The big picture is that UKoutput is still below the level it reached in 2008; in contrast, Germany, France and the US all have higher GDP levels than when the crisis struck. The UK’s recovery from recession has been slower than any comparable recoveries during the 20th century, the 30s included. Real wages are still more than 5% below their level of 2008.
So despite a government-stoked housing bubble and manufacturing figures that reflect a modest pick-up in Europe’s economies, it is too early to proclaim a new economic era. The UK economy remains weak, and consumer debt levels remain high. At the same time, there are signs that consumers are re-evaluating their lives. In our 2013 survey, 59% of UK consumers agreed that "I am now more focused on enjoying what I already have instead of trying to become better off". There were signs of this shift before the recession. In short, "the recession consumer" is going to be with us for some years to come.
The Futures Company has been tracking post-recession consumer attitudes in Britain and Ireland since the financial crisis hit, and we have found that exposure to debt is the biggest single factor shaping consumer attitudes. Research by other organisations has come to the same conclusion.
Exposures to debt
From our data and analysis, we have identified three main groups. The first, "All hands on deck" (25% of the UK population), has chronic experience of debt; it dominates their lives. Typically, they have financial responsibilities and dependent children. The second group, "Choppy waters" (41%), has financial commitments and typically still support children. They have debt, but it is manageable – provided nothing unexpected happens. The last group, "Plain sailing" (34%), is older, typically has few financial responsibilities and low exposure to debt.
Both the "All hands" and "Choppy waters" groups are broadly similar to the population as a whole, if a little younger. It is as easy for the more affluent to take on debt as the less affluent.
The differences in attitudes between the three groups are striking: the gradient in attitudes from financially exposed to financially secure is steep.
Sitting behind this data is a second story about how people respond to this financial pressure.
The Consumer Outlook research this year found that almost half of consumers agreed with the statement "In recent years, I have made new friends and social connections"; a fifth agreed that "The recession has brought me closer together with my family and friends", while one in eight agreed that "I talk to my neighbours more now than I did before the recession".
Across all three of these "connection" statements, the level of agreement was higher for those in the "All hands" group.
The most striking finding emerged from deeper analysis of this data. On average, 33% of UK consumers agreed that "I am starting to feel more optimistic about the future". But those who had sought out new connections were significantly more optimistic than the average.
In other words, people’s attitudes to the future are more influenced by their social connection than their financial situation. Consumers have started to reduce their vulnerability to markets by paying closer attention to the elements of their lives that they can influence through their own actions.
At the same time, the surge of consumers’ scepticism about businesses and governments should not be underestimated. We have identified a group – the "Global enraged" – which can be seen in every market where we have carried out the research. It is deeply mistrustful of business, angry about "the 1%", and thinks that links between business and governments are too close.
In the UK, this group represents 22% of the population and is broadly similar to the population as a whole; similar social class, gender and age.
If debt defines market behaviour, many companies’ market models are already out of date.
There are two particular points here for the post-recession marketing landscape. The first is that, at more than one-fifth of the population, almost everyone knows someone who holds these attitudes. The second is that, in an age of social media, this anger can be channelled very quickly, helped by activism groups such as 38 Degrees and Avaaz. This makes for a highly charged public mood, seen in changing attitudes to corporate tax and activism over zero-hours employment contracts.
The "Global enraged" ask of brands: "Whose side are you on?" But post-recession consumers are asking similar questions. They are looking for value, assurance and mental space. And if debt defines market behaviour, many companies’ market models are already out of date. Here are five pointers for marketers trying to engage the "recovery consumer".
Looking for value
One of the common mistakes made by some brands in the wake of the recession was to confuse value with price. The deal is more complicated than that.
Value is about the whole package, the emotional and service benefits as well as the product or core service. Consumers will pay more if they understand the value of the whole thing. For example, people will buy Green & Black’s or Divine chocolate on occasion, rather than, say, Galaxy because they reserve some of their budget for small treats. Coffee shops are prospering for the same reason.
One of the smartest value responses has been Sky Sports’ Day Pass. Post-recession consumers do not go out so much: this offering turns a proposition that might otherwise feel like a burden into a special occasion, and without harming margin.
Assurance is a promise that you are not going to be cheated, that there aren’t any ugly clauses in the small print or horsemeat in the lasagne. Assurance failures are one of the reasons why utilities are so mistrusted. But some brands have used assurance to their advantage. Primark took leadership in the wake of the Bangladeshi factory collapse in April, and stuck with it, thereby helping to dispel a perception that it was indifferent to the workers who produced its goods. Similarly, the supermarkets’ "price-match" battle is about assurance.
But assurance now extends beyond narrow consumer interests to citizens and communities. The benefits from even the fairest returns scheme will be undone quickly if you switch to an offshore workforce. The brand has to go all the way through the business.
Creating mental space
The post-recession world is a stressful one. There is pressure on time as well as budgets, and complexity increases when you have to micromanage your finances. A significant post-recession trend is about businesses giving their consumers more mental space by reducing the number of decisions they have to make.
US company Dollar Shave Club is one example. It sends new razors to its customers once a month in exchange for a regular payment. It sounds simple, but it requires the business to think through its
customers’ journeys and service design from first principles.
Driven by debt
Many businesses segment their customers by income, sometimes by spend or life-stage. But what we see in the Consumer Outlook data is that behaviours and attitudes are more likely to be framed by debt than income.
This suggests that marketers need to understand the post-recession consumer through a new lens. Many businesses do not currently have the data to enable them do this.
Just like friends
In summary, brands and businesses need to behave more like friends toward consumers and customers, looking out for them rather than trying to trick them. There is more to this, and my colleague J Walker Smith has written and presented widely on the notion of the "kinship economy".
For the moment, however, the question for marketers as they think about their post-recession consumers can be reduced to a single line: "Is that how a friend would behave?"
Andrew Curry is a director of The Futures Company.
Consumer Outlook is available as part of its UK Monitor, a syndicated insight package.