Last November Synovate conducted an international survey to explore how people were handling the recession. This survey has just been repeated, interviewing over 16,000 people in 26 countries. Over 400 New Zealanders were included in both these surveys, providing unique insights into what New Zealanders are thinking and doing in the recession, and how we differ from the rest of the world.
This Synovate survey has found that people are slowly regaining a positive outlook about the recession, becoming more optimistic for themselves and their country’s economies. The people believing that their countries’ economies are going to worsen are now a minority (20% of the global sample). New Zealanders are more pessimistic than most, with 36% feeling the economy is going to worsen, but this still represents a decrease from the 51% recorded in November. Australians were notably more pessimistic than New Zealanders, with 42% expecting deteriorating conditions.
Of the global sample, 44% believe that the economy is going to remain the same over the next year (in New Zealand this has increased 8% to 27%), and 30% believe things will get better, a similar level to New Zealanders (29%).
The most optimistic countries, where people are most likely to feel that their economies are going to improve, were found to be the United Arab Emirates (72%); Brazil (64%) and South Africa (58%). In contrast, the pessimistic countries, where people are most likely to feel that their economies are going to deteriorate were revealed to be France (51%); Serbia and Germany (both on 48%) and the UK (47%).
Despite New Zealanders’ growing conviction that the worst of the recession is behind us, the proportion worried about job loss has actually increased. Most people, rich or poor, now know others who have been made unemployed and the problem now has a more human face for many. A third are now worried about the households’ main income earner becoming redundant, up 4% from November. This is similar to the level of the global sample (35%) but it shows that New Zealanders are much more worried about job losses than Australians, of whom only 19% have such concerns. In contrast, Australians are notably concerned about losing money in their investments (16% being worried about this, 9% more than in New Zealand).
As readers will know, such concerns can help fuel recessions, especially when even those with no job concerns reduce their spending - the survey revealed that New Zealanders are amongst the most likely to report making spending cuts, with 61% reporting that they had made spending cuts in the last six months, albeit down from the level of 73% reported in November. However at 61%, New Zealanders are still 8% more likely than the global average of 53%.
Areas where New Zealanders claim to be spending less are fast food (52%), soft drinks (40%), and alcohol (40%). However, spending less does not always mean consuming less. Following the proven marketing strategy of adding value to maintain share in a recession, it will not have escaped readers’ notice that fast food companies are offering a large amount of ‘value deals’ on at present. Synovate Aztec’s supermarket data also shows that people are buying more wine overall, albeit at lower prices. Other similar examples abound, and consumers have learnt to ‘buy smart’ in order to maintain some semblance of their pre-recession lifestyle without increasing their expenditure.
New Zealanders are also saving money in quite different ways to those overseas. In contrast to the global sample, New Zealanders are cutting back on the branded items that can be exchanged for private label supermarket brands such as Pams and Signature (14% of New Zealanders reported such switching, 5% more than for the global sample). Synovate Aztec’s supermarket sales data confirms that over 2008 the value of supermarket house brands being sold has been increasing at high levels. Although over the last few months this rise has plateaued, supermarket house brands are still growing faster than sales overall. It is here that the recessions effects can be clearly quantified, category by category.
This ‘smart buying’ and the resultant exodus to the supermarket brands raises some serious questions for marketers. Much has been written over the years about the benefits of a strong brand. Research has proven that strong brands will attract more consumers, keep them for longer, and command a higher premium. But with so many consumers dropping their favoured brands for house brands, one has to wonder how strong some of these brands really were – gaining sales in a buoyant economy is easier than when consumers scrutinise their shopping, and now things are tougher, the Emperor’s new clothes are being revealed.
Therefore the onus is now on marketers to work even harder for their brands, and this applies to more than the FMCG sector. Increasing value and restricting price rises are obvious short-term tactics to maintain share, but in a changing, challenging time when consumers are feeling nervous, the best brands will be offering reassurance and trust. Brands with a proven track record, and better yet a strong New Zealand identity, have a good base on which to provide the security that New Zealanders now crave.
Good examples of late are Mitre10’s retro-themed 35-year anniversary promotion; Cadbury’s ‘eyebrows’ TVC using well-scrubbed children wearing old-fashioned Sunday best; the Pink Batts ‘warm fuzzy’ campaign; and come summer L&P and Tui will undoubtedly continue to provide the time-honoured reassurance that last week’s new energy drink or new beer variant will struggle to match. If your brand is weak on these areas, then rest assured that my qualitative colleagues are picking up a developing sense of consumer boredom with the recession. Being ‘sensible’ with our shopping palls after a while, and so brands that offer a sense of the new and special, while still offering good value, may also find a way to grow in the coming months.
Jonathan Dodd