We are in the longest economic slump this side of the Second World War, but is it changing the way we behave as consumers and think as a nation?
It has been five years since queues formed outside branches of Northern Rock as it sought emergency funding – a year and a day later Lehman Brothers was allowed to collapse and the world changed forever. Or did it?
That things changed is undeniable. In the immediate aftermath of the downturn a number of reactions were witnessed, from the subtle to the glaringly obvious. Custard sales went through the roof as people sought refuge in nostalgia. The savings ratio has steadily improved as consumers act sensibly and remove themselves from risk. Frugal chic has entered the vocabulary and consumers wallets and inboxes are stuffed full of vouchers to use at discount grocers.
But does this mean things have changed forever? In 1991 Time magazine published an article under the headline The Simple Life: Rejecting the rate race, Americans get back to basics. It’s a fascinating read, but what’s even more striking is that it could quite easily have been written 20 months ago rather than 20 years ago. Consider this excerpt:
“After a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down. They want to reduce their attachments to status symbols, fast-track careers and great expectations of Having It All. Upscale is out; downscale is in. Yuppies are an ancient civilization. Flaunting money is considered gauche: if you’ve got it, please keep it to yourself — or give some away.”
But is this recession different? It definitely feels different. Opinion is divided. On the one hand there is the belief that everything will go back to normal at some point soon: “In every recession, there’s the hypothesis that the consumer is chastened and that we will come out living the simple life of monks, it hasn’t happened yet.“ Carl Steidtmann, chief economist and director of Deloitte Research. But then others would argue that the effects will become ingrained and long lasting. “Consumers will learn to become more frugal and are likely to carry those skills over once the economy recovers. At some level, everybody has now been schooled about financial markets and overextending one’s credit” Wesley Hutchinson, Wharton Marketing Professor
The Only Thing That Is Constant Is Change
In some respects, not much has changed in the last twenty years. But in others, the world we live in bears little or no resemblance to that of 1991. People are now hyper connected inhabitants of a global village, with information that once took great effort to obtain, just a click away. Data flows across the globe at an ever expanding velocity and volume. In a new social era trends spread like wildfire and then disappear as quickly as they came whilst mobile consumers have seen technology democratize the masses, providing unprecedented access and empowerment.
What is so interesting is that such a deep recessionary storm has blown in at a very particular time; a time when we are seeing significant changes to the structure of modern Britain at a macro level and fundamental changes to how we live, work and communicate. Immigration, population growth, employment patterns, mass use of mobile computing, social media and changing values, are just some of the major trends that are making Britain a different place. When we combine these factors, the whole is greater than the sum of the parts. Great Britain, along with many other countries, is sailing into unchartered waters.
- The only type of household in the UK to shrink in the latest census was married couples with children
- Baby Boomers own 80% of the UK’s £6.7 trillion in wealth
- Despite a struggling economy and the rise of the BRIC countries, in 2012 the UK topped the annual Global Soft Power survey
- The number of patent applications granted in the UK increased by 29 per cent last year.
- The percentage of unemployed young people out of work for longer than one year has nearly doubled since late 2008
- Immediately after the recession Marks & Spencer saw sales of custard increase 140% as people sought refuge in nostalgic, familiar brands
- Selfridges took £1.5m within an hour of opening on Boxing Day this Christmas.
- In 2013 it is forecast that mobile phones will overtake PCs for internet access
We find ourselves in an age of contradictions.
Which is why we have launched our yearlong Future of Britain project. Our aim is to get under the skin of these changes, to learn what will stick and what will fade away, to interpret what these changes mean for businesses, brands and the people who are employed by them or consumer them,
We will be using a range of research techniques and partnerships – as people and their world have evolved, so has our ability to observe and interpret this through research. We have begun with a series of in depth interviews across the country in people’s homes – immersing ourselves in their real world environment. Even at this early stage, some key themes are coming out.
- Open Britain: Whether it’s making a purchase decision, sharing money saving tips, posting your holiday photos; the stiff upper lip is out, embracing openness is in.
- The high street vs. the banks: Despite extensive media coverage of the role of the bankers in the current downturn, it is the high street that provides a focus of anguish for consumers
- Drip, drip effect: Unlike the ‘shock and awe’ impact of previous recessions, consumers are experiencing a ‘turning of the screw’; whether it is train fares, car insurance, food costs or benefit cuts there are a multitude of pressure points
- Redefining necessity: Despite this, the role of brands has never been more important, with consumers unable or unwilling to go without their favourites
Our next step is to examine these themes further with a large scale online consumer survey using a range of innovative techniques including Implicit Response Testing and Scenario Modelling.
We intend to continue this research throughout the year using mobile ethnography study that will enable us to virtually “live” with consumers every second of the day and chart how the diverse range of British household types manage their lives.
We may find that everyone has stopped eating custard. But we also hope that we will create a comprehensive insight into where Britain is headed as a consumer society and to get to a point where we understand what the “new normal” looks like.