Latest Consumer Market Monitor from MII and UCD 

Dublin, Thurs 28^th Jan, 2010: The Marketing Institute of Ireland today launched the latest quarterly Consumer Market Monitor Q4 in conjunction with the Smurfit Business School at UCD. Amongst the results, the report indicates that cross border shopping has cost the Irish Exchequer an estimated €810 million in 2009, the equivalent of 3.5% of the retail market. The monitor reveals shopping in the North is up 25% since the end of 2008 with 250,000 households in the Republic now doing grocery shopping in the North. Q4 results also show 10% of the Republic’s off-licence business has migrated to the North in 2009. Click here to download the full report.

The monitor, which tracks key indicators of confidence and activity in the consumer market on a quarterly basis, shows the level of confidence in December 2009 was 6% better than in December 2008 and the average level of confidence for the year as a whole was 4% better than 2008. However, research shows that consumers are still cautious with their income and have changed their spending habits. Consumers are buying less (55%), spending more time hunting for value (65%) and trading down or buying cheaper produce (35%).

Decrease in consumer spending is believed to have continued in the fourth quarter and remained weak for the Christmas season. The report predicts a fall of 10% for the year due to a decline in disposable income, an increase in personal savings from a low of 3% of disposable income in 2007 to a high of 11% in 2009 and depreciation of the Sterling. Domestic demand is also expected to fall again in 2010 although at a slower rate of – 2% compared to 10% in 2009. 

Retail sales fell significantly in 2009, although final figures are not yet available the November figures (a fall of 11%) are indicative of the trend. All sectors were hit by falling sales with motor trade and household equipment particularly affected. The motor trade’s downward trend accelerated to a record low in 2009 - last seen in 1987 - with total private car sales falling 50%, new car sales by 62.8% and the total number of new car licensed at just 54,432 vehicles. The Irish experience in 2009 has been much worse than in other countries. By comparison, new car sales were down 19% in the US, 6.4% in the UK and just 1.6% in the EU25 compared to 2008.

Other sectors hit in the twelve month period ending November 2009 were: department stores (22%), clothing, footwear and textiles (15%), books and newspapers (16%), bars (13%), food (8%) and pharmaceuticals, medical and cosmetics (6%). Average transaction values have declined significantly, especially within ladies wear. On average, the price per transaction shows women spent €80.55 in Q4 2008 compared to €50.01 in 2009, a 38% reduction.

“The Consumer Market Monitor this year has brought to light important consumer shifts. Q4 results show consumers are voting with their feet in search of better value for money in the North,” said Mary Lambkin, Professor of Marketing at UCD Smurfit School. “This mass exodus reflects a more consumer savvy population and the need for retailers in the Republic to compete with rock bottom prices on offer just over the border.”

The number of new loans paid out for home purchases is a good indicator of the number of homes being bought and sold in the market. The monitor shows there was a 52% decrease in the number of new loans paid out for home purchases between Q1 2009 and Q1 2008, normally the peak season for residential property sales. There was a 5% increase in mortgages issued in Q3 of 2009, 48% of this was mainly accounted for by first time buyers. Mortgages issued to this section of the Irish community have risen by 14% in this period, revealing that although purse strings may be tight, it is considered an opportune time to buy a home.

Personal loans have also declined with credit outstanding falling by 21% in the twelve months ending November 2009. Credit card debt has also levelled off with outstanding indebtedness down 0.6% in November compared to the same month last year, with repayments now exceeding new spending.

Tom Trainor, Chief Executive of the Marketing Institute of Ireland said, “This resource is a great tool to gauge consumer confidence in an ever changing market. A positive from the Q4 report is that retailers perceive that the rate of decline is slowing and that there could potentially be a return to growth by Q3 2010. It must be said however that the fortunes of firms will be determined by the quality of their individual marketing strategies.”

References

All research quoted from the ‘Consumer Market Monitor’ Q4 results, 2010.