In the latest wave of research for its series of Shaping Ireland’s Future reports, B&A looks at the challenges and opportunities faced by key sectors in the economy.
In this report, we look at consumers spending, saving and budgeting coming out of lockdown and looking ahead to the next year.
It’s a mixed picture, with many of us being able to accumulate savings in the lockdown period but facing further uncertainty about our finances in the short to medium term.
We’re thinking very hard about what our spending priorities are in the next few months and in the run up to Christmas.
We’ve identified 5 key opportunities.
The Covid Bonus
Due to generous Covid payments and expenses dropping during lockdown 50% of us felt we had more cash in our bank accounts when lockdown finished in June.
While this net benefit was broadly felt, it was more pronounced among those working (60%) and those aged 18-35 (59%).
These savings came from reduced spending during lockdown on the following areas:
And we haven’t frittered it all away yet! 88% of those who had spare cash saved all or part of that money.
However, we don’t expect this financial boost to last.
80% of us are anticipating income to stay the same or lessen over the next 12 months.
Of those who think they’ll have less discretionary spend in the next 12 months:
- 30% are worried about taking pay cuts or being put on reduced hours.
- 20% are worried about losing their jobs entirely
- 47% expect their taxes to increase.
As we think about where we’ll make cuts, entertainment is something we look set to prioritise. Maintaining one streaming service (generally Netflix) is a big priority, no matter how tight our finances get.
Home Sweet Home
The home became a focal point for our spending during and after lockdown – and looks to continue:
- 25% of us spent discretionary spare cash on homewares and home improvements
- 17% spent on DIY equipment.
There are a number of reasons, functional and emotional, why we’ve been so focused on spending on our homes.
Interestingly, these are internal rather than external motivators. We have fewer visitors, but our homes are in super shape:
- The need to make our space more multi-functional for home working
- Irritation points becoming unbearable as we’re spending so much time there
- Desire to throw ourselves into a meaningful project
- The urge to nest & create a safe spaces for our loved ones
- Finally getting the time to tackle ‘the list’
The DIY craze looks set to keep running this winter. We’re hearing things like “I still have lots on my list” and “a lot done more to do”
With the Covid-19 crisis going nowhere and restrictions set to continue across the country, we know that winter 2020 will be tough.
Our discretionary spending will be focused around things to brighten the dark days
- Treats: Premium food and drink options were something we splashed out on during lockdown and will be important again as winter sets in. We’re looking for ways to enhance the sense of ‘treat’ (though this causes conflict with our health goals)
- Projects/hobbies: Many of us are interested in taking up something new to distract ourselves. Preferably something that can be done from home.
- Things to look forward to: Short breaks in Ireland, restaurant nights out. Though we’re concerned about how much we can plan in advance, with the new ‘living with Covid’ plan in operation.
- Entertainment: Many of us invested in extra streaming services during lockdown and these are on the list for the winter, along with new technology and extra video games.
Kids First this Christmas
Our Christmas spending this year will be different in many ways, but presents for the kids will be prioritised
- We’ll be shopping in fewer stores: 67% of us will be streamlining the stores we visit to prep for the festive season.
- We’ll be shopping more online: 51% plan to do most of their Christmas shopping online, rising to 77% of 18-34’s.
- We’ll be doing more in advance: 58% of parents intend to do most of their shopping a good deal in advance this year.
- We’ll be enjoying fewer Christmas ‘experiences’: Just 40% of parents of kids under 12 plan to take them to see Santa this year.
- We’ll make sure the kids are alright: Almost 30% of us will prioritise Christmas gifts/toys above other discretionary spending in the next few months.
Ways for Brands to Win
- Considerable numbers of us have amassed some savings (some for the first time ever). Now is a good time to promote saving/planning/investment products and tools. While these savings may be required sooner rather than later, there’s an opportunity to cultivate good habits for the longer term.
- Help with budgeting will also be much appreciated in the coming months, particularly as Christmas approaches. Many families will be under a lot of pressure to make their money go further than ever.
- There will be significant opportunities in the DIY/homewares sector. Marketing strategies have a wide range of consumer needs to play to, but as ever, engaging on an emotional level will be more effective than targeting the purely functional.
- With many of us ready to ‘up our game’ in the DIY stakes, opportunities are there for brands to help ‘upskill’ the DIYers who have done the easy options and are ready to tackle more advanced projects.
- Facing into a tough (and potentially locked down) winter, consumers are willing to invest in things that will keep them occupied and lift their mood. Hobby brands have huge potential over the next few months.
- Small, inexpensive treats look set to help lift the mood in a cost-effective way. If you play in the FMCG space, look for opportunities to upgrade the experience for your customers, creating more excitement and rituals around the consumption of your product.
- When it comes to Christmas shopping, it will pay to get on consumers’ radars early this year, as they start shopping earlier themselves. It will also be important to carve out a place on their (limited) list of ‘go to’ stores (whether that’s online or on the ground).
- Toy and gifts look set to have a good year. With Christmas ‘experiences’ set to take a back seat, Christmas shopping trips may become even more important as a way of getting people into the Christmas spirit.
For more information on this research visit www.banda.ie