The August Equity Consumer Products & Services Deal Club delved into the top 10 consumer trends for 2008 with speaker Helen Osman, Head of Mintel Research Consultancy.
A falling pound, rising fuel prices, an unstable property market, debt and weak consumer confidence all mean one thing – times are getting tough. Households are spending more than they earn, which they have financed by borrowing more. Consumer debt has hit £1.4 trillion. Per capita debt is at a whopping £21,300 with a greater proportion of this unsecured. Mortgage repayments are spiralling higher and 36 pence out of every £1 is now spent on housing. This means cutbacks on DIY home improvements, buying a car, saving, shopping and even eating out, but we may see customers ‘trading up’ – buying less but buying better quality.
Reduce, reuse, recycle – which do you do? Most people opt for the easiest ways to salve their conscience. That means more recycled rubbish and more reuse of shopping bags at supermarkets. But consumers are yet to address the more radical lifestyle changes which may be necessary to address climate change: for example, there is little evidence of less car use or air travel. Consumers are looking for leadership from companies to provide green solutions, but they want firm evidence that words are backed up with green actions. There are big questions that companies need to face up to, as consumers start to adopt greener living, but are consumers prepared to pay more for environmentally friendly goods?
We should be a healthy nation. The average food shopper is increasingly shunning processed, sugary, frozen and snack foods in favour of fresh meat and fish and fresh fruit and vegetables. The 2008 consumer wants ethical and organic sourced products, low fat, sugar and cholesterol and anything that claims to be a ‘super food’. Consumers want all that – AND a bit of luxury, which means dark chocolate that contains antioxidants is flying off the shelves. Winners are brands with a healthy image. Losers include frozen ready meals, showing a significant sales drop in 2007.
As more consumers have broadband, click and shop is soaring. If last Christmas is anything to go by, the passion for online is set to rise yet more. Some £5.6 billion was spent online for Christmas 2007, up £2 billion on the previous year and up £4.6 billion on 2005. Shoppers even managed to spend £50 million online when the shops were shut on Christmas Day. Put this into context: the internet now takes one pound in six of retail spending, compared with Tesco’s one pound in seven. Analysts are even pointing to an online splurge as the reason for flat high street sales.
Welcome to the geek generation. Lifestyles have changed thanks to technology. Just six years ago only five per cent of people owned digital cameras; only 37 per cent of people were using the internet; the iPod had just launched; and a mere 100,000 households had signed up to broadband. Fast-forward to a world where voicemail, SMS, email and even SatNav are used on a daily basis. Even the TV is undergoing a makeover with on-demand services overtaking scheduled TV and multi-platform sets. There is still some way to go before content is cheap AND technology can deliver enough and quickly enough. But watch the Third Space – whoever wins the battle to dominate mobile internet will rule.
Social networking is one of the biggest shifts in consumer trends over the last 18 months. There are 25 million users of social networking sites in the UK and 75 per cent of the UK online population has a social network profile. There is little distinction between male and female users of online social networks, although more women use Facebook, but more men are members of Friends Reunited. The challenge is to get users to spend more money and more time online and develop revenue models based on new consumer internet patterns.
Consumers may be shunning the high street, but they can’t get enough of foreign travel. Cheap European flights mean previously inaccessible places are now easy to reach. Better technology means people are connected wherever they are. Some 43 per cent of people polled by Mintel said they now use blogs and photo hosting sites. Forget about the green dilemma – when it comes to holidays just three per cent of those asked in a poll said they planned to cut down on the number of flights for environmental reasons.
Are you being served? The consensus is that consumers in 2008 have never had it so good when it comes to getting up close and personal. Marketing is about prescribing for the individual. All the signs are that people want to focus increasingly on themselves. First came personalised music, now we are moving to personalised television programmes. Estate agents and travel agents are still in business – despite the internet – because they give the personal touch. Increasingly services are ‘on demand’ – when we want them and how we want them. The cash-rich, time-poor want companies that clean their laundry, deliver their pet food and clean their wheelie bins. There are plenty of new business opportunities to be had through closer engagement with the consumer.
If you can’t afford to have it all – share with someone else. New businesses are emerging allowing consumers to have a share of something they can’t afford to buy outright or share something they don’t need to use all of the time. Fractional ownership is booming. You CAN have that designer handbag for a week or a month if you just pay for the time you use it. Perhaps more bizarrely, there are more companies like Flexpetz, which allows dog owners to share their time with pets. The trend does not stop with individuals, the green agenda is ripe with potential opportunities for new shared business models.
The world might be advancing at a rapid pace, fuelled by changes in technology and the desire to have more of everything, right now. However, there is a dichotomy. Underpinning all the hustle and bustle is nostalgia for simpler times. Old-fashioned leisure activities are on the rise – they include ballroom dancing, sewing and knitting. More people are downsizing or even opting out of the rat race altogether amid cries that childhood has become too commercialised.
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