Consumer Reaction to the Credit Crunch-UK : Market Research Report

Consumer Reaction to the Credit Crunch-UK

Published by: Mintel International Group Ltd.

Published: Jan. 1, 2009 - 149 Pages

ISSUES IN THE MARKET: Key issues covered in the report; Abbreviations
FUTURE OPPORTUNITIES: A window of opportunity to attract switching business?; Security and certainty - the new watchwords; Simple products for complicated times; Life after debt
MARKET IN BRIEF: The phoney war is over - we are officially in recession; Consumers are starting to feel the pinch…; …but it’s not as bad as some are making out; Comfortable - or hard-hit?; Bank failures not an issue for most people…; …but negative equity is starting to take hold; What happened last time round?; Offering security in an uncertain world; Who will benefit when confidence returns?
BACKGROUND TO THE CREDIT CRISIS: Key points; The basics - what is a credit crunch?; Timeline - how the crisis unfolded; From sub-prime to credit crunch; Shifting the risk; Contagion spreads…; …and household names go to the wall
BROADER ECONOMIC CLIMATE: Key points
CURRENT MINTEL PROJECTIONS: Slight revival to be seen at the end of 2009?; Beyond 2010
KEY MACROECONOMIC INDICATORS: Base rates plunge…; …but what effect will this have on spending?; Saving the windfall; Consumers and policymakers at odds?; Unemployment ticks upwards
THE HOUSING MARKET: House prices falls further undermine confidence; Mortgage lending and property transactions tumble; How will a housing slowdown affect the wider economy?
CONSUMER CREDIT: Further signs of a new prudence?; An end to consumer denial; Insolvencies jump in the second half of 2008
THE IMPACT ON RETAIL SPENDING: The retail recession to start in 2009?
LEISURE - LITTLE LUXURIES, OR UNNECESSARY SPEND?: Travel - the new essential…; …but could people cut back on short breaks?; Small sacrifices to maintain lifestyles
THEN AND NOW - PARALLELS WITH 1991-95: Key points; A debt-driven recession; Finding comparables; Last time around - five quarters in recession…; …and a half decade of stagnating property prices; Freedom of information; Short sharp shock - or a sign of worse to come?
LEARNINGS FROM THE OUT OF RECESSION - 1993 REPORT: Maintaining leisure spend - at the expense of durables; Staying in is the new going out (again…); New cars and furniture dropped to the bottom of the list of priorities; Maintaining lifestyle - as important in 1992 as it is in 2009; The least affluent were worst-hit…; …but could mortgage holders escape in 2009?; The young and mortgage holders cut back hardest
INDUSTRY INSIGHT: The common thread; Less room for investment…; …but more for protection?; Insurance - shopping around, not cancelling…; …although ‘luxury’ lines could be hit; A boost for the aggregators?; Banking - security to the fore; Concerns over loan books; Impact on consumer credit markets
CONSUMER SENTIMENT: Key points; Figure 21: Change in the leading concerns among UK adults, February 2008-January 2009; Figure 22: UK consumer confidence index, 2002-08; Figure 23: Spending and saving confidence, March 2001-September 2008; Figure 24: Savings, investment, borrowing and debt repayment - consumers’ expected activity, 2002-08;Quarterly indices; Consumer credit - the last throw of the dice?; Savings - will good intentions translate into activity?
THE CONSUMER - FINANCIAL CONFIDENCE AND FUTURE PROSPECTS: Key point; Two thirds keep their finances on an even keel…; …but many are finely poised; How does reality match up to press coverage?; Lower earners and the self-employed the first to feel the strain?; Squeezing family incomes; No need to panic - but people can’t help but worry; Confidence among the better-off; One eye on retirement
THE CONSUMER - IMPACT OF THE CREDIT CRUNCH: Key points; Have people even noticed the crunch?; Wide-reaching effects
KEY FINANCIAL GROUPS: From hard hit to comfortable and confident; Group 1: Comfortable and confident (21% of the sample); Group 2: Feeling the pinch (52% of the sample); Group 3: Fearing for the future (16% of the sample); Group 4: Hard hit (11% of the sample); Young and old the last to feel the strain; Children a major factor; The middle classes more likely to be comfortable…; Figure 36: Key financial groups, by socio-economic status, December 2008; …but they don’t totally escape the downturn; The South is hit - but it’s not a London-based recession; Personal loans - an already troubled sector could get worse; Buying security; Figure 37: Product ownership, by key financial groups, December 2008; When will it end?
THE CONSUMER - SPENDING AND SAVING: Key points; Cutting down on the little luxuries…; Travel could suffer…; …but finance stays strong - on the whole; Can parents trim spending?; The strugglers are making the most cutbacks…; …and are cutting back on core spending; Holidays and saving plans deferred; Figure 40: Spending cutbacks over the next six months, December 2008; Leisure or luxuries - which industries stand to lose out?; Figure 41: Spending cutbacks over the next six months, by key financial groups, December 2008; Even the mainstream are cutting back
THE CONSUMER - SAVINGS AND INVESTMENTS: Key points; How many people were caught up in the bank failures?; Flight to safety among older consumers; Has Government action maintained confidence?; Moving up the investment ladder; Opportunities are still out there; Long-term investments - time for a bargain?; A comfortable retirement?; Those in the market are nursing losses - but considering new purchases; Not only confident about their own financial situation
THE CONSUMER - MORTGAGES AND HOUSING: Key points; The credit crisis - putting home moves on hold…; …but still only a minority concern; A chance to get on the ladder?; But also the danger of negative equity; Arrears up among the less affluent; Remortgaging - alright for some, a problem for others; A wave of negative equity among the Hard Hit
THE CONSUMER - INSURANCE AND PROTECTION: Key points
Insurance - an easy target for cost-cutting?: Looking for a bit of reassurance as the years go by?; Easy to value insurance when you’re comfortable and confident
WHO CAN WIN IN A SLOWDOWN?: Key points; What were the priorities last time round?; Zopa - cutting out the banks and beating the base rate; Innovation - Apple are giving people a reason to upgrade…; …not just to replace; The new austerity in the food and drink sector; Drinking your troubles away; Emerging from the recession - the strong will prosper; Car manufacturers need to concentrate their efforts; Blockbusters and bookmakers - the way forward for leisure; Re-packaging the packaged holiday
APPENDIX: CONSUMER SENTIMENT
APPENDIX: THE CONSUMER - FINANCIAL CONFIDENCE AND FUTURE PROSPECTS: Current financial situation; Financial prospects
APPENDIX: THE CONSUMER - IMPACT OF THE CREDIT CRUNCH: Impact of the downturn; Key financial groups
APPENDIX: THE CONSUMER - SPENDING AND SAVING
APPENDIX: THE CONSUMER - SAVING AND INVESTING
APPENDIX: THE CONSUMER - MORTGAGES AND HOUSING
APPENDIX: THE CONSUMER - INSURANCE AND PROTECTION
APPENDIX: RESEARCH METHODOLOGY

Abstract

For the last half decade, consumers have been making the most of cheap and readily-available credit,underpinned by the confidence that soaring house prices bring to homeowners. And for the last half decade, if not longer, pundits have been pointing out that this situation simply wasn’t sustainable. These pundits have been proved spectacularly right. The sub-prime crisis in the US turned into a worldwide credit crunch. In turn, the credit crunch is set to turn into a severe and prolonged downturn.

In the final quarter of 2008, amid rising unemployment, repossessions and insolvencies, the UK officially entered recession, defined as two consecutive quarters of negative GDP growth.

As far as consumers are concerned, though, it is early days. Unemployment may be rising, but it is well below the levels reached during the last recession. Inflation has started to fall, and base rates have been slashed - meaning that many mortgage holders will actually be better off. Just how hard is the slowdown hitting the average UK consumer? Which market segments are struggling to make ends meet, and which segments are - so far - entirely untroubled by the slowdown?

This report draws on exclusively commissioned consumer research, including a series of online focus groups, to answer these questions. It examines just how consumer behaviour is changing: where they are cutting back on spending; whether the banking collapses have prompted them to switch accounts; the impact on their mortgage payments; and whether insecurity is prompting them to start paying down debts and build up ‘rainy day’ funds.

The consumer research is backed up by an in-depth examination of the macro-economic factors affecting the economy. The report also identifies where businesses can learn from the last recession,drawing on Mintel’s 1993 Out of Recession report and past economic trends.

Key issues covered in the report

Background to the credit crunch, and the impact on the wider economy.
Consumers’ general financial well-being and economic confidence.
Changing financial priorities, and the return (or not) of fiscal prudence.
The impact of the crisis on bank confidence - whether or not people have switched accounts in favour of safer providers.
Trimming expenses

Get Full Details About This Report >>

US: 800.298.5699

Int'l: +1.240.747.3093

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 250,000 market research reports, company profiles and country profiles from over 650 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.

Consumer Reaction to the Credit Crunch-UK

Table of Contents

Abstract