Claire Beale: Meet the recovery consumer
Ah, September. Time for back-to-school, holiday-fresh vigour as we make the final push through to the end of the year. And, on cue, there's some encouraging economic news.
Claire Beale is editor of Marketing.@MarketingUK
Household spending (about 60% of the economy) is expected to strengthen through the end of this year and into next. A healthier housing market, spurred on by the government "Help to buy" scheme that launched in April, is further evidence that consumer spending is more buoyant. And wages are expected to catch up with easing inflation early next year – for the first time in more than five years.
Meanwhile, Bank of England Governor Mark Carney has suggested that he will not raise interest rates until unemployment falls below 7%, which the Bank expects will take three years (though money markets are writing in a rate rise for early 2015). And the Eurozone is pulling out of its 18-month slump, which is good news for exporters. At the same time, business-investment spending is forecast to recover more than 7% in 2014 and the CBI says manufacturing surged to a two-year high in the three months to August.
For the moment, let’s not worry about the "recovery" being consumption-led. Although the rate of saving is falling worryingly again, business confidence is crucial for this recovery to become an unqualified one; we won’t get a return to sound business confidence without clear, growing consumer demand.
All sounds quite positive, doesn’t it? At least if you ignore the news that the Treasury’s purse was empty for the first July in three years and that public-sector borrowing is £1.6bn higher than it was in the same period last year.
More caution is sounded in The Futures Company’s research findings on page 34 of this issue. Even if recovery is here to stay, don’t expect consumers to revert to their pre-recession attitude to consumption. We’re a changed nation.
"I’m now more focused on enjoying what I already have" is a prevalent sentiment, and brands hoping to engage with the "recovery consumer" have some very clear tests ahead – not least, getting their heads (and data analytics) around segmenting consumers by their level of debt rather than their income.
It’s always good to come back from holiday to a new challenge, isn’t it?
This article was first published on marketingmagazine.co.uk
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