Lifestyle Spaces - edition 2

LIFESTYLE SPACESA trends briefing by SMG Research

Designed to keep you up-to-date with the consumer issues that are affecting your business, Lifestyle Spaces brings you the latest in consumer trends insight from SMG. The second edition includes:

• An exploration of the “New Normal”• A focus on the changing nature of shared TV viewing

EDITION 2

What will you remember the Noughties for? Cast your mind back to 2000… Mr. Blair was in power, the economy was growing at a rate of 3.9%, and Bling-Bling was the phrase du jour. By the middle of this decade credit cards were bulging, bankers’ bonuses had more zeros than a phone book, and scores of Wags shopped ‘til they dropped. Well, it was fun while it lasted. At the start of the new decade, those excessive days seem long gone.

In 2009 we experienced the most severe economic turmoil since the Second World War. Faced with the very real threats of job insecurity and credit shortage, consumer confidence took a hit. According to a recent report by The Future Foundation, some three quarters of UK consumers claim to have responded to the recession by cutting back in some way at least. However, trend forecasters have been predicting a shift away from this conspicuous consumption for some time now.

Referring to ‘the new sobriety’, The Future Laboratory have reported on an emerging consumer mindset whereby individuals adopt a more

considered approach to satisfying their material needs. The Great Recession has simply provided a catalyst for many consumers to reevaluate the excessive spending habits they acquired in the so called ‘nice decade1’

The Great Reset According to the Future Foundation, 48% of consumers claim to be ‘carefully budgeting’ as a direct reaction to the recession, and 54% are expecting to ‘reduce spending across all areas in the next 12 months’. Interestingly, the majority (75%) of consumers across all incomes and age groups are claiming to adopt this ‘recessionary psyche’. This view was shared by one member of SMG’s panel The Street: “I think the recession has made me more aware about managing and saving money which is a great life skill”.

While consumers are showing a greater awareness of price (83% of UK shoppers agree), growing contingents of shoppers are now considering the whole value equation with factors such as quality and durability rising to the forefront. This group is also willing to invest time in this process, with 49% claiming to ‘shop around extensively to get the best deals’.

That said, it would be short sighted of us not to mention another factor that is contributing to this shift away from conspicuous consumption: the widespread anxiety for the health of the planet, and the consequent need for sustainability. 70% of UK consumers now agree that they are concerned about what they can personally do to help the environment - up from 40% in 1999. Combined with Government campaigns which have drawn our attention to the dangers of excess, we as a nation have a renewed sense of the world around us. After a series of prosperous years and material fulfillment, scaling back consumption and adopting a more considerate approach feels like the ‘right thing’ to do for many. However, charging a premium for a mainstream concern might present a conflict for increasingly price-conscious consumers. Instead, integrating environmental awareness into a product or service will be an expected element of a brand proposition as we

UPDATE ON THE STREETSMG’s qualitative research panel ‘The Street’ has been up and running for just over a year now. In that period, our citizen trends commentators have discussed a variety of topics relating to our clients’ business. By providing a platform for UK consumers to express themselves, we have the enviable position of being able to tap into consumer opinion from up and down the country on a daily basis.

If you have a question you would like to put to The Street please get in contact.

TREND IN THE SPOTLIGHT: THE “NEW NORMAL”In each edition SMG will present you with an emerging consumer trend that could impact on your brand and communications. This edition will examine the effect that the economic downturn – what many commentators are terming the “Great Recession” – has had on consumer behaviour, and which of these behaviours will remain long-term, potentially presenting us with a “New Normal”.

1 Mervyn King, Governor of the Bank of England

By Donna Booth, Associate Research Director

head into the next decade. At this point, which other behaviours and activities are likely to stick as we reach the New Normal?

Home Sweet HomeAs we approach the New Normal the concept of home is enjoying something of a renaissance as people retreat from the pressures of the outside world into the safety of their own surroundings. Under the ‘recessionary psyche’, around one in five consumers now claim to take fewer holidays and spend less on out-of-home entertainment such as eating out. Combined with television programmes that have educated the nation on the importance of healthy eating and food provenance, consumers have been showing a renewed interest in home cooking. One member of our own research community The Street explained this sentiment: ‘I love to bake - I make cakes, pasties and scones - it’s great eating something knowing that you actually made it - gives you a sense of accomplishment and that warm feeling when sharing it with friends and family’.

The Rise of the AldiratiAs people retreat to their homes and shy away from eating out, supermarkets are returning greater profits than ever. Through successfully positioning themselves as a reliable way to save money, supermarkets are now more trusted institutions than banks or Governments as we settle into the New Normal.

Whilst some consumers have no choice but to make cutbacks, not all shoppers are viewing this economising as down-trading. In fact, budget supermarkets Aldi and Lidl have been reporting a rise in sales amongst affluent customers who are deriving some enjoyment from displaying this new awareness of ‘value’. According to Paul Foley, managing director of Aldi in the UK and Ireland, the number of ABC1 consumers coming through the doors has doubled over the last three years. Adopting a more strategic and

thrifty approach to shopping, a new tribe has emerged: the ‘Aldirati’.

Also called the NFA’s (No-Frills Affluents) by the Future Laboratory, this consumer group is recognisable by high household incomes of more than £80k. Having developed a taste for the finer things in life during more prosperous times, they are now tightening their belts to reflect the current mood.

Shopping for essentials such as cleaning products at discount grocers allows them to supplement the basics with fresh produce from the local farmers market, or to purchase the finest cuts of meat from the organic butchers. There is a certain level of status to be derived from being part of the ‘Aldirati’. Even when an individual’s personal financial position has remained stable, affluent shoppers are enjoying a new sense of morality from their more thoughtful consumption and are using this to gain a certain social ‘one-upmanship’.

Digital DiscountsWith our renewed focus on value, even those with spare cash might need a little reassurance and encouragement before making a purchase decision, however large or small. Consumers are increasingly turning to the internet to seek out ways of obtaining the best deal on big ticket items through price comparison sites, or to relieve guilt by subsidising a meal out or shopping trip with a voucher or coupon. And once again, this isn’t limited to the least wealthy consumers. One member of The Street recounted ‘…several of my mates who are actually quite well-off also do this [redeem vouchers] as every saving you can make in this credit crunch helps’.

With 79% of the UK now online, the internet is experiencing its first recession in the mainstream. Whilst consumers have been exploring the cost efficiencies the internet can provide for a while, the Great Recession has brought this into the limelight. At the touch of a finger, the price transparencies and cost savings that the internet affords are becoming increasingly difficult to ignore. And once again, these savvy shoppers are keen to spread the word to let others know how fashionably frugal they are. According to the Future Foundation, 51% of consumers agree that they ‘often share tips on how to cut costs and save money’, and 38% agree that they ‘often pass on high street vouchers to friends and family’. SMG believe this trend is only set to continue into the New Normal as

e-commerce grows, and shoppers take web prices and discounts to the high street through print-outs and eventually through mobile phones.

Neo-Haggling Armed with the new level of knowledge that the internet provides, shoppers are set to become even more demanding on the high street. Adopting a ‘we’re in this together’ attitude, shoppers are expecting retailers to offer a degree of empathy and flexibility. In the UK, we have heard reports of ‘demanding consumers’ trying their bargaining luck on the high street to get discounts of up to 20% from retailers such as John Lewis, Marks & Spencer, and Comet. In an attempt to counteract this trend, US retailer Macy’s released a press statement saying they were not open to haggling of any sort. However, with consumers taking things into their own hands with online initiatives such as Bartercard, Freecycle, and Whatsmineisyours, the changing balance of power between retailers and consumers will be an interesting one to watch in the New Normal. Especially if we are to believe American magazine Barter News’ claim that, ‘we are now moving into the golden age of barter’.

What does this mean for your brand and communications?

Your consumers are exploring new thrifty behaviours through this recession which are causing them to reconsider their consumption habits. Predict which of these will stick and have an effect on your brand when we emerge through the other side and arrive at the New Normal.Beyond the recession, this shift away from conspicuous consumption will ultimately be underpinned by the threat to our planet’s wellbeing. Consider how you can incorporate ethical and environmental concerns into your offer without asking customers to compromise on price.As people retreat to their homes, supermarkets have emerged as trusted institutions. This has occurred through communicating and facilitating savings to a new class of savvy shopper who will be looking at value overall rather than price alone. Is there anything your brand can do to enhance its overall value package? As the ‘recessionary psyche’ starts to lift and shoppers start to regain their confidence, they might need a little reassurance or justification before parting with their hard-earned cash. Could your brand facilitate this with an online discount or voucher code? Get it right and savvy shoppers might also take it upon themselves to tell their peers just how fashionably frugal they are.

Sources: Sources: The Future Foundation (21st Century Trendsurfing, Reacting to the Economy, How Price is Competing for Leadership within Consumer Decision Making), The Future Laboratory (New Sobriety, No Frills Affluents), www.timesonline.co.uk (The rise of the Aldirati), http://money.cnn.com (Seven lucky consumer businesses), www.thisismoney.co.uk (King: ‘Nice’ decade is behind us)

For further information on Lifestyle Spaces please contact: Donna Booth at [email protected]

Instead, they have been settling down in front of the trusty television set. In fact, UK TV viewing is at its highest point for a decade. SMG has found however that shared viewing is in decline. Reflecting an increasingly complex landscape, deeper TV audience intelligence will be required to pinpoint these valuable shared viewing occasions and to understand how advertisers can reach these environments in the most cost effective way.

Viewing is upUndoubtedly TV is fragmenting with programmes rarely delivering audiences over 12 million anymore. But the fact is that overall TV viewing levels have increased by 3% since 2001, with the average adult watching four hours per day.

Although there are now more TV sets in the average household versus five years ago, viewing levels on the main set have also increased. It now accounts for 90% of total household viewing. This isn’t really surprising when we consider the difference in viewing experience in the living room versus on secondary sets – the front room TV has become bigger, they are increasingly HD-enabled and connected to a PVR (circa 35%) – all encouraging family members to watch TV in their living room.

Shared viewing in declineSo with viewing in the living room increasing you might expect shared viewing to have increased accordingly. But this isn’t the case. In contrast, we’re seeing total shared viewing levels progressively decreasing over the last six years, even on the main set. (see fig. 1).

Shared viewing now represents 53% of our total viewing compared to 59% in 2003. Based on this decline, watching TV socially will become the minority of our viewing by as soon as 2014 as we choose

to watch programmes alone.

But to put this in context, we are still spending on average just under 14 hours per week watching TV with someone else. This makes it our most sociable leisure pursuit. Indeed, television brings families together, couples together and friends together. Which other medium can do this? According to IPA Touchpoints only 16% of our online consumption and 27% of our radio listening is mutual – compared to 53% of our TV viewing.

Efficiently reaching shared viewing occasionsShared viewing occasions are of particular interest for advertisers whose brand purchase is a joint decision i.e. for holidays, cars, or for FMCG categories where the consumer and purchaser are different members of the household, or if the advertiser wants to cash in on the more sociable viewing context. For those seeking brand presence across such occasions, the decline in shared viewing means that a deeper and more ongoing analysis of viewing is required. SMG’s in-house TV analysis system, TARDIIS, is able to identify the most efficient social TV territories and as a result is becoming increasingly important to deliver mutual consumption TV strategies.

WE’RE WATCHING MORE TV BUT LESS OF IT TOGETHER

In reaction to economic threats, UK consumers have responded by going out less

By Simon Stanforth, Group Research Director

“My hubby or daughter normally decide what to watch, but we all love the X Factor and Britain’s Got Talent so when they are on we all watch”Female, 41, The Street

“I watch more TV than I ever have, but not live…usually recorded on Sky+”Female, 37, The Street

FIG 1. SHARED VIEWING IN DECLINE

© MediaVest 2009

Source: BARB/TARDIIS (Audience – Individuals)

FIG 2. TOP MUTUALLY VIEWED PROGRAMMES

© MediaVest 2009

Programmes

Film: Happy Feet

Film: Annie You’ve been framed at Christmas

Film: Casper

Lee Evans – Big Film: Polar Express

Film: Santa Claus The Movie Film: Charlie & The Chocolate Factory

Creature Comforts

Deal or No Deal Ant & Dec’s Christmas Show

Film: Elf

Day

15.40

16.15 15.10

17.50

23.05 13.10

10.55 18.00

10.25

15.10 19.30

17.45

Channel

itv1

C4 itv1

itv2

C4 itv1

itv1 itv2

itv1

C4 itv1

C4

Source: BARB/TARDIIS Min. 2.0 Ind TVRs, ranked on conversion, Oct-Dec ‘09