Inside Track by Mark Stretton
What will be the legacies of the recession? It is a question that many are grappling with, and return to often, in these challenging times. It seems, at least to me, that a legacy for those running businesses in this market, and probably for every consumer-facing business, is the desire and need to be closer than ever to customer sentiment. To that end, a couple of new bits of research around consumers caught the eye this weekend, one about general sentiment and the other looking at some specifics in the leisure market. The first showed a few signs of a battle-weary consumer, with three quarters of people saying that the recession had had a negative impact on their lifestyle. More worryingly perhaps, six out of 10 people thought it was going to get worse before it got better, with many fearing a double-dip recession. The findings were based on interviews with 1,000 consumers undertaken by GfK NOP. The fear for this market is that this sort of thinking prompts people to retrench further, withdrawing from usual spending habits, and that the double dip becomes some sort of self-fulfilling prophecy. But for we put corks in the forks, and place other sharp objects at a safe distance, it is worth reflecting on how resilient large parts of the eating and drinking out market have proved throughout the economic downturn. It is also worth remembering that there is often a complex relationship between how people feel and what they say, and what they actually do. The pub market in some people’s eyes has been the poster child for this recession, and the pain that has been inflicted on some of Britain’s boozers is obvious. But like-for-like sales figures from a clutch of pub and pub-restaurant operators that have come to light in recent weeks, such as those from Fuller’s, Greene King and Whitbread, show the sector’s better operators are trading pretty respectably albeit against some soft comparables from 2009. New research from Mintel, in a report entitled “Impact of The Recession on Consumer’ Leisure Habits”, serves to reinforce some of the predicted impacts of the current climate. There’s more of a homebird culture among consumers – with 53% of people staying in more – and individuals are also mindful of watching the pennies: 59% spend less when they go out. But people do still go out. Mintel said that spending on leisure activities remained a high priority for consumers, who were merely changing their spending behaviour and patterns. It said: “The desire for escapism is stronger than ever in these uncertain times but this urge is now tempered by the new mantra of balance.” The most popular activities remain eating out, where nine in 10 adults participate, and drinking out, which is enjoyed regularly by eight out of 10 people. However, Mintel reported that the frequency was down, along with spend. The biggest disciples of the “new mantra of balance” are ABC1 women, which Mintel said have become “particularly price sensitive, frugal and resourceful.” However, there are some recession-proof spenders still available, with 37% having not changed their spending habits at all in the light of the economic woes. The analyst’s research found that, unsurprisingly perhaps, the most recession-proof leisure spenders were ABC1 men under the age of 35. Of course, the big legacy from the recession has been the search and availability of value, driven by a highly competitive market and consumers ability to survey all the offers available to them thanks to comparison websites. Mintel said that while sales in the eating out market had been “relatively resistant”, this was largely driven by discounting and special offers. Seven out of 10 adults had taken advantage of leisure vouchers, offers and discounts and more than half now research price before they go out. Like in other recessions, cinemas have been a big winner – an affordable treat – although consumers had pared back secondary spend items like food and drink when engaged in such leisure activities as catching the latest film. Unsurprisingly, the recession has forced the end of the “play now, pay later” culture which drove the post-millennium leisure boom in the UK, according to Mintel, with four out of 10 adults are now less likely to use their credit card or overdraft to fund out of home leisure activities than they were before the downturn. The study said: “The notion of an ‘affordable treat’ or old maxims such as ‘everything in moderation’, ‘a little bit of what you fancy does you good’ and ‘pleasure in small things’ suddenly seem a lot less quaint. “With the popularity of Pizza Express deals and Orange Wednesdays helping to remove the status anxiety [possible stigma] from discounts and making cheap options ‘socially acceptable’ to a wider audience – no longer just the hard up – other approaches can include loyalty points, staggered debit payments for holidays etc and membership schemes.” It is clear that this consumer is still very much open for business; the eating and drinking out market is like an old friend. Consumers are very reluctant to give up the oxygen of an affordable treat – that meal or drink out is an escape, a reward, making life worth living. Companies must make sure they are aligned with this mindset. If there are just a couple of words that pub and restaurant operators should keep close when thinking about customer engagement it is loyalty and value. Understanding the post-recession consumer One of the UK’s leading lights on consumer insight will be presenting at M&C Report's forthcoming UK Pub Retail Summit. Crawford Hollingworth, chiarman of the Futures Company, will draw on his firm’s research to examine the legacy of the recession, how customer behaviour has changed and the new set of values driving purchasing decisions .