Consumer confidence

Consumer confidence measures public attitudes to personal spending and the general economic outlook, and is used to predict future consumer spending. Having slumped at the start of the economic downturn in 2008, confidence recovered slightly in 2009/10, before falling again to a new low at the start of 2011. Most surveys report monthly so confidence measures can fluctuate quickly. The austere national mood, combined with weak economic growth, high unemployment, inflation and declining real incomes mean that confidence and spending are likely to remain subdued.

What are the implications?

  • In an effort to stimulate the economy, interest rates are likely to remain low until consumer confidence and spending begin to recover.
  • Cautious consumers will save rather than spend their disposable income – and this may limit the level of individual giving.
  • Pressure on all sectors to cut prices as empowered consumers seek discounts.
  • A slow recovery, or risk of 'double-dip' and a economic downturn if low levels of consumer spending persist.
  • Spending on high cost goods may be viewed as a luxury, so sales of ethical products and services such as organic food may be restricted.
  • Other luxuries may also suffer such as membership subscriptions, as well as social enterprise activity, particularly where it is consumer oriented.
  • Charity shops on the high street may see increased demand as consumers may prefer second-hand goods, but at the same time there may be a reduced supply of unwanted items donated.

Moving forward

Consumers and supporters are looking to cut their spending and save money. What does this mean for your fundraising strategy?

  • Are there tactics that your organisation can use to make your income streams more resilient (for example by converting donors to regular, planned giving using monthly direct debits)?
  • How can you retain your existing donors? Despite the pressure on other sources of income, now might not be a good time to ask your donors to increase their level of giving.
  • Can your organisation explore opportunities for more in-kind support, such as new streams of volunteers as parts of the workforce needing to change careers or gain new skills?
  • Do you understand which of your products and services (including memberships, events etc) might be perceived as luxuries by your stakeholders?
  • Are your high street shops receiving more business? Are you able to maintain stocks or are donations falling off? If you are short of stock, should you raise your prices?

Want to know more?

Nationwide Consumer Confidence Index

Published by: Nationwide - a Building Society

Date: Monthly

Format: PDF

What is it? Data on a broad range of indicators of consumer confidence. It includes data on the current and expected state of employment, the economy and spending, as well as other relevant indicators.

How useful is this? The commentary is limited but this provides a useful comparison to the Consumer Confidence Barometer. The website also provides a data archive as well as details on the methodology.

GfK NOP Consumer Confidence Barometer

Published by: GfK NOP – an international market research company

Date: Monthly

Format: Web

What is it? The latest press release referencing the most recent data. The index itself is a measure of consumer confidence, based on monthly survey data. It is based on actual and predicted changes in individual finances and in the general economy. A brief commentary is also given on the website.

How useful is this? This is a respected and well-known index, giving a useful measure of overall confidence. It omits demographic nuances in confidence, but as a measure of overall consumer confidence it is worth monitoring. Although headline results are given in press releases, details of results require a subscription.

UK Consumer confidence in 'astonishing fall'

Published by: BBC News

Date: January 2011

Format: Web

What is it? This article discusses the sharp drop in consumer confidence in January 2011.

How useful is this? Although it is reporting a current event, the article contains useful information about the likely impact of a sharp fall in consumer confidence, as well as some predictions from a private-sector research consultancy about the future prospects for consumer spending and the economy as a whole.

Last updated at 17:44 Mon 07/Feb/11.

Discuss

How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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