Negative perceptions, pessimism, fear: consumer confidence in Europe does not seem ready to bounce back!

Transcription

1 Negative perceptions, pessimism, fear: consumer confidence in Europe does not seem ready to bounce back! 1

2 In today s challenging economic environment, what are the options for companies? Should they focus their marketing and investment efforts on European markets where consumers are more confident, less impacted by the crisis and more ready to purchase? The crisis is hitting everyone, everywhere The large majority of European consumers continue to be very gloomy about the state of their national economy. Just above a quarter of Europeans see their country s economy in a positive light, while just over 70% have a negative view. This outlook is not new in Europe: in fact it has been pretty stable over the last two years. How would you judge the current situation of your national economy (European average)? 2

3 It s important to bear in mind that views on the economic outlook differ widely between EU Member States. This reflects the differences in economic situations from one country to another: while 83% of respondents in Sweden and 82% in Luxembourg are positive about their country s economy, less than 5% feel the same in Ireland (4%), Portugal (3%), Spain (1%) and Greece (0%). How would you judge the current situation of your national economy (by country)? Think... lessons for business: Most European countries have been severely affected by the current economic crisis, which inevitably impacts the way consumers behave. However, confidence is high in some countries which continue to have strong consumer purchase potential. Not all is universally gloomy throughout the euro zone economy. 3

4 European public opinion forecasts do not look positive but optimism is gaining some ground. Economic pessimism continues to dominate European public opinion. Less than a fifth of Europeans think that the next 12 months will be better (19%) for their national economies. Four in ten think that the situation will remain stable ( the same, 40%), and 37% think that it will deteriorate. Yet these figures carry some hope: over time, there has been a slight but real improvement in the forecasts. In Autumn 2011, 16% of Europeans said they expected the economic situation to be better (3 points below the Spring 2012 figure). Furthermore, respondents were more likely to expect the national economic situation to worsen than to remain the same ( worse, 44%, vs. the same, 36%). Six months later, the situation is reversed ( worse, 37%, vs. the same, 40%). What are your expectations for the next twelve months: will the next twelve months be better, worse or the same, when it comes to the economic situation in (your country)? Think... lessons for business: Given the impact of confidence on consumption, this improvement in confidence is a positive sign for the coming months. 4

5 Though the consumer outlook is gloomy at a national level, Europeans remain generally upbeat about their personal situations. Close to two-thirds of Europeans consider that the financial situation in their household is good (62%), despite their gloomy feelings regarding their respective national economies. Nevertheless, there are still important national variations on this dimension: in the Nordic countries, Benelux, Austria, Germany and the UK, more than three-quarters of respondents say that their own situation is good, while less than a third feel the same in Bulgaria, Portugal, Hungary and Greece. How would you judge the current situation in each of the following: the financial situation of your household? Think... lessons for business: There are significant discrepancies between how European s see their personal economic prospects and their forecasts for the economic outlook at a national level. People are obviously becoming anxious that the crisis might eventually impact their own lives. But for the time being, except in Southern Europe, this contamination seems fairly limited. In terms of business, in countries where consumers are upbeat about their own financial situation the propensity to consume also remains high, regardless of their evaluation of the situation of their country. 5

6 An absolute majority of Europeans think that the financial situation of their household will remain unchanged in the short-term. Is this pessimism, or wishful thinking? Less than a fifth of Europeans think that the financial situation of their household will improve in the next twelve months (18%). Conversely, just above one in five consider that this situation will deteriorate in the short term (21%). But a large majority of Europeans expect there to be no change (58%). Once again, Europeans seem to distinguish their personal situation from their country s economic future. Analysing the trend line over an extended period reveals that the personal indicator is not really impacted by the current economic crises: since 2000, an absolute majority of Europeans answer the same, with a range constantly between 50 and 60%. However, the trust index (difference between the better and worse answers) gives us an indication of the level of consumer confidence in Europe: from +16 points in Autumn 2000, it fell to -10 in January 2009, a few months after the collapse of Lehman Brothers. The latest measure, -3 (21% worse, 18% better ), shows that Europeans are fairly evenly divided when it comes to making predictions about their personal financial situation. Again, there are marked differences between countries: the trust index reaches +26 in Sweden, +24 in Latvia, +22 in Estonia and +20 in Denmark; it falls to -53 in Greece, -34 in Hungary and -32 in Portugal. 6

7 An absolute majority of Europeans think that the financial situation of their household will remain unchanged in the short-term. Is this pessimism, or wishful thinking? What are your expectations for the next twelve months: will the next twelve months be better, worse or the same, when it comes to the financial situation of your household? Think... lessons for business: Right now, any marketing or investment strategy in the EU needs to take account of these massive differences between Member States. Pay particular attention to those countries where people are negative about the future of their national economy, but seriously optimistic when it comes to the likely development of their own financial situation in the short-term (e.g. Latvia and Estonia). In such countries, public confidence in the future could have a positive influence on their consumer behaviour. 7

8 Precise plans for Growth The impact of consumer confidence on consumption is well-known. When consumer confidence is high, there is a greater propensity to consume. When confidence is low, there is a lower propensity. However, making assumptions about Europe-wide consumer confidence when considering your investment or your marketing strategy is not valid. Consumer confidence differs widely from one country to another. Some geographical patterns can be identified however: in the Nordic countries, Luxembourg, Austria and Germany, the public sees the economic situation of both their country and their household as good. Consumption in these countries could retrieve their pre-crisis levels relatively quickly. In the Mediterranean countries, Bulgaria, Romania, Ireland and Hungary, the situation is reversed: the public takes a gloomy view of the economy. A low cost strategy could be well-suited for these countries consumers. The Baltic countries are among the most optimistic in terms of forecasts for personal short-term economic prospects. This confidence in the future could imply a boost in Baltic consumers buying intentions. About TNS TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world. TNS is part of Kantar, one of the world s largest insight, information and consultancy groups. Web: enquiries@tnsglobal.com TNS owns all copyright in this paper (including all data contained herein). No person may reproduce or use any information contained in this paper in whole or in part, without express prior written approval. 8