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GfK: Consumer Confidence Weakened In March

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GfK has reported the results of its monthly Consumer Confidence Index for the month of March.

Joe Staton, Client Strategy Director at GfK says: “Against the threat of a dramatic slowdown in the UK economy due to the spread of Covid-19, the Consumer Confidence Barometer has weakened by two points this month.  Importantly, this research was carried out during the first two-weeks of March, when the coronavirus was headline news but not impacting day-to-day lives of people across all UK nations to the degree we see today.

"After a run of increasingly positive numbers since last December, we’re now seeing very clear disruption. There’s a six-point drop in perceptions of the economy in the coming year, although the view on the next 12 months for personal finances has recorded a softer decrease of three points. The steep eight-point fall in the Major Purchase Index is worrying news for retailers across the land.

"While we have a long way to drop before we match the devastating numbers seen in July 2008, when the Overall Index Score crashed to -39 points, we are likely to suffer further deterioration now that we are in  lock-down in Britain."

UK Consumer Confidence Measures – March 2020

The Overall Index Score in March 2020 is -9. One measure increased, three measures decreased, and one measure remained the same this month.

Personal Financial Situation

The index measuring changes in personal finances during the last 12 months has increased by three points this month to +2; this is two points higher than March 2019.

The forecast for personal finances over the next 12 months has decreased to +3 this month; this is one point higher than March 2019.

General Economic Situation

The measure for the general economic situation of the country during the last 12 months remains the same this month at -23; this is ten points higher than in March 2019.

Expectations for the general economic situation over the next 12 months have decreased six points to -27; this is nine points higher than March 2019.

Major Purchase Index

The Major Purchase Index decreased eight points in March to -2; this is three points lower than it was in March 2019.

Savings Index

The Savings Index decreased ten points this month to +10; this is ten points lower than at this time last year.

KPMG Comment  - Linda Ellett, UK head of consumer markets at KPMG

“Given the significant level of disruption caused by COVID-19 and the impact it’s having on everyone’s day-to-day lives, it’s unsurprising to learn that consumer confidence has retreated, while shopping behaviour has seemingly turned on its head.

“The decline in GfK’s consumer confidence figures show the growing levels of consumer anxiety being felt by us all, as the nation worries about its health first and foremost, but this also has significant ramifications for our economy. The decline in confidence preceded the nation’s formal ‘lockdown’, so in all likelihood the situation is now more acute than recorded. Businesses and consumers are having to grapple with the definition of essential versus non-essential purchases, and understandably the focus has to be on what’s needed, not necessarily what’s wanted, in these times. We aren’t likely to see major purchases being made until a degree of normality returns, with the focus instead being on essentials and whatever else can be sourced online.

“Focussing on necessities, we all know that grocers are on the front line where consumer industries are concerned. Kantar’s grocery market share data records unprecedented surges in demand in March, with the biggest month for grocery sales growth ever recorded. Grocery’s ability to keep the nation fed is quite remarkable really, and testament to the commitment of all the people working in those businesses and their supply chains, but shoppers do still need to exercise consideration for others when shopping.

“With the end date of this disruption still unclear, the consumer landscape could well change more permanently. The lock-down period we’re experiencing will certainly be long enough to form new shopping habits. Businesses would be wise to think carefully about how they can ensure they can adapt accordingly for whatever the new normal is.”

Source : GfK and KPMG

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01 April 2020

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