Confidential & Proprietary Copyright © 2009 The Nielsen Company Consumer Confidence Survey GB Q3...

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Consumer Confidence SurveyGB Q3 2009

Survey field dates October 2009

October 2009

Consumer Confidence Confidential & ProprietaryCopyright © 2008 The Nielsen Company

Topline Summary Nielsen/BRC Consumer Confidence Survey October 2009

• In GB Consumer Confidence has improved again, suggesting in consumers’ eyes the recession has now bottomed out.

• This trend is reflected in research by Nielsen Buzzmetrics, Nielsen’s service for measuring online conversations, in the UK the number of online discussions or ‘buzz’ mentioning the word “recession” fell by 60% between March and June this year.

• Whilst fear of unemployment remains a very real trend for many, this concern is easing.

• As concern over the economy eases, the new fear for GB is one of debt. As shoppers look to make savings to stay within budget and better afford their annual holiday – they are increasingly willing to make savings on discretionary items.

• Whilst a third of consumers are more willing to spend on discretionary items there is a growing core who are not, suggesting shoppers are polarising depending on their own personal circumstances.


Topline Summary Nielsen/BRC Consumer Confidence SurveyConsumer concerns and spending intentions

• The proportion of GB population feeling negatively about job prospects has improved slightly from 79% in June to 77% in October.

• Whilst Shoppers concerns over the economy and job security have improved since June concerns over debt and work-life balance have increased slightly.

• Since June attitudes have changed suggesting shoppers are less willing to spend on oneself but the annual holiday is the one treat consumers are less willing to sacrifice.

• The survey responses continue to reflect the external pressures shoppers are feeling personally rather than some of the macro issues such as global warming and terrorism that were more prevalent in the media 2 years ago .

• Having covered their essential living expenses, the proportion of consumers in Britain stating they “have no spare cash” has fallen to 19% but remains one of highest globally.

• To improve their financial security, a third of the population are trying to put some money away into savings despite the ongoing banking crisis, whilst just under a third are trying to pay off debts.

• Despite the number of deals currently available in the non food sector, the proportion of shoppers currently willing to spend on non-essential items has decreased indicating the real fear about debt in GB is finally reaching home.

• Post recession consumers have highlighted short breaks and holidays are the areas where they will be looking to spend their money.


Coping strategies post the recession

• The impact of the recession looks to have changed the attitudes regarding what consumers are willing to compromise on.

• 70% of GB shoppers have admitted they have changed their spending by saving on household expenses.

• There is a greater awareness of, and a need to seek value for money

• Whilst saving on utility bills remains the favourite strategy post recession, a third of consumers are also willing to:

1. switching to cheaper grocery brands2. cut down on take-away meals3. look for better deals on loans, insurance, credit cards


Consumer Confidence has improved globally in the last 3 months. Whilst GB confidence has improved it is still below Global average, but ranks above France

Global average 86

2H 2009 Nielsen Consumer Confidence Index

2H 2009

Changes 1H09 vs.2H08

Changes 2H09 vs.1H09

120

108 106102101100100 98 96 96 94 94 93 92 92 91 89 87 86 86 85 85 85 84 84 84

80 79 79 78 77 77 75 74 73 72 71 71 69 68 67 66 66 65

5854 53 53

49 49

107109110

115

0

20

40

60

80

100

120

140

160

180

200

IN ID NO VN BR PH AU AE CN DK NZ CLM

Y SG CA TH HK NL VE CO PK IL SE ZA PL CH RU AT US AR FIBE

SA IT DEM

X GB ES UA G

REG

TW CZ TR FR IE EERO HU LT PT KO LV JP


Nielsen’s latest survey into Consumer Confidence suggests that the recession has ‘bottomed out’ in consumers’ eyes and consumers are beginning to embrace

the idea of recovery, GB is following this trend.

99 97

84

108

9791

79

106

94 94

80

100

88

79

70

8384

74

61

8277

6560

808272

60

8086

7567

84

Global* Average GB France USA

Oct-06 May-07 Nov-07 May-08 Oct-08 Apr-09

Jun-09 Oct-09

GB Consumer Confidence Index versus Global Average, Neighbouring Countries & USA

Source: Nielsen – Global Online SurveyConsumer Confidence

October 2006 to October 2009*June 2009 global index based on sub-set of 28 countries

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Great Britain in Recession

Consumer Confidence October 2009


Nielsen Consumer Confidence Index Shoppers are feeling more confident

Source: Nielsen Global Online Consumer Confidence Survey, Q3 2009Results: GB, 2005 to 2009

98 101 97 91 9479 74

65 72 75

1st Half'05

1st Half'06

2nd Half'06

1st Half'07

2nd Half'07

1st Half'08

2nd Half'08

Apr-09 Jun-09 Oct-09

% pt +/- +2 -4 -6 +3 -15 -5 -9 +7 +3


Some other economic facts that will determine shopper spend over the next year ...

• House Prices – Debt (including mortgages) remains at all time high– £31k average per household – At 132% of average earnings this is not sustainable – Shoppers still rely on feeling `wealthy` to spend

• Credit card debt – currently over £50b (source : BBA) with ¾ of all cards

paying interest, with this interest averaging 18%– Has not decreased significantly during recession

• Savings ratio – Will soon be back to 5% (of GDP) and increasing – Above 8% and GDP will fall again (source : Numis Securities)

– c. 20% of households can no longer save anything each month ( industry consensus)


4% 4% 6% 3% 3% 2% 1% 3%

48% 46% 44%31%

23%9% 13%

17%

41% 40% 40%

46%47%

44%53%

53%

7% 10% 10%14% 23%

42%26%

24%

6% 5% 3% 7% 3%

Oct 2006 May 2007 Nov 2007 May 2008 Oct 2008 Apr 2009 Jun 2009 Oct 2009

Excellent Good Not so good Bad * Don't Know

“Do you think job prospects in your country over the next 12 months will be... ”

Source: Nielsen – Global Online Survey Oct 2006 to October 2009Consumer Confidence – GB results* new survey response option H1 2008

Proportion of shoppers feeling ‘less bad’ about job prospects continues to improve, but only 20% are feeling good

compared to 50% in November 2007.

77%


Source: Nielsen – Global Online Survey Oct 2006 to October 2009Consumer Confidence – GB results

4% 4% 5% 2% 1% 1% 2% 3%

47% 46% 49%37% 34% 28% 32% 33%

41% 37% 38%

44% 46%49% 49% 46%

7% 12% 8%13% 14% 17% 12% 12%4% 4% 4% 6% 5%

Oct 2006 May2007

Nov2007

May2008

Oct 2008

Apr 2009

Jun2009

Oct2009

Excellent Good Not so good Bad * Don't Know

“Do you think the state of your own personal finances over the next 12 months will be..”

* new survey response option H1 2008

There has been a marginal improvement in the proportion of people feeling better about their own personal finances but the majority 58% are still feeling negatively.


3% 2% 3% 2% 1% 3% 2% 2%

41%36% 36%

23% 27% 26% 27% 31%

46%47% 46%

51% 46% 47% 49% 41%

10% 15% 15%22% 23% 23% 18% 23%

2% 2% 1% 3% 3%

Oct2006

May2007

Nov2007

May2008

Oct2008

April2009

June2009

Oct2009

Excellent Good Not so good Bad * Dont' Know

“Considering the cost of things today and your own personal finances, would you say at this moment the time to buy the things you want and need is...”

Source: Nielsen – Global Online Survey Oct 2006 to October 2009

Consumer Confidence – GB results* new survey response option H1 2008

Attitudes towards spending on discretionary items is polarising with the proportions feeling ‘good’ and ‘bad’ increasing.


10%

15%

4%

21%

4%

5%

3%

3%

6%

9%

3%

3%

13%

19%

20%

9%

5%

5%

3%

2%

3%

4%

3%

3%

15%

13%

10%

10%

9%

6%

5%

5%

4%

3%

3%

2%

Debt

The economy

Job security

Increasing utility bills

Work/life balance

Immigration

Health

Childrens' education and/or welfare

Increasing fuel prices

Increasing food prices

Global warming

Crime

Oct-08

Apr-09

Oct-09

Source: Nielsen – Global Online Survey April 09 & October 2009Consumer Confidence – GB results

“What is your biggest concern over the next 6 months?”

Whilst concerns towards the economy and job security are easing, concerns towards debt and work/life balance are increasing. Shoppers are noticing that inflation is slowing.


As UK moves out of recession shoppers concerns over debt are rising ...

Source: Nielsen Global Online Consumer Confidence Survey, Results: GB, 2008 to 2009

10%

13%

11%

15%

Oct 2008 Apr 2009 Jun 2009 Oct 2009

% pt +/- +3 -2 +4


Shoppers are becoming more aware ..

• the time it will take to bring public debt back down to the level before the Credit Crunch is 20 years ...

• They estimate by 2018 reducing this debt will cost the average household almost £3,000 a year.

• The public sector pension deficit ... is estimated to be around £19,000 per UK citizen.

Institute of Fiscal Studies 2009


13%

15%

10%

10%

9%

6%

5%

4%

3%

5%

3%

2%

3%

1%

0%

1%

12%

9%

12%

9%

8%

6%

6%

6%

7%

3%

3%

4%

2%

2%

2%

0%

25%

24%

22%

19%

17%

12%

11%

10%

10%

8%

6%

6%

5%

3%

2%

1%

The economy

Debt

Increasing utility bills

Job security

Work/life balance

Immigration

Health

Increasing fuel prices

Increasing food prices

Childrens' education and/or welfare

Terrorism

Crime

Global warming

Political stability

War

Lack of understanding of other cultures

Main Concern

Secondary Concern

Source: Nielsen – Global Online Survey October 2009Consumer Confidence – GB results

“What is your biggest and second biggest concern over the next 6 months?”

Debt is quickly rising to be the UK’s number one fear as concerns over the economy eases. Increased financial pressures are impacting work/life balance which has risen to fifth place behind job security.

vs Jul09

=


56

65

8085

63

8489 86

69

98 95 95

71

9692 94

66

9487

91

Global Average GB France USA

May-08 Oct-08 Apr-09 Jun-09 Oct-09

“Do you think your country is in an economic recession at the moment?”

Source: Nielsen – Global Online Survey 2008 - 2009Consumer Confidence

% answered “yes”

The proportion of the global population believing we are in recession has eased to 71%. In Great Britain, France and USA there is no doubt with 90% of the population agreeing – though with France now ‘officially’ out of recession these numbers are improving.


25%26%19%

2726%26%

48%50%68%4747%52%

27%24%13%

2600%26%23%

GB Oct09GB Jun09GB Apr09GlobalAverage

Oct09

GlobalAverage

Jun09

GlobalAverage

Apr09

Yes

No

Don'tknow

Source: Nielsen – Global Online Survey October 2009Consumer Confidence

“Do you think your country will be out of an economic recession in the next 12 months?”

Consumers in Great Britain continue to think in line with the Global average with just over a quarter believing we will be out of recession in a year.


64%

75%

70%

69%

France

USA

GB

Global Average

Oct-09

“Compared to this time last year, have you changed your spending to save on household expenses?”

Source: Nielsen – Global Online October 2009Consumer Confidence

% answered “yes”

In order to cope with the economic crisis, 70% of GB shoppers agree that they have made changes to their household expenses in order to make savings.


34%

29%

33%

22%

26%

22%

23%

17%

7%

2%

6%

34%

30%

28%

23%

22%

20%

19%

13%

6%

4%

3%

Putting into savings

Paying off debts / credit cards / loans

Holidays / vacations

Home improvements / decorating

New clothes

Out of home entertainment

I have no spare cash

New technology

Retirement fund

Don’t know/undecided

Investing in shares of stock / mutual funds

Jun-09

Oct-09

With increased focus on debt, in the last 3 months, more shoppers are willing to put spare cash into savings and pay-off debts and fewer shoppers willing to spend on

discretionary items such as Holidays, Clothes and Out of home entertainment.

“Once you have covered your essential living expenses, which of the following statements best describes what you do with your spare cash...?”

Source: Nielsen – Global Online Survey 2007-2009Consumer Confidence – GB results


55%

50%

46%

43%

54%

37%

34%

34%

38%

23%

28%

24%

18%

22%

13%

68%

66%

64%

59%

58%

46%

43%

39%

37%

36%

33%

33%

30%

22%

14%

Spend less on new clothes

Try save on gas and electricity

Cut down on take-away meals

Switch to cheaper grocery brands

Cut down on out-of-home entertainment

Cut down on holidays / short breaks

Delay replacement of major household items

Cut down on telephone expenses

Delay upgrading technology, eg. PC, Mobile

Look for better deals on loans, insurance, credit cards

Use my car less often

Cut out annual vacation

Cut down on or buy cheaper brands of alcohol

Cut down on at-home entertainment

Cut down on smoking

Jun-09

Oct-09

“At times when the cost of living is rising rapidly, which of the following actions would you take in order to stay within your budget: ?”

Source: Nielsen – Global Online Survey 2008 & 2009Consumer Confidence – GB results

Rank in 2005

2

1

4

8

7

6

n/a

9

5

3

10

11

12

13

14

There has been a significant increase in shoppers looking to make savings on discretionary items in the last 3 months, with switching to cheaper grocery brands now the 4th top coping strategy.


55%

29%

29%

26%

22%

21%

14%

21%

13%

7%

8%

7%

9%

6%

10%

5%

54%

38%

34%

29%

28%

24%

23%

19%

13%

13%

12%

10%

9%

9%

9%

8%

Try to save on gas and electricity



Look for better deals on home loans, insurance, credit cards






Delay the replacement of major household items


Cut down on smoking

Other actions not listed above


Delay upgrading technology, eg. PC, Mobile, etc


Jun-09

Oct-09

“When economic conditions do improve, which of these do you expect you will continue to do?”

Source: Nielsen – Global Online Survey April & October 2009Consumer Confidence – GB results

Shoppers have become more focussed on reducing debt post recession, with an increasing proportion of shoppers looking to make savings on discretionary items


66%

64%

59%

36%

68%

39%

58%

33%

30%

43%

46%

14%

33%

37%

22%

54%

38%

34%

29%

28%

24%

23%

19%

13%

13%

12%

10%

9%

9%

8%

Try to save on gas and electricity



Look for better deals on home loans, insurance, credit cards






Delay the replacement of major household items


Cut down on smoking


Delay upgrading technology, eg. PC, Mobile, etc


Now

Post Recession

“At times when the cost of living is rising rapidly, which of the following actions would you take in order to stay within your budget: ?”

Source: Nielsen – Global Online Survey October 2009Consumer Confidence – GB results

Post recession an increasing proportion of shoppers are looking to make savings to stay within budget, with a third of shoppers now citing switching to cheaper grocery brands as a key coping strategy.


UK Recovery

• UK Consumer confidence improved again in October

• As concerns over the economy and job security eases a little – shoppers are becoming increasingly worried about debt, which will impact their willingness to spend as we move out of recession.

• An increasing proportion of shoppers are expecting to continue to make savings on discretionary items, in order to stay within budget and afford an annual vacation.


Summary and Outlook for GB October 2009

• Shopper spend has been remarkably resilient over the last 12 months following the rapid falls in Consumer Confidence during 2008.

• Consumers currently appear to have a sense of optimism compared to 6 months ago but the small recovery in Consumer Confidence masks the underlying concerns about unemployment and debt.

• The need to save money is as strong as ever and with the economic outlook of future tax rises and cuts to public expenditure now beginning to attract attention, shoppers are becoming increasingly cautious.

Confidential & Proprietary Copyright © 2009 The Nielsen Company Consumer Confidence Survey GB Q3...

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