s view 48Contacts 50

02


Q2 2020 at a glance

*Net balances

Previous

Latest

-18.3%-17.4%

Overall consumer confidence (q/q)*

Previous

Latest

-26.9%-16.2%

Confidence inlevels of disposable income (q/q)*

Previous

Latest

-6.2%-0.7%

Confidence in levels of debt (q/q)*

Previous

Latest

-20.1%-19.8%

Confidence in job security (q/q)*

Previous

Latest

-15.5%-22.5%

Confidence in job opportunities (q/q)*

03

Consumer confidence

04

The Deloitte Consumer Tracker Q2 2020 – Consumer confidence

Net % of consumers who said their level of confidence has improved in the past three months

Deloitte consumer confidence index *

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020

Source: The Deloitte Consumer Tracker

Annual moving average

Weak signs of rebound in consumer confidenceThe Deloitte consumer confidence index* remained at a record low in the second quarter of 2020, though it showed weak signs of a rebound as the lockdown started to ease. The index recovered one percentage point from its historic low last quarter, but consumers remained very pessimistic.

Outside of the six measures included in the index, sentiment around the state of the economy reached a new record low at -88%, down a further 17 percentage points since Q1 2020 and a steep 60 percentage point decline from the Q4 2019 score, which reflected some optimism following the December general election.

*�The�Deloitte�consumer�confidence�index�is�an�average�of�the�net�%�of�consumers�who�said�their�level�of�confidence�improved�in�the�past�three�months�for�six�individual�measures�of�confidence�(see�next�slide).

+1pp q/qto -17%

05


Individual measures of consumer confidence

-1%

-26%

-16%

-20%

-22%

-19%

+4

-10

0

-13

-21

-17

N/A-88%

+5

+2

+11

0

-7

-6

-17

% point change year on year

Household disposable income

Levels of debt

Job security

Job opportunities/career progression

General health and wellbeing

Children’s education and welfare

Source: The Deloitte Consumer Tracker*Please note this measure is not included in the overall index

NEW MEASUREThe state of the UK economy*

Current Q2 2020net balances

Our overall confidence index is based on six individual measures of confidence

% point change quarter on quarter

06


Consumer confidence about their levels of debt

Net % of consumers who said that their confidence in their levels of debt has improved in the past three months

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



Household deleveraging and government support drive confidence in personal financesIn Q2 sentiment around personal finances improved compared to last quarter, likely due to a combination of government-backed financial support, record low interest rates and a boost in savings during lockdown. Over 1.8 million mortgage payment holidays have been taken up since March, and the initial three‑month term was extended by another three months, with applications open until October.

Sentiment around levels of debt improved by five percentage points in Q2 to -1%, which is one of the highest levels in Tracker history.

+5pp q/qto -1%

07


Consumer confidence about their levels of household disposable income

Consumers remain cautiousThe government estimates that its interventions between March and May have been worth around a fifth of working households’ income on average, reducing the scale of their losses by up to two-thirds.

In Q2, confidence in levels of household disposable income bounced back to pre-pandemic levels with a quarterly improvement of 11 percentage points to -16%. While this is a positive sign, consumers remain cautious, as 20% are concerned about not being able to make upcoming payments, and another 36% are delaying large purchases, according to the Deloitte Global State of the Consumer Tracker.

Net % of consumers who said that their confidence in their levels of household disposable income has improved in the past three months

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



+11pp q/qto -16%

08

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/898420/Impact_of_COVID-19_on_working_household_incomes.pdf

https://www2.deloitte.com/uk/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker.html

https://www2.deloitte.com/uk/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker.html


Consumer confidence about their children’s education and welfareNet % of consumers who said that their confidence in their children s education and welfare has improved in the past three months

-25%

-20%

-15%

-10%

-5%

0%

5%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



Growing concerns about the delay in the reopening of schoolsThe announcement that schools would not reopen fully until September left many parents concerned about their children’s education, while others worried about the safety of pupils being allowed back to school.

Confidence levels in children’s education and welfare fell by six percentage points in Q2 2020 to -19%. This marks a new all-time low, and it declines further to -49% among those with children in the household.

-6pp q/qto -19%

09


-22%

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



Consumer confidence about job security

Net % of consumers who said that their confidence in their job security has improved in the past three months

Consumers worry about the job marketThe Job Retention scheme and other forms of government support have helped to prevent sharp increases in unemployment during the lockdown.

However, there is still uncertainty about the future of many jobs as the furlough scheme comes to an end and is replaced by the Jobs Retention Bonus, a new policy that incentivises employers to bring furloughed staff back. As such, consumer sentiment around job security remained at a historic low of -20% in Q2 2020.

Stable q/q at ‑20%

10


Consumer confidence about job opportunities

Net % of consumers who said that their confidence in their job opportunities and their career progression has improved in the past three months

-25%

-20%

-15%

-10%

-5%

0%

5%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



Sentiment about career progression deteriorates furtherConfidence in career opportunities and progression deteriorated further in Q2 to a new record low of -22%, down seven percentage points from Q1.

-7pp q/qto ‑22%

11


Consumer confidence about their general health and wellbeing

Consumers remain most pessimistic about their health and wellbeingIn the second quarter of 2020 UK consumers continued to feel most pessimistic about their health and wellbeing.

Though sentiment around this measure improved by two percentage points quarter on quarter to -26%, it remained at historic lows as around 1,000 new COVID-19 cases were still reported daily in the UK during the time of our survey.

Net % of consumers who said that their confidence in their general health and wellbeing has improved in the past three months

-30%

-25%

-20%

-15%

-10%

-5%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020



+2pp q/qto -26%

12

The wider economy13

The Deloitte Consumer Tracker Q2 2020 – The wider economy

-1

0

1

2

3

4

5

6

Jun

2010

Oct

201

0Fe

b 20

11Ju

n 20

11O

ct 2

011

Feb

2012

Jun

2012

Oct

201

2Fe

b 20

13Ju

n 20

13O

ct 2

013

Feb

2014

Jun

2014

Oct

201

4Fe

b 20

15Ju

n 20

15O

ct 2

015

Feb

2016

Jun

2016

Oct

201

6Fe

b 20

17Ju

n 20

17O

ct 2

017

Feb

2018

Jun

2018

Oct

201

8Fe

b 20

19Ju

n 20

19O

ct 2

019

Feb

2020

Jun

2020

Source: Refinitiv Datastream

CPI inflation Average earnings including bonuses

Inflation has more than halved since the start of the pandemic in the UK

Wage growth slowed faster than inflation in Q2The global pandemic has caused a big deflationary shock to the UK economy – inflation more than halved since February 2020, dropping to 0.6% in June.

However, this has not translated into stronger purchasing power for consumers, as wage growth slowed faster than inflation over the second quarter, and fell into negative territory at -0.3% in May 2020.

CPI inflation vs average earnings (inc. bonuses) (year-on-year % growth)

14


Government support limits impact of pandemic on unemployment

A total of 9.3 million jobs were furloughed under the Job Retention schemeThis scheme and other forms of government support have helped to prevent sharp increases in unemployment, which stood at 3.9% in May 2020, unchanged since the beginning of the year.

However, other data from the Office for National Statistics (ONS) shows a 16.7% year-on-year reduction in hours worked in March to May 2020, and vacancies falling to an all-time low in June.

There is still uncertainty about the future of many jobs as the furlough scheme comes to an end and is replaced by the Jobs Retention Bonus.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

May

201

0Se

p 20

10Ja

n 20

11M

ay 2

011

Sep

2011

Jan

2012

May

201

2Se

p 20

12Ja

n 20

13M

ay 2

013

Sep

2013

Jan

2014

May

201

4Se

p 20

14Ja

n 20

15M

ay 2

015

Sep

2015

Jan

2016

May

201

6Se

p 20

16Ja

n 20

17M

ay 2

017

Sep

2017

Jan

2018

May

201

8Se

p 20

18Ja

n 20

19M

ay 2

019

Sep

2019

Jan

2020

May

202

0


UK unemployment rate (all aged 16 and over)

15

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest


Consumer credit registers record decline

UK households reduce debt levels during the lockdownUnsecured lending declined by a record -3% in May as consumers paid back their credit cards.

Meanwhile, two emergency cuts in interest rates by the Bank of England brought interest rates down to 0.1%, the lowest ever in the Bank’s 325-year history.

-4

-2

0

2

4

6

8

10

12

May

201

0Se

p 20

10Ja

n 20

11M

ay 2

011

Sep

2011

Jan

2012

May

201

2Se

p 20

12Ja

n 20

13M

ay 2

013

Sep

2013

Jan

2014

May

201

4Se

p 20

14Ja

n 20

15M

ay 2

015

Sep

2015

Jan

2016

May

201

6Se

p 20

16Ja

n 20

17M

ay 2

017

Sep

2017

Jan

2018

May

201

8Se

p 20

18Ja

n 20

19M

ay 2

019

Sep

2019

Jan

2020

May

202

0


Unsecured lending to individuals (year-on-year % growth)

16


Savings ratio at highest in four years

The lockdown drives surge in savingsIn Q1 2020 UK households’ savings ratio hit its highest level since 2016 at 8.4%, while the Centre for Economics and Business Research estimates excess household savings of around £23 billion in the second quarter.

3

6

9

12

15

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020


UK households’ savings ratio

17

Consumer spending18

The Deloitte Consumer Tracker Q2 2020 – Consumer spending

Consumer spending in the last three months – essential vs discretionary spending

Consumption freezes during lockdownIn Q2 2020, net consumer spending shrank by 15 percentage points quarter on quarter. Discretionary spending collapsed by 23 percentage points to a new record low, while essential spending fell by 11 percentage points into negative net spending for the first time in Tracker history.

With consumers forced to stay at home, net spending on grocery surged by 15 percentage points to 40%, the Tracker’s highest ever. However, increased net spending for grocery and alcohol and tobacco was not sufficient to offset drops in net spending across most other essential and discretionary categories.

Net % of UK consumers spending more by category over the last three months

-40%

-30%

-20%

-10%

0%

10%

20%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020


Essential Discretionary

Note: New categories were added to Essential spending in Q2 2020

19


Consumer spending in the last three months by category




-3% -10 -9Health

+6%Everyday household items N/A N/A





-57% -44Holidays & Hotels -61

+2% +10 +10Alcoholic beverages and tobacco

-20% -10 -13Furniture and homeware

-48% -31 -44Clothing and footwear

-71% -51 -68Restaurants

-74% -51 -65Going out

-7% 0 0Electrical equipment

-10% -7Major household appliances -5

-11 -14Essential -4%

+40% +22Grocery +15

+22% +1 +3Utility bills

-1% -6 -9Housing

+4% 0 -3Phone, Internet and cable/TV subscriptions

-3% -5 -10Pensions and insurance

-5% -4 -5Education

-72% -67 -84Transport

-23 -31Discretionary -36%

-30%Beauty and personalcare products N/A N/A

20


Inflationary pressures could have also been at play in some categories

Increased net spending in some categories blamed on price increasesAccording to our survey, half of consumers say they have spent more in the second quarter compared to Q1 2020 due to price increases, suggesting that inflationary pressures could have also been at play.

While the rate of inflation in the UK is falling rapidly, inflation for the food and alcohol and tobacco categories peaked in May 2020 at 1.8% and 2.6% respectively, and remained above pre-lockdown levels in June, despite a decrease month on month.

0.6

3.9

2.7

2.6

2.1

1.8

1.3

1.1

-0.5

-1.1

-2.2

0.5

4

2.7

2

2.6

0.7

2

1.1

1.8

-0.7

-1.2

-1.7

-3.1

1.7

4.5

2.7

1.4

0.7

3

2.5

2.4

1.2

0.1

1.8

1.8

0.2

Total inflation

Communication

Education

Recreation & Culture

Alcoholic beverages, Tobacco & Narcotics

Health

Hotels, Cafes & Restaurants

Miscellaneous goods & Services

Food & Non-alcoholic beverages

Furniture, HH equipment & Repair

Housing, Water & Fuels

Transport

Clothing & Footwear


Jun 2020 May 2020 Feb 2020

CPI inflation by category (year-on-year % change)

21

Retail

22

The Deloitte Consumer Tracker Q2 2020 – Retail

Retail sales (excl. fuel SA)

Retail sales register steepest yearly declines on recordAfter registering double digit year‑on‑year declines in April, June retail sales showed double digit monthly growth, marking a return to pre-lockdown volumes.

During the lockdown, food stores saw value sales increase by 6.8% over the second quarter. Meanwhile, non-food sales registered a sharp year-on-year decline of -36.2% in Q2.

All in all, the retail sector showed signs of rebounding at the end of Q2, and will likely continue on an upward trajectory into Q3. However, pent-up in-store demand immediately after the reopening is unlikely to translate into a quick recovery for the retail sector.

-20

-15

-10

-5

0

5

10

Jun

2015

Sep

2015

Dec

201

5

Mar

201

6

Jun

2016

Sep

2016

Dec

201

6

Mar

201

7

Jun

2017

Sep

2017

Dec

201

7

Mar

201

8

Jun

2018

Sep

2018

Dec

201

8

Mar

201

9

Jun

2019

Sep

2019

Dec

201

9

Mar

202

0

Jun

2020


Annual moving average (Volume) Annual moving average (Value)Volume Value

% change in volume and value year on year

23


Online sales

0

5

10

15

20

25

30

35

Jun

2007

Dec

200

7Ju

n 20

08D

ec 2

008

Jun

2009

Dec

200

9Ju

n 20

10D

ec 2

010

Jun

2011

Dec

201

1Ju

n 20

12D

ec 2

012

Jun

2013

Dec

201

3Ju

n 20

14D

ec 2

014

Jun

2015

Dec

201

5Ju

n 20

16D

ec 2

016

Jun

2017

Dec

201

7Ju

n 20

18D

ec 2

018

Jun

2019

Dec

201

9Ju

n 20

20


UK Internet sales as a % of total retail sales Fastest shift to online ever registeredWith most non‑essential stores closed, the shift to online shopping accelerated exponentially in Q2 2020. Online sales accounted for 33.4% of all retail spending in May, beating April’s record increase and up 13 percentage points from February 2020, before the COVID-19 outbreak.

Though non-essential stores gradually reopened, online sales increased 8.2% month on month in June to account for 31.8% of sales.

While footfall slowly resumes, some of the new shopping behaviours consumers developed during lockdown might continue past the end of the COVID-19 outbreak.

24


Grocery shopping by channel

5%

5%

19%

19%

29%

58%

5%

6%

19%

19%

29%

60%

5%

5%

15%

25%

29%

57%

0% 20% 40% 60% 80%

Convenience store

Specialist food/ drink store

High street or town centre supermarket

Online websites

Discount supermarket

Large supermarkets


Q2 2020 Q1 2020 Q2 2019

Channel usage for main grocery shop Online grocery booms during lockdownConsumers’ grocery channel preferences were changed substantially during lockdown, with a shift to fewer but bigger shops, and the unprecedented growth of online.

Our research shows that a quarter of UK consumers did their main weekly/monthly grocery shop online in Q2 2020, up six percentage points from the previous quarter. However, physical store preferences remained largely unchanged year on year, with the exception of high street and town centre supermarkets, which have seen a drop in footfall as consumers shopped more locally.

25


Purchases of product and service categories by channel

Consumers turn to online for lockdown essentialsIn Q2 2020 online sales across categories increased by 11 percentage points compared to Q4 2019, with 65% of respondents saying that their last purchase was made online.

The increase in online sales was fuelled by the clothing and footwear, and beauty and personal care categories. Both registered online sales growth of around 20 percentage points since Q4 2019. Throughout Q2 consumers also turned to online to shop for lockdown essentials including children and baby products, toys and arts and crafts, and sports and fitness equipment.

26%

24%

37%

37%

39%

49%

54%

58%

57%

69%

74%

89%

93%

54%

25%

42%

46%

55%

60%

61%

61%

68%

74%

79%

81%

91%

95%

65%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Car, motorcycle and bicycle

Beauty and personal care

Furniture and homeware

Children & baby products, excluding clothes

Clothing and footwear

Sports, fitness and outdoors equipment

Major household appliances

Electrical equipment

Toys, hobbies, collectibles and art

Entertainment excluding digital services

Events

Holiday & travel

Digital services

Net online


Q2 2020 Q4 2019

Channel usage for last purchase in each category

26

Consumer Products 27

The Deloitte Consumer Tracker Q2 2020 – Consumer Products

Mixed sector performance during lockdown

Boost in grocery spend unlikely to have offset on‑trade lossesNet spending on grocery was at an all-time high in Q2 as stockpiling drove a short-term boost in sales, though demand surged in particular for lower-margin staple products. In addition, sales would have benefitted from fewer promotions and discounts, with reduced price elasticity of consumer demand due to supply shortages.

However, this boost in sales is unlikely to have offset losses in the on-trade segment, which boasts higher profit margins. Net consumer spending in the going out and restaurant categories registered quarterly declines of over 50 percentage points in Q2.

SHOP

Net consumer spending on restaurants in the last three months

Q2 2020(net balance)

I’m planning to keep my home stocked with more than I immediately need

42% 23-27 June(all agree)

Net consumer spending on going

out in in the last three months

-74% Q2 2020(net balance)

Net consumer spending on grocery in

the last three months

40%Q2 2020(net balance)

-71%

28


Major shift in channel mix

Surge of online shoppingPersonal care and beauty also saw negative net spending in Q2 as a short-term surge in sales of sanitising products is unlikely to have counterbalanced lower sales of hygiene and beauty products.

The channel mix would have also seen a major shift, as consumers turned to shopping online and Consumer Products companies increased their Direct‑to‑Consumer (D2C) offering.

Looking ahead, consumers expect to spend less on grocery and focus more on going out and restaurants as restrictions continue to be lifted. As such, there are also some signs of recovery for the beauty and personal care category as grooming routines resume in full.

SHOP

BEAUTY CARE

Net spending intentions on beauty and personal care in the next three months

Q2 2020(net balance)

Net spending intentions on

restaurants in the next three months

6% Q2 2020(net balance)

Last bought a beauty and personal care

product online

42%Q2 2020(net online)

-1%

Net spending intentions on grocery in the next three months

4% Q2 2020(net balance)

29


Ongoing subscription delivery services (1/2)

Subscription delivery services cater to many consumersAs of Q2 2020, our research found that close to half of UK consumers had at least one subscription delivery service in place. Delivery passes such as Amazon Prime or supermarket passes proved more than twice as popular as subscription boxes, with 39% paying for delivery passes and 17% for subscription boxes.

The delivery pass market is largely dominated by Amazon Prime. Meanwhile, the subscription boxes market is much more fragmented. Alcoholic beverages such as wine and beer are the most common product that consumers receive through a subscription box.

39%

17%

53%

0% 10% 20% 30% 40% 50% 60%

Any delivery pass

Any subscription box

I/ my household do not currently subscribe toany online delivery subscription services


Q2 2020

% of UK consumers subscribing to ongoing subscription delivery services

30


Ongoing subscription delivery services (2/2)

Seven in ten consumers currently subscribe to only one serviceWhile overall uptake of subscription delivery services is widespread, this is largely driven by Amazon Prime. Our research shows that seven in ten consumers currently subscribe to only one service.

Delivery passes are more likely to be consumers’ first venture into the subscription market: among those who only have one subscription 82% have a delivery pass, while 60% of those signed up to a delivery box also subscribe to one or more delivery passes.

Number of ongoing subscription delivery services consumers have in place

69%

22%

9%


1 subscription 2 subscriptions 3+ subscriptions

31

Leisure32

The Deloitte Consumer Tracker Q2 2020 – Leisure

UK consumer leisure spending in the last three months

-8%

-12%

-29%

-32%

-45%

-54%

-56%

-68%

-68%

-8%

-8%

-11% -7

%

-13%

-15%

-16%

-20%

-21%

-8% -7% -6% -4%

-8%

-1%

-1%

-10%

-11%

In-h

ome

leis

ure

activ

ity

Bett

ing

and

gam

ing

Atte

ndin

g liv

e sp

orts

eve

nts

Gym

/ pl

ayin

g sp

ort

Oth

er le

isur

e ac

tiviti

es

Long

hol

iday

s

Shor

t hol

iday

s

Cultu

re a

nd e

nter

tain

men

t

Eatin

g an

d dr

inki

ng o

ut


Q2 2020 Q1 2020 Q2 2019

Net % of UK consumers spending more by category over the last three months

Substantial slump in leisure spending patternsThe lockdown left consumers with little choice but to continue home based activities, which saw no change in consumption. However, the restrictions resulted in a considerable slump in leisure spending patterns, particularly on dining and drinking out, holidays and entertainment.

Business continuity and survival remained the key focus for most leisure and hospitality businesses.

With the lifting of the lockdown, latent consumer demand combined with government support offers a glimmer of hope for a leisure sector recovery.

33


Leisure spending in the last three months by category





Going to the gym or playing sport -32% -25 -28

Eating out -76% -53 -66

Drinking in pubs and bars -63% -41 -51

Drinking in coffee houses and sandwich shops -66% -47 -54

Culture and entertainment -68% -48 -58

Short holidays -56% -40 -55

Long holidays -54% -39 -53

Other leisure activities -45% -32 -37

Attending live sports events -29% -18 -23

Betting and gaming -12% -4 -5

In-home leisure activity -8% 0 0

34


UK consumer leisure spending in the next three months

8%

3% 2% 1%

-1%

-3%

-8%

-9%

-12%

-53% -52%

-41% -39%

-27%

-35%

-26%

-17%

-8%

-12% -8

% -1%

0%

-2%

-7% -4

%

-9%

-12%

Eatin

g an

d dr

inki

ng o

ut

Cultu

re a

nd e

nter

tain

men

t

Shor

t hol

iday

s

Long

hol

iday

s

Goi

ng to

the

gym

or

play

ing

spor

t

Oth

er le

isur

e ac

tiviti

es

Atte

ndin

g liv

e sp

orts

eve

nts

Bett

ing

and

gam

ing

In h

ome

leis

ure

activ

ity


Q2 2020 Q1 2020 Q2 2019

Net % of UK consumers spending more by category over thenext three months

Consumers remain cautious but slightly more optimisticIn the coming months, consumers intend to spend more on leisure activities than they did in the previous quarter, though the overall spending intention remains subdued.

With the easing of the lockdown, drinking and eating out saw the highest uptick in terms of net spending intentions, however, this may be an initial surge driven by latent demand. Recent initiatives launched by the government regarding VAT cuts, employment schemes and subsidies could trigger a quicker recovery.

35


Leisure spending in the next three months by category





In-home leisure activity -12% -4 0

Eating out +12% +71 +23

Drinking in coffee houses and sandwich shops +5% +58 +19

Drinking in pubs and bars +7% +56 +17

Culture and entertainment +3% +55 +11

Short holidays +2% +43 +3

Long holidays +1% +40 +1

Other leisure activities -3% +32 +4

Going to the gym or playing sport -1% +26 +1

Attending live sports events -8% +18 -4

Betting and gaming -9% +8 0

36


Leisure activities likely to be resumed as restrictions ease

6

7

9

9

9

10

13

22

24

27

28

31

52

64

6

13

15

11

6

7

16

25

15

19

19

26

14

22

20

28

27

19

22

22

28

28

25

28

25

23

22

10

34

34

32

24

41

39

31

20

22

16

19

16

9

4

34

18

18

38

23

21

12

5

14

9

9

4

3

1

Take a flight

Stay in a hotel

Stay in a vacation rental

Hire a car

Go to a live event

Go to a business event

Go to the cinema/ theatre

Go to a restaurant

Take a taxi

Go to the gym / playing sports

Use public transport

Go to a pub / bar / coffee shop

Return to the workplace / office

Go to a shop


Within a month In 1 to 2 months In 3 months to 6 months

In 6 months to 12 months In more than a year's time

2021

2020

% of UK consumers likely to resume the following activities as restrictions ease

Some leisure sectors could recover faster than othersShopping and drinking out are the first leisure activities consumers plan to do. However, fewer consumers intend to dine out at a restaurant within a month.

Driven by domestic demand, hotels in the UK may see an uptick sooner than air travel, where spending is not expected to pick up for six months.

The partial lifting of both travel bans to key countries and the quarantine in the UK, may improve the likelihood of consumers booking their summer break.

37

Automotive38

The Deloitte Consumer Tracker Q2 2020 – Automotive

UK car registrations (1/3)

New car sales fell 70.1% in Q2 compared to the same period last year, but there are signs of green shoots of recovery as we enter Q3At the height of lockdown, car showrooms were closed to the public and factories were temporarily shut down for public health reasons. As a result, car sales fell by as much as 97.3% in a single month, with only 4,321 new cars registered in April. The “wipe-out” continued in May with sales down by 89.0%.

-115

-95

-75

-55

-35

-15

5

25

Jun

2012

Oct

201

2Fe

b 20

13Ju

n 20

13O

ct 2

013

Feb

2014

Jun

2014

Oct

201

4Fe

b 20

15Ju

n 20

15O

ct 2

015

Feb

2016

Jun

2016

Oct

201

6Fe

b 20

17Ju

n 20

17O

ct 2

017

Feb

2018

Jun

2018

Oct

201

8Fe

b 20

19Ju

n 20

19O

ct 2

019

Feb

2020

Jun

2020

Source: The Society of Motor Manufacturers and Traders (SMMT)


UK car registrations % change year on year

39



COVID‑19 cuts year to date sales in half and forces the sector to innovateA fallow Q2 for the sector means that year to date sales are at their lowest levels in 50 years with just 653,502 new cars on the road in the first six months of the year, a decline of 48.5% compared to the same period last year.

With public health an ongoing concern, some manufacturers and dealerships are revisiting their digital and direct-to-consumer offerings.

YTD 2020 YTD 2019 % change

Market share

YTD 2020

Market share

YTD 2019

Diesel 118,957 339,330 -64.9% 18.2% 26.7%

Petrol 392,608 822,521 -52.3% 60.1% 64.8%

BEV 30,957 11,975 158.6% 4.7% 0.9%

PHEV 19,508 15,136 28.9% 3.0% 1.2%

HEV 39,328 49,004 -19.7% 6.0% 3.9%

MHEV diesel 21,884 9,840 122.4% 3.3% 0.8%

MHEV petrol 30,260 21,439 41.1% 4.6% 1.7%

Total 653,502 1,269,245 ‑48.5%

BEV – Battery Electric Vehicle; PHEV – Plug-in Hybrid Electric Vehicle; HEV – Hybrid Electric Vehicle; MHEV – Mild Hybrid Electric Vehicle

Source:�The Society�of�Motor�Manufacturers�and�Traders�(SMMT)

UK car registrations – YTD 2020

40



The dramatic decline in sales during the lockdown has accelerated a reshaping of the market, with EVs the main beneficiaryEVs fared better than the rest of the sector during lockdown as some major EV manufacturers were able to satisfy online orders. Even after showrooms reopened in England, the EV market continued to outpace the overall market with BEVs and PHEVs both delivering triple-digit growth. As a result, BEVs and PHEVs held a combined 9.5% share of the market in June, up from 2.1% last year.

June 2020 June 2019 % change

Market share

March 2020

Market share

March 2019

Diesel 23,011 57,271 -59.8% 15.8% 25.6%

Petrol 87,896 146,308 -39.9% 60.5% 65.6%

BEV 8,903 2,461 261.8% 6.1% 1.1%

PHEV 4,926 2,270 117.0% 3.4% 1.0%

HEV 10,239 8,583 19.3% 7.0% 3.8%

MHEV diesel 3,893 2,539 53.3% 2.7% 1.1%

MHEV petrol 6,509 3,989 63.2% 4.5% 1.8%

Total 145,377 223,421 ‑34.9%

BEV – Battery Electric Vehicle; PHEV – Plug-in Hybrid Electric Vehicle; HEV – Hybrid Electric Vehicle; MHEV – Mild Hybrid Electric Vehicle

Source:�The Society�of�Motor�Manufacturers�and�Traders�(SMMT)

UK car registrations – June 2020

41


Planned car purchases

Planned car purchases pick up due to a combination of latent demand and consumers looking for an alternative to public transport6.8% of consumers plan to buy a car in the next three months up from a low of 2.5% in Q1. Much of the demand is likely driven by public health concerns and therefore focused on cheap new and used cars that offer an alternative to public transport.

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020


Annual moving averageNote: This question was changed in Q2 2020

% of UK consumers planning to purchase a car in the next three months

42


Affordability of car repayments

Consumers remain comfortable with the affordability of their car paymentsAfter housing, car repayments are often the single biggest monthly expenditure for a consumer. As a result, lenders have worked hard throughout the pandemic to prioritise and support consumers in financial difficulty.

However, almost two thirds of consumers are happy with the affordability of their repayments, supported by an uptick in consumer confidence around levels of debt and disposable income.

57.4%

4.1%

4.1%

8.8%

56.6%

3.5%

3.8%

11.9%

54.8%

6.1%

4.7%

12.4%

60.5%

6.8%

5.0%

9.2%

0% 20% 40% 60%

Keep the status quo (pay the same)

Upgrade your vehicle (pay more)

Downgrade your vehicle (pay less)

End lease

Q1 2020 Q4 2019


Q3 2019Q2 2020

Thinking about your current financial situation, if you were offered the chance to change the terms of your finance/lease plan of your car(s) with no penalty which of the following would apply to you?

% of consumers who own a car on finance

43

Outlook44

The Deloitte Consumer Tracker Q2 2020 – Outlook

Outlook for consumer spending – essential vs discretionary spending

Net spending to surge in Q3Net spending on essential categories is expected to increase by two percentage points in Q3, driven especially by a return to spending on transport. However, consumers anticipate reducing their spending on grocery and household bills compared to the previous quarter, as they plan to spend more time outdoors.

Discretionary net spending is projected to rise more steeply, driven in particular by spending on restaurants and going out as well as a return to shopping for clothing and booking holidays. However, demand is likely to focus on small-ticket items at first, as consumers remain cautious given the current economic uncertainty.

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

Q1

2020

Q2

2020


Essential Discretionary

Note: New categories were added to Essential spending in Q2 2020

Net % of UK consumers spending more by category over the next three months

45

The Deloitte Consumer Tracker Q2 2020 – Outlook

Consumer spending in the next three months by category

+4 0

N/A N/A




+1% -3 0Health

+3% 0 0





-6% +17 +2

+6% +65 +12

-3% +38 -5

Furniture and homeware

-5% +11 +6

-9% +10 +1

Restaurants

-9% +9 +2

+5% +43 +15

+2% +11+60

+33 +5Discretionary+2 -1Essential

+13% +7+51

+4% -13 -2

+1%

+2% -15 -6

-1%

-1% +1 -2Pensions and insurance

-1%

-1% -3 -1

Transport

Grocery shopping

Housing

Utility bills

Everyday household items N/A N/A

Beauty and personalcare products

Education

Landline/mobile phone, Internet and cable/TV

Clothing and footwear

Going out

Holidays & Hotels

Major household appliances

Electrical equipment

Alcoholic beverages and tobacco

-2%+2%

46


The last word

With the unprecedented squeeze in activity during lockdown, consumer confidence remained at a record low in Q2 2020 and consumer demand was severely hampered. The tentative rebound in consumer demand from June is unlikely to return spending to pre-COVID-19 levels, as the furlough scheme winds down and consumer incomes remain under pressure.

Takeaway 1The Deloitte consumer confidence index remained at a record low in the second quarter of 2020.Consumer confidence showed weak signs of a rebound as the lockdown started to ease from May after the COVID-19 pandemic reached its peak in the UK. The index recovered one percentage point from its historic low last quarter, to -17%, but consumers remained very pessimistic.

Takeaway 2The pandemic had a negative effect across most measures of confidence.All scores bar personal finances remain 10 to 20 percentage points below the levels registered this time last year.

During lockdown, consumers showed record levels of concern about their health and wellbeing, and expressed growing apprehension about the job market and the delay in the reopening of schools. Meanwhile, sentiment around personal finances improved, likely due to a combination of government-backed financial support, record low interest rates and a boost in savings during lockdown.

Takeaway 3Confidence in the state of the UK economy deteriorated further.Sentiment around the state of the UK economy reached a new record low in Q2 2020 at -88%, down a further 17 percentage points since Q1 2020 and a steep 60 percentage point decline from the Q4 2019 score, which reflected some optimism following the December general election.

Takeaway 4Net consumer spending shrank by 15 percentage points quarter on quarter.Discretionary spending collapsed by 23 percentage points to a new record low, while essential spending fell by 11 percentage points into negative net spending for the first time in Tracker history.

Consumers entered Q3 2020 with a glimmer of optimism as the lockdown eases. With social gatherings resuming and more activities reopening, consumers expect their net spending to surge in Q3 compared to the previous three months. However, demand is likely to focus on small-ticket items at first, as consumers remain cautious given the current economic uncertainty.

47


Ian StewartChief Economist, Deloitte UK

Following a huge contraction in March and April, activity is seeing a post-lockdown bounce. Consumers are keen to get out more and to go shopping. But with confidence about the economy at record lows and high levels of concern about jobs and health, consumer spending is set to remain weak. Easing the lockdown helps, but consumer spending is unlikely to return to pre-pandemic levels until next year at best.

The Chief Economist’s view

48


Craig TurnbullConsumer Products lead partnerThe Consumer Products sector has seen mixed performance throughout the pandemic, with the lockdown forcing consumers to move their food and drink consumption in-home and slowing demand for personal care and beauty. Losses in the higher margin on-trade segment would have been difficult to offset, however the forced shift in channel mix towards online accelerated many companies’ D2C efforts. As lockdown progressively eases in Q3, consumers will likely retain some of the buying behaviours developed during lockdown, which can help to support sector recovery and would play to the advantage of CP companies looking to nurture a direct relationship with their end customers.

Mike WoodwardAutomobile lead partnerCOVID-19 has had a dramatic impact on the UK automotive industry, with sales practically wiped out during April and May as showrooms closed their doors to the public. As a result, we are likely to witness historically low sales this year. The legacy of COVID-19 may well be just as noteworthy. EVs have continued to outpace the rest of the market, Petrol and Diesel are unlikely to reach pre-COVID-19 levels ever again and retailers with a digital showroom, enabling customers to purchase new vehicles online, fared better than most during the lockdown, prompting some manufacturers and dealerships to revisit their direct-to-consumer offerings.

Simon OatenHospitality and Leisure lead partnerThe Leisure sector was among the first to be impacted by the COVID-19 pandemic, as opportunities to travel and spend on out-of-home activities were limited. As the industry reopens, the restrictions imposed by social distancing measures may further delay its recovery. The governments’ economic recovery plan clearly recognises the value of the sector and the initiatives might help the sector rebound, at least in the short term. Consumers’ concerns about their wellbeing have clear implications for consumer-oriented businesses such as restaurants, events and travel. With the possibility of an economic downturn and a second wave of the virus, it is unclear whether the willingness or ability to spend will sustain, as we move into the third quarter. Consumers will probably remain cautious about their discretionary spending as they wait and watch.

The last, last word

Ian GeddesRetail lead partnerAs the hospitality sector reopens in the months ahead, and more consumers are enticed out, secondary footfall could boost numbers on the High Street. Likewise, with holidays back on the cards for many, demand for summer collections may just arrive in time for the new season. For both food and non-food sectors, the challenge will be maintaining the pace of returning consumers. Online sales as a proportion of overall sales remained high in June. Having experienced the convenience of online shopping during lockdown, some retailers will be focusing once more on their in-store experience in the ‘new normal’.

49


Contacts

Sara BallabenAuthor Manager,�Consumer�Products�and�Retail�Research

[email protected] +44 20 7007 6627

A note on the methodologySome of the figures in this research show the results in the form of a net balance. This is calculated by subtracting the proportion of respondents that reported feeling more negative from the proportion that reported feeling more positive. For instance, assume that 30% of respondents reported they are spending more, 50% reported no change and 20% reported they are spending less. The net balance is calculated as 30% – 20% = 10%. This means 10% of consumers reported that they spent more rather than less.

Ben PerkinsContributor Head�of�Consumer�Research

[email protected]+44 20 7007 2207

Dr Bryn WaltonAuthorManager,�Automotive�Research


Anjusha ChemmanurAuthor Manager,�Transportation,�Hospitality�and�Services�Research


50

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The�Deloitte�Consumer�Tracker�is�based�on�a consumer�survey�carried�out�by�independent�market�research�agency,�YouGov,�on�Deloitte’s�behalf.

This�survey�was�conducted�online�with�a nationally�representative�sample�of�more�than�3,000 UK�adults aged�18+�between�19�and�23�June.

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