While Britain may be officially out of recession, latest research from British Lifestyles, Mintel’s flagship report, reveals two thirds of consumers are still worried about the state of the economy and that five out of the top six worries are economic, highlighting the impact the recent financial climate has made. Moreover, Mintel finds that given the new Government’s determination to reduce the finance deficit, two new economy-related worries have become prominent in 2010: cutbacks in public spending and the state of the NHS. Immigration and the Iraq war have also risen into public consciousness, with the former now ranking as the nation’s number three concern. Richard Perks, Research Director at Mintel said: ” consumers continue to be influenced by uncertainty about their own and the economy’s short-term future and the level of concern about unemployment has hardly changed in the past year and personal finance. Like the UK economy as a whole, while consumer temperament this year is rosier than it was last year, the current situation is hardly inspiring when considering the economic pain in the pipeline from higher taxes and reduced public spending. It seems that consumers have moved from being fearful to being doubtful and doubt – like fear – is not a strong foundation on which to make major purchase decisions. “ Savings are a key priority among consumers and 70% of adults are focusing on building their wealth and repairing their financial position. The majority of consumers say they are ‘very cautious’ about spending on non essential items and this is not only restricted to those worst hit. Indeed, over 60% of those who are a little or a lot better off because of the recession retain some caution about spending too. Around one quarter of adults don’t have the luxury of savings because their financial situation is so tight. “With two thirds of adults emphasising saving in the coming year, the prospects for a rapid rise in consumer spending is not looking good. In a climate of uncertainty concerning future tax rates, benefit levels and public sector job prospects, many adults are hunkering down and focusing on putting money behind them, just in case it is needed. Moreover, despite the economic recovery, they are expecting higher unemployment and there is little optimism regarding the growth prospects of the UK economy. It is hardly any wonder in these circumstances that they should be looking at focusing their spending on core essential items. “Richard continues. Furthermore, when looking to the future it seems consumer outlook is also bleak, as over two thirds of consumers think that taxes will be either slightly or a lot higher and just under half think that unemployment will be slightly or a lot higher too. Indeed, when asked about which bills they anticipated being higher for the coming year, every sector saw a rise from 2009 with food and home energy bills topping the list. Indeed, it is the food sector which tops these worries with half (50%) of consumers anticipating higher food bills in the coming year. While financial pressures have eased to the extent that nearly one in four adults describe their financial positions as ‘healthy'; more than one third describe their situations as ‘tight’, struggling or in trouble and a further 40% are just coping. However, though savings and cost cutting are priorities, some consumers are putting their money worries behind them and looking on the lighter side – 42% of consumers are concentrating on getting on with life, and not letting money worries get in the way. Technology booms Most sectors of consumer spending have seen falling sales in real terms – mainly because of the recession – with only technology and clothing and adornment seeing significant real sales growth since 2009. Consumers spent £50.5 billion on technology and communications products and services in 2009. Indeed, the Technology sector has seen growth of 80% over the past five years. Furthermore, between 2010 and 2015, Mintel predicts that in current price terms, expenditure on technology and communications products and services will grow by a further 20%. This, however, translates into growth of 140% in constant 2010 prices. Soft drinks sparkle in recession Consumers on average spent £228 per year on non-alcoholic drinks in 2009, £14.1 billion in total, and it seems the Recession has given the carbonates sector, an area previously in decline, a new lease of life. Indeed, carbonated drinks have performed extremely well in the recession, a fact explained by their relative cheapness and their positioning as an affordable indulgence in troubled times. In home food success Consumers spent £65.1 billion on in-home food in 2009, representing an average spend of £1,054 per person per year or £2,451 per household per year. Per capita spending rose in 2009 by 3.4% and has increased by 32% over the past decade. Furthermore, the in-home food sector is anticipated to experience growth of 11% between 2010 and 2015. Almost 70% of consumers are searching for ways to save money when food shopping and 40% will be actively searching for cheaper food and drink brands. Poultry and burgers have reclaimed their place in the shopping basket as consumers switch to cheaper meat options. Over the past decade, the fastest growing markets have been baby food, fruit and vegetables, bread and morning goods and store cupboard basics. These sectors have benefitted from demographic trends and the growing focus on foods which aid health or promote home cooking. Consumer attitudes are shifting from a concern over specific ingredients to welfare systems and food provenance. Fashion Forward Brits While money worries may have changed prospects for many market sectors, it seems clothing is one area Brits wont compromise on. UK consumers spent £46.2 billion in 2009 on clothing and adornment products, which represented per capita annual spending of £753. Consumer sales have risen steadily over the past decade, although value sales have been strongly influenced by changing UK exchange rates and the wholesale shift of production to low cost countries in the Far East. Furthermore, per capita spending between 1999 and 2009 rose by 24%. A bite out of the eating out market… Consumer spending on eating out and takeaways was worth £31.5 billion in 2009, meaning that, on average, each person in the UK spent around £10 per week on eating out and the market has seen nearly 50% growth over the past 10 years. However, while eating out has been a traditionally high growth sector, the recession has taken its toll. Per capita spending rose by just 0.7% in 2009, compared to a rise of 43% between 1999 and 2009. However, the fast food market has bucked this trend – growing 55% over the past ten years to reach a market value of £8 billion. Holidays – return of the jet set? In 2009, a total of £32.3 billion was spent by UK consumers on holidays, equivalent to just over £10 per person per week. The recession brought to end a period of strong growth and reversed the trend towards taking more holidays overseas, especially short breaks. Holidays are now seen as a ‘luxury’ item of spending by almost half of adults, which compares to just 38% having this view before the recession in 2007. Today, less than one in five adults see holidays as a ‘necessary spend’ or a ‘right’. However, Mintel’s research forecasts that in the coming five years, the market will return to a more ‘normal’ balance, with overseas holidays and short breaks growing at the expense of domestic holidays and longer holidays. Charity begins at home Meanwhile, while the recession may have seen savings drop, the same cannot be said for Britain’s generosity levels. Charity donations in the UK have seen 144% growth over the past 10 years. Pets escape recession Finally while financial difficulties may have impacted British consumers, the same can’t be said of their pets. The UK is home to 10.2 million dog owners and 9.7 cat owners who clearly see their pets as one of the family. Despite the recession, the pet food market grew by 4% year on year to reach £1.8 billion in 2009: consumers may have cut back, but the pet hardly noticed. You might also be interested in: No related posts.