Consumer spend for 2010 is projected to decline by a mere 1.0 per cent, according to the Q3 Consumer Market Monitor published by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland recently. This figure is considerably better than the 10 per cent drop in overall spending for 2009 and shows that consumer spending is stabilising, claims the report.
The Q3 Monitor also highlights how people are becoming more price-conscious, thrifty and better money managers with 75 per cent actively looking around for better value and 73 per cent starting to think more carefully about what they buy.
The Monitor, which tracks key indicators of confidence and activity in the Irish consumer market, indicates that in 2011 there could be a modest rise in consumer expenditure of 0.4 per cent, however this is dependent on the continual consumer spending trend we have seen of late.
Consumer confidence continued to recover in this quarter; at -12 per cent, the level in August 2010 was more than double that of August 2009 (-26 per cent) which has now brought Ireland back in line with the European average, states the report. Our UK peers however do not share the same optimistic outlook. UK confidence has plummeted from minus seven per cent in January 2010 to -15 per cent in August 2010.
“The Consumer Market Monitor Q3 results demonstrate that although consumers are starting to loosen their purse strings, there is still some apprehension about the future as they continue to save a lump sum of their earnings each month,” said Mary Lambkin, Professor of Marketing at UCD Smurfit Business School, “However, Q3 figures can be seen as encouraging for the retail sector as we can see that a marginal rise in consumer spending translates to a rise in sales volumes for retail sectors such as department stores, clothing, medical & cosmetics and electrical goods.”
In the bar sector, the Consumer Market Monitor states, “Sales rallied in January of 2010 in line with the normal seasonal pattern, rising in March and leveling off into the Summer months. However sales for the three months from June to August were down 9.8 per cent in volume and 12.2 per cent in value.
This declining trend has continued in August with sales volume down by 10.3 per cent compared to the same month last year and sales value down by an even larger 12.7 per cent.
These decreases can be attributed to a “stay-at-home” culture which has emerged in the wake of higher taxes on alcohol and lower consumer discretionary income.
“Indications are that pub sales are also down in the UK. Pub beer sales continued to fall, with a 6.3 per cent decline in overall beer sales in the second quarter.”
The Consumer Market Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources. To download the full report visit http://www.mii.ie/cmm/