RSA RETAIL RESEARCH PAPER2 WEB HR.pdf

ECONOMIC CHALLENGES AND
CONSUMER CONFIDENCE
CONSUMERS HAVE HAD TO RETHINK THEIR FINANCES
The economic stresses of this century, so far, have changed the
world forever and have had a massive impact on consuming
habits. Consumers have experienced a credit crunch, recession
and practical collapse of the fi nancial system. The Euro has come
under great pressure as a result and there may still be more
economic turmoil across Europe. Some countries such as Greece
and Spain are struggling to turnaround major defi cits. This has had
a major impact on the day to day lives of the inhabitants of those
countries. Consumers have seen rising bills, rising taxation, rising
unemployment and reductions in public services.
For many of the countries across Europe, Retail prices have either
been reducing or going up only steadily. In the UK and Germany,
prices have begun to go up on core products.
For Retailers across Europe, there have been visible changes to
sales volumes with, on the whole, steady declines.
RETAIL SALES 2009 – 2010
% Growth PA
10%
5%
0%
-5%
-10%
-15%
-20%
Russia
Luxembourg
Poland
Sweden
Turkey
Austria
France
UK
Switzerland
Norway
Finland
Belgium
Italy
Eurozone
Germany
Portugal
Czech Republic
Denmark
Netherlands
Hungary
Ireland
Spain
Slovenia
Slovakia
Bulgaria
Romania
Greece
Estonia
Lithuania
Latvia
Ref. Cushman & Wakefi eld, Oxford Economics
According to the statistics, previous recessions have seen food
category sales least affected; this time round this category has also
seen an impact, showing how tough things have been
for consumers.
Consumers once trusted fi nancial institutions almost above all
others. This trust has vanished and there is widespread distrust of
fi nancial institutions in general. There is also now less willingness
or ability to invest for the future. There are major concerns as we
write this for further recession and for further impacts of defi cit
in the Euro.
POVERTY IS A GROWING ISSUE WORLDWIDE
Nearly half of the world (48%) lives in poverty.
Poverty is pronounced deprivation in well-being, and comprises
many dimensions. It includes low incomes and the inability to
acquire the basic goods and services necessary for survival
with dignity. Poverty also encompasses low levels of health and
education, poor access to clean water and sanitation, inadequate
physical security, lack of voice, and insuffi cient capacity and
opportunity to better one’s life.
World Bank[5]
The poorest countries are growing at the quickest rate. This makes
a large shift away from poverty very diffi cult.
POPULATION CLOCK 2011
World
More Developed
Countries
Less Developed
Countries
Population 6,986,951,000 1,241,580,000 5,745,371,000
Births per Year 139,558,000 14,070,000 125,488,000
Day 382,351 38,548 343,803
Minute 266 27 239
Deaths per Year 56,611,000 12,201,000 44,410,000
Day 155,099 33,427 121,671
Minute 108 23 84
Natural increase
Natural increase
Year 82,947,000 1,869,000 81,078,000
(births-deaths)per Day 227,252 5,121 222,132
Minute 158 4 154
Infant deaths per Year 6,078,000 77,000 6,001,000
Day 16,652 211 16,441
Minute 12 0.1 11
Ref. Population reference bureau
Some areas within Europe are also poor and getting poorer as the
economic situation worsens.
SPENDING POWER HAS BECOME MORE FEMALE
Spending power for females has increased, although in many cases
there is still a difference in earnings with male counterparts.
Some examples within Europe:
• In Switzerland 61% of females are economically active vs
74% of males.
• In comparison, in Iraq only 14% of females are economically
active vs 19% of males.