Are shoppers gaining in confidence? - The prospects for Britain's retailers
New research shows cause for optimism for shops frequented by middle classes
25th April 2012 - Analysis by CACI of British Population Survey data shows that for some groups of shoppers there are signs of a return to confidence, as well as a general narrowing in confidence across all demographic groups.
CACI has analysed the responses to the question: 'Thinking about your financial situation at present, how do you think it is likely to have changed in three months' time?'. The confidence levels of each ACORN demographic group have been assessed and the prospects of those retailers dependent on each group (see graph below).
Of the most affluent consumers, the 'Wealthy Achievers' - typically living in high-status suburban areas - have started to gain in confidence after a pessimistic start to 2012. These groups served by the likes of John Lewis, Waitrose and Majestic Wines have continued to spend during difficult economic times but an increase in confidence suggests improvements for sales and margins for retailers for the middle classes.
Among 'Urban Prosperity' shoppers, living in the affluent areas of the major cities, there are still doubts about their prospects. As a result of this uncertainty retailers frequented by this category, such as Jones Bootmakers and Hobbs, may have to wait a while longer before these affluent urban shoppers come back to their previous spend levels.
Those described as 'Comfortably Off' are recovering from their declining confidence around the turn of the year. These consumers have typically shopped in the likes of the retailers such as Ernest Jones and Holland & Barrett.
The 'Moderate Means' category, often living in the former industrial heartlands of Britain, are often the mainstay of retailers such as ASDA, JD Sports and New Look. These people have shown themselves to be fairly upbeat in recent months but economic pressures seemed to be testing their resilience once again. While their overall responses remain positive, the decline in their confidence levels in 2012 suggests that price pressures on their chosen retailers will remain as these shoppers search for discount propositions.
The most deprived shoppers in Britain, the 'Hard Pressed', had a brief feeling of confidence in January, but their resilience has now declined in the face of pressure on public spending given their reliance on benefits. Retailers such as Matalan and Shoe Zone will have difficulties if they continue to have a major focus on these consumers.
Paul Langston, Associate Partner, CACI comments: "Retailers will not get the full picture if they only look at nationwide averages or broad economic confidence indicators. Our analysis shows confidence has taken a slight dip among the average shopper but that some groups are much more upbeat than others.
"By knowing that the wealthiest in the country are starting to see confidence return, and that those on moderate incomes are once again feeling the pinch, retailers can better adapt their short to medium-term business strategies - either taking maximum advantage or mitigating the impact on their business, depending on the type of customers they have."
Notes to editors
About the economic confidence analysis
The percentage showing economic confidence is calculated as a balance of those expecting a 'better' or 'much better' situation less those expecting a 'worse' or 'much worse' situation.
The British Population Survey is the largest up to date study of the British population. The data provides detailed information about the population, both at individual and household level with monthly historical data back to January 2008. Data is collected in person from 6,000 to 8,000 individuals each month (over 80,000 per annum) structured to provide a representative sample of the population.
CACI's ACORN demographic analysis (A Classification of Residential Neighbourhoods) is the market-leading geo-demographic postcode classification that classifies the entire UK population into five categories, 17 groups and 56 types. ACORN is used for location planning and customer analytics. For greater detail on ACORN groups, click here
The latest analysis was conducted on (insert timeframe - important to state if before, during or after the Budget)
Headquartered in London, CACI Ltd is a wholly owned subsidiary of CACI International Inc., a publicly listed company on the NYSE with annual revenue in excess of US $3.15bn and employing approx 13,200 people worldwide. CACI was founded in 1975 in the UK and operates from several offices across the country. We offer an unrivalled range of marketing solutions and information systems to local and central government and to businesses from most industry sectors.
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