Insights to Consumer Behaviour and action - Josephine Maguire, SEAI

Insights to Consumer Behaviour Josephine Maguire 10 June 2015

Research Methodology

• Quantitative research carried out in 2013 & 2014

• Nationally representative face-to-face survey

• 659 households with household decision maker

• Weighted to the CSO population in terms of spread

• Supplemented by qualitative research

• Additional references to CER research of a different

nationally representative sample

General Attitudes to

Spend & the Household

3

Consumer Mindset

• My Wallet – My Way

– Self reward, convenience and control remain primary considerations in the

consumer mind, in general and when considering energy investment

• The energy improvement journey

– Investment is expected to offer enhancement to the home experience and to

be part of an on-going journey towards incremental improvement

• Demand and Command

– Post recession consumers are armed with a demand-command confidence.

They demand transparency, value and accountability in investment

decisions

• Home central

– Increased willingness to invest in the home, as more time is spent at home

means comfort and value drive investment decisions

Prevailing consumer trends reflected in the research:

Preferences for a €5,000 windfall

Renovate

joint 4th

of 10

options

Reward-Recovery dichotomy evident in expenditure decisions

• Pay off debts (recovery) and going on holidays (reward) are

the two most popular activities in the event of a windfall (47%)

The relevance of Home Central is evident in the number of

consumers willing to invest:

• Home renovation interest level is at 14% in 2014 with an

additional 14% indicating they would engage in home

redecoration

• 3 in 5 respondents have carried out some home improvement

in last 3 years, main one was home/room redecoration (43%)

6

Home/Energy Improvement

Interest & Awareness

Energy: A confusing landscape

• The energy landscape is fraught with confusion and complexity

– Energy costs from suppliers are little understood (just 6% can cite a unit cost of

gas and 13% a unit cost of electricity, regardless of accuracy)

– Increase in number of offers/products available but low levels of product

understanding ( only 17% of electricity customers and 19% of gas customers claim

to fully understand electricity and gas offers)

– Decreasing levels of switching (12% electricity, 16% gas), indicating a

reluctance to engage with the energy market (29% in 2011)

• Thus, the outcome of energy investment decisions made in this context

cannot meet the Demand-Command consumer mindset

– Whilst input costs can be clearly specified, measures of success are less

transparent due to knowledge deficits

– Implicit measures and expectations may be assumed, but the explicit

outcome is not likely to be clear

Awareness and Attitude to Energy Improvement

• That may explain why awareness of energy efficiency measures is

high and increasing, but the level undertaking improvements in the

last 2-3 years is static

– 82% of respondents believe their home would benefit from some form of

energy efficiency improvement (increase of 8% on 2013)

– Highest interest in rural communities and those aged 40-50’s

– Most favoured measures include attic insulation, solar panels and

window glazing

• Future interest is somewhat muted when action involved(14%)

– 36-55 year olds and those living in Urban areas are most likely to undertake

energy improvements in next 5 years

– Most likely measures are lighting improvement, draught proofing, boiler

and controls upgrade and attic insulation

Summary of Retrofitting Challenges –The Consumer Journey

Financing

Accessible, flexible and cost effective finance

Ability to repay

Hidden costs

Availability of grants or some incentive

Unaware of savings or inability to calculate savings

Emotional engagement required to break inertia.

Knowledge

What specifically do I need to do to my house?

Where to source trusted suppliers for larger and complex jobs?

How will I know it’s done to the proper standards?

Information Upheaval

Disruption of home

Disturbance to life

Fear Factor…new

Organising and project managing

Where do I go to source info…to learn?

What are the grants, incentives etc.

What are the benefits?

…Message that the home, like a car, needs to be kept serviced (boiler upgrade)

10

Energy Efficiency

Improvement Payment

Methods & Loan

Repayments

Energy Improvements: Funding profile

• 61% cited expense as the main reason for not carrying out measures (down from 71% in 2013)

• the investment level:

– 57% would fund the initiatives from savings (65% in 2013)

– 44% would be willing to take out some form of loan to cover part of costs (up

from 34% in 2013)

• The level at which consumers are willing to borrow is somewhat modest

– the average amount for those willing to borrow is €4,852 (€2,899 :2013)

– with an average monthly repayment of €164, (€96 in 2013)

• Evidence of the consumer mind-set of initiatives as an on-going journey

of incremental energy improvement steps

Energy Improvements: Loans and Incentives

• When seeking a loan, the interest rate is most important (37%)

• Other considerations are also central such as:

– The flexibility of the loan in terms of timing 24%

– The payback period 21%

– The ease of securing approval 18%

• Top three incentives to increase home energy upgrades were assessed

by consumers, and the My Wallet – My Way traits of self reward,

convenience and control are evident in the ranking of the options

– Cash Back once work is complete 87%

– Discount on Cost of Work upfront 82%

– Reduced Property Tax Based on a better BER 65%

Sources of Advice/

Recommendation on

Energy Efficiency

Improvements

Friends & family are the main sources of advice

• Consumer mind-set of maintaining control and valuing convenience means

– friends/neighbours and family rate as the highest source of advice on energy

initiatives

– there is a noticeable increase in getting advice from local accredited

contractors

– advice sourced from the energy supplier has declined

Thank you.