The Death of the Credit Card?

UK consumers are among the most indebted in the world. The average UK family owes £7,900 on personal loans, credit cards and overdrafts.

Type this topic into your search engine and the results are endless, money managing and saving tools are readily available with little or no cost. With financial matters appearing so frequently in the news, are people now starting to get on top of their finances?

Card repayments overtook new borrowing by £118 million in April, the largest amount since August 2006, when they outweighed borrowing by £152 million. Coupled with the younger generation showing an inclination for debit cards and digital technology, this trend indicates that the use of credit cards will continue to fall. Suggesting that debit cards and other innovations will force the credit card into a dwindling market.

PricewaterhouseCoopers' (PwC) recent report argued that credit card use could plummet into permanent decline. The rise of digital technology such as mobile payments and payday lenders is changing how people access credit.

Melanie Bowler, an economist at Moody's Analytics, said: "Households are favouring paying down debt, rather than undertaking new borrowing”. Consumer Credit Counselling Service (CCCS) saw a 27% increase in the number of people contacting it for help with council tax arrears, from 13,353 in 2010 to 16,958 in 2011. The average amount owed in council tax arrears also increased, from £675 in 2010 to £717 in 2011. Suggesting people are looking for alternative solutions, rather than paying a bill on credit.

However with the rise in funds borrowed from payday loan companies, households run the risk of purely shifting their debt to another commodity. With 2012 not yet bringing an end to financial uncertainty, demand for credit is likely to remain high; however credit cards are no longer the favourable source.

Lauren Overton
Consumer Analyst

How Hard is it to be Healthy?

Recent statistics show that if current trends continue 60% of men and 50% of women will be clinically obese by 2050. The government have responded with £2bn spend allocated over the past decade tackling obesity levels, including £733m on school sport.

A healthy way of life takes up time, effort and money. Going beyond just eating; encompassing physical activity, work-life balance and behaviour change.

The government’s white paper ‘Healthy lives, healthy people’ was launched in December 2010. The initiative aims to improve the nation’s health by focusing on five areas: food, alcohol, physical activity, health at work and behaviour change. In research conducted by Group Risk Development (GRiD), more than one in three (38%) said their top priority in 2012 was taking steps to improve work-life balance.

Price is a main concern for being part of the well-being trend. In a poll conducted by World Cancer Research Fund, only 17% of people in low income households eat their 5 a day compared to 27% in higher income groups.

Exercise also needs to be more accessible and convenient. With faster results in demand, quicker solutions to get fit such as HIT (Higher Intensity Training) are proving popular. Mintel’s research indicates that many consumers no longer wish to be tied in to lengthy contracts. Instead, they are looking for flexibility - demonstrated in the success of 24-hour gym opening times. In 2010, Pure Gyms, a national 24-hour chain, ran just 12 outlets. By 2013, that will rise to 45.

For brands to engage with consumers in the health trend they need to introduce healthy lifestyle changes in small convenient bites. Providing a solution that is easy and affordable for the consumer to adopt into their daily routine.

Lauren Overton
Consumer Analyst

Will People Ever Go Shopping On Their Mobile?

According to Kantar Worldpanel, over half of the UK population now have a smartphone. But will people ever use it as a market place that could challenge the traditional retail environment?

Internet and application access on mobiles has empowered customers to make purchases in almost any place at any time; should they wish to. According to the IAB and PWC, the percentage of mobile visits to online retail sites rose from 2.6% in 2010 to 8.2% in 2011 while the average transaction carried out on a mobile device rose from £12.20 to £17.49.

However, claims of mobile retail replacing the high street are exaggerated. Shopping online is complementary to the retail experience, not competition. Purchasing on a 3 inch screen as an experience barely compares with going into a store to try on clothes, test out the latest gadget or browse interesting books. Even as a proportion of online sales, only 5% are done via mobile.

What mobile is great for is to assist retail, both online and in-store. Whether this is to increase footfall, pay for products in-store, or mobile marketing. Sarah Ballie, Mobile Commerce Manager from Debenhams has made the point “There are many benefits of people engaging on mobile within the store: allowing them to double check prices against the website, read reviews or share products with friends for a second opinion”

  Mobile is a platform that is often used in conjunction with other media, it is important to be used with broad mix of media to engage with users. It is an engagement tool, not a market place. At least not yet.

Paul Barnes

Media Analyst

Inflation and Trading Down Brands

Rising prices and a move to cheaper brands are a hallmark feature of the economy over the last 5 years. However, with the UK recently reaching the lowest inflation level for 2 years, could this be the start of the premium brand revival? 

How will the Olympics Benefit Sponsors and the UK

Summer 2012 will bring the Olympics to the UK, with several million spectators following closely behind.

 “The Olympic Games give the host country exposure on the front page, in the middle pages and on the back pages of every newspaper in every country on Earth over a six-week period.”

Michael Payne, International Olympic Committee.

The Faceless Crowd

There is a basic human need to be part of a group. We move through many on a daily basis. Individuals gather for countless reasons; from organized events to unintentionally on a busy street.

The increase of mass media also allows the rapid exchange of information and opinions around the world to form online groups. For example, #100daystogo is currently trending on twitter – a mixture of thousands of people and companies sharing their views and sponsorship offers on the Olympics. A perfect opportunity to influence the masses.

Is Too Much Choice a Problem for Consumers?

Today’s choice of products has never been so great. Tesco stocks 91 different shampoos, 93 varieties of tooth paste and 115 types of household cleaner according to The Economist. This should be great - conventional economic theory points to competition and choice as two important drivers for welfare and profits. 

Yet too much choice can have considerable negative effects. In 2004, Barry Schwartz wrote ‘The Paradox of Choice-Why More is Less’ arguing that wide choice causes anxiety for the consumer. Who wouldn’t be anxious when Starbucks offer 87,000 different drink combinations?

How Consumers Save Money

Since 2008, consumer spending has weakened and people started to focus on saving their money. Households are likely to remain under pressure for the near future and are looking for ways to get more for their pound. 

Here are 3 interesting ways in which consumers save and squeeze more value from their money:

Is the High Street an Experience Worth Leaving Your Laptop For?

British high streets are in crisis. The three most affected areas are Stockport, Nottingham and Grimsby with the North West as a whole the worst affected and it is estimated that 2011 saw 20 shops close every day in the UK.

It all sounds very ominous and even though retail guru Mary Portas has outlined measures she claims will put the high street back on the road to recovery, it is unlikely to be a speedy one. Despite this, last week saw the announcement that consumer spending was up 0.9%, the strongest monthly growth since the Royal Wedding (April 2011). 

That’s ‘In-tertainment’

Consumers are increasingly seeing entertaining in-home as a viable and desirable alternative to going out to socialise. As they make changes to how they spend, but stop short of cutting back on luxuries which they feel maintain their identities, entertaining friends at home seems a convenient solution.

According to Mintel, almost eight in ten (79%) consumers drank alcohol at the home in the last six months. Besides price concern, other benefits to drinking in the home were recognised, over a third (35%) of consumers consider drinking at home less hassle than travelling to a bar and 27% find it more intimate to drink at home.

Online and the In-Store Shopping Experience is Vital for Retail’s Future

Retailers are feeling the pressure at the moment. Slow consumer spending coupled with a shift to digital purchasing have created a challenging environment. 

Hawkin’s Bazaar, LaSenza and Barratts have all entered administration within the last few months and the likes of Tesco, Next, HMV and Game are all down in terms of like for like sales.