They say that money can’t buy you happiness - but new research from Mintel reveals it can certainly go a long way towards it.
With economic pressures and an increasingly polarised society all making their mark, the research highlights the divide that has opened up between British consumers over the past couple of years - both in affluence and outlook.
In new figures from British Lifestyles 2011 - Mintel’s flagship report – it appears that money CAN buy you happiness and affluence plays a pivotal role in financial outlook. Indeed, today almost six in ten (58%) of those earning £50,000 and over are satisfied with their life, compared to just four in ten (43%) of those earning under £15,000.
Similarly, almost half (47%) of those earning £50,000 and over have achieved the important things they want in life compared to three in ten (31%) of those earning less that £15,500. And despite being arguably in the ‘prime of life’, it is not consumers aged 25-54 who are most satisfied with their lives.
Those aged 16-24 are the group most optimistic about their finances (74% say they are healthy) with retirees faring next best (31% have money left at the end of the month for a few luxuries).
Toby Clark, Head of Finance at Mintel, said:
"There have always been sections of society who do better than others, but when times are tough it becomes harder to gloss over those differences. The UK is staging a weak recovery from the recession of 2008-10 - Government spending cuts, too, are playing on consumers' minds, with seven in ten feeling that the austerity measures will leave them worse-off. The consumer remains under spending pressure with squeezed incomes not keeping pace with price rises in the shops. As with 2010, the path of recovery from the recession has proved somewhat bumpy for consumers whose confidence remains low. With interest rates still low, and an anticipation that household outgoings will rocket as soon as interest rates start to climb, the consumer remains wary.”
Today, as many as half (50%) of all Brits are satisfied with their life, three in ten are neutral (31%) while a fifth (21%) are not content with their lot. Almost four in ten Brits (38%) have achieved the important things they want in life. Meanwhile, slightly more consumers (43%) admit that "in life they always want more than they have.
Alexandra Richmond, Senior Consumer Analyst at Mintel, said:
"A lack of money holds people back from realising their dreams and as a result, the unemployed and those living in lower-income households are the most likely to say that they always want more than they have. They are less satisfied with life and less likely to agree that they have achieved the things they wanted to."
And it is consumers living in Yorkshire who are the nations happiest consumers – almost six in ten (57%) are very satisfied with life compared to an average of 50% across the nation. By contrast, those living in London are the least content, indeed, today, less than half (48%) of Londoners admit to being happy.
Life in a village adds up to a content existence, well over half (56%) of those living in a village are satisfied with their lives, with Suburban dwellers (52%) the next most satisfied - and Urban Dwellers (47%) trailing someway behind.
The markets covered by Mintel account for 90% of consumer discretionary spend. In 2010, UK consumers spent a total of £993 billion on goods and services, with housing (£326 billion), transport (£157 billion), and in-home food (£70 billion) consumer sectors with the highest consumer expenditure.
Compared with Mintel findings at the same time last year there has been nearly no improvement in feelings about the current financial situation.
Overall, people are cautiously optimistic about their future financial situation, with only under a third (29%) feeling confident about their finances and only a minority are extremely worried (18%).
Indeed, low recovery from the downturn, combined with the onset of the government’s austerity measures mean that overall people are still feeling the pressure.
An estimated 34 and 33 million people have noticed price rises on transport and their food shop, respectively.
Notions of false economy are coming to the fore; an estimated 10.4 million people buy something that is cheap in the hope that it will last, although a slightly larger group (an estimated 12.6 million) are prepared to spend more on something that they know will definitely last longer.
An estimated 34 and 33 million people have noticed price rises on transport and their food shop, respectively and today, half (50%) of British consumers don’t like paying full price for anything.
And it appears that when times are tough, brand loyalty is the first thing to be bypassed with more than half (51%) of people switching from their preferred brand if they see a better deal on another. More than one in three (35%) disagree that they’ll stick to the brands that they know and trust if the price rises.
Consumers are cynical of price rises with almost half (46%) believing that retailers are using inflation as a cover to maintain their profits.
And it seems the divide between rich and poor is reflected in their buying behaviour and treat purchases in the current economic climate. Almost half of people (46%) with incomes in excess of £50,000 per year will take a holiday to cheer themselves up when they’re feeling down but this compares to 22% amongst those living in households with an income of less than £15,500.
The only type of product that lower income households are more likely to buy to cheer themselves up is cigarettes. Almost a third (32%) of those living in households with an income of less than £9,500 buy cigarettes as a treat compared to an average of fewer than one in five (19%) of all adults - despite the price of cigarettes jumping by almost 50% in the last five years.
And when feeling blue - an estimated 31 million (77%) Brits turn to food to cheer themselves up. Sweets and chocolate also rate highly as comfort foods with more than six in ten (around 24 million) turning to these treats to pick themselves up.
Although many have cut down on their restaurant outings (the market for Eating Out and Takeaways grew by a sluggish 1.6% between 2007 and 2010) and started cooking more from home, more than half (52%) will treat themselves to a night out with friends or a partner and almost half (47%) will pick up a takeaway
And its not just food self soothing Brits are turning to when times are tough, indeed, the top five things to cheer the nation up include 1. Favourite food to eat at home (77%) 2. Chocolate and sweets, 3. A night out (52%) 4. Takeaway (47%) and 5. Clothing & accessories
Consumer sector highlights:
ALCOHOLIC DRINKS – Alcopops go flat– 50% decline in five years
RTD (ready to drink) & alcoholic mixables (otherwise known as alcopops) have seen a dramatic decline as they fall victim to negative publicity around their perceived associations with underage drinking. The sector saw a decline of almost 50% between 2006 and 2010.
However - Mintel forecasts prospects for this sector are set to improve as innovation in the RTD sector revives fortunes and tax on ABV encourages manufacturers to invest in the low ABV RTD sector.
The total alcoholic drinks sector saw value slide between 2006 and 2010, although looking forward this is set to recover achieving an estimated 6.1% growth between 2011 and 2016. Mintel forecasts that the two major markets - beer and wine – will see a sales decline over the next five years. The former due to over-reliance on the declining pub sector and the latter because of its reliance on imports which, alongside higher taxes, are driving up prices.
FOOD AND DRINK: ‘Cocooning’ on the rise
Not surprisingly, one of the biggest increases in consumer spending was seen in the in-home food sector, 38% of Brits claim to have spent more or started spending on this category over the past year. Of consumers who have eaten out, 33% say the number of times they eat out in a typical month has decreased and 36% say the amount they spend on eating out in a typical month has decreased.
Another casualty is expenditure on alcohol (43% cut or stop spending), as the rising cost of living drives people away from the pub back to their homes.
Today, nearly nine in ten people (87%) felt that food prices had risen compared to a year ago, while 78% were more concerned about the rising prices than a year earlier. Nearly two in three people (63%) who eat chocolate feel brands should make it clear when they have reduced the product size/weight, while a slightly lower share (56%) would feel cheated if manufacturers kept the product the same price but reduced the pack size.
Nearly one in three people (31%) who eat meat cook more with red meat because they cook from scratch more, while a slightly lower share (29%) do so because they eat out less.
Three in ten adults (29%) adults are using more butter and spreads, because they are baking and cooking more at home, while just over one in four (26%) say they eat out less often, so are eating more desserts at home.
FOOD : Baby food fastest growing consumer market
The baby food category has experienced a remarkable rate of growth in current prices (53%) over the period between 2006 and 2010. Sales in this category have been buoyed in part by the mini baby-boom over 2003-08 as well as mothers’ increasing reliance on and better ability to spend on baby food.
Parents continue to want the best for their babies and are less willing to make sacrifices when it comes to their offspring, which explains the strong growth in this sector.
Ready meals are one of the smallest segments in the UK food market, at £3.3 billion, accounting for just 5p in every £1 spent on food by Britons.
However, like some of the other smaller sectors, it has posted growth ahead of the wider market over the 2000 to 2010 period, at 51%. If the cost of their weekly grocery shopping rose by £10, more than half (54%) of adults would switch to cheaper brands, while 44% would cut back on the quantity and 37% would switch to cheaper types of foods.
Two in five meat-eaters (42%) eat more poultry/fish/sausages instead of red meat to save money, while a third of adults (34%) have switched to supermarket own-label butter/spread to save money.
Expenditure on non-essentials, such as clothing and accessories as well as home and garden purchases have been trimmed (44% and 43% cut or stopped spending respectively), while spending on technology products has also gone down at the same rate (44%), but perhaps owing to different reasons.
TRAVEL AND TOURISM - staycations here to stay?
Spending on holidays has been cut, as more people choose to stay around where they live or elsewhere in the UK, rather than purchase more expensive holiday packages abroad.
A combination of the weak pound and a decline in the cost of domestic holidays (with UK holidays £144 cheaper compared to last year) this rise in the popularity of ‘stacations’ fits well into the mentality of ‘preparing for the worst’.
In 2010, total expenditure on holidays dropped to a five-year low. The number of overseas holidays continued to fall and domestic holidays came down from the ‘staycation’ high of 2009. Average expenditure increased, however, with petrol prices a key driver in the UK (over three in four domestic holidays are self-drive trips).
Domestic holidays accounted for six in ten of the total in 2010; overseas holidays made up more than 60% of total expenditure, however. While one in four people consider holidays to be a necessary spend, four in ten classify them as a luxury.
TECHNOLOGY - Boom for Technology sector
In real terms, the technology market has enjoyed a remarkable growth between 2006 and 2010 (STAT), with real sales in all categories increasing fast, especially when it comes to audio visual (94% growth), computing and gaming (87% growth), and communications (71% growth).
BEAUTY - healthy glow for beauty market
The beauty and personal care categories sported a healthy glow in the first decade of the new millennium, turning in growth of just over 50% in the ten-year period. Despite the recession, the combined categories consistently reported growth, though in 2009 – arguably the eye of the Credit Crunch storm - the rise was slight at just under 1%.
True to the “Lipstick Index” theory, make-up was the strongest growing category in the beauty and personal care segment, growing by almost 90% between 2000 and 2010. Face make-up, which accounts for almost 40% of make-up sales in the UK, has replaced lipstick as an economic bellwether since the segment continues to report positive growth driven by products with additional benefits, such as treatment properties.
Meanwhile, in the same period, the proportion of women visiting hair salons remained more or less steady, standing at 80% in 2010. Nail varnish has been a standout segment for several years, almost doubling in size between 2005 and 2010.
PERSONAL CARE - Brits give oral care the brush off
Only eight in ten men (78%) brush their teeth at least once a day. Less than 10% of the population brush their teeth during the day when away from home.
Women are more concerned than men about always having fresh breath. Almost four in ten women (38%) carry something (like mints or gum) with them at all times to ensure their breath smells fresh, whereas exactly half as many men (19%) do the same. Hair removal can be a tricky issue – apparently all the more so for those aged under-25, six in ten (62%) of whom have hurt themselves at some point while removing excess hair.
OTC - Complementary medicine boom?
Between 2011 and 2016, sales of complementary medicines are forecast to show the strongest growth of 60%, while other pharmaceutical products and vitamins and supplements are forecast to lag behind average growth in the total market (just 2% and 6% respectively). Increased knowledge of health issues among consumers and an ageing population will help to boost preventative remedies.
CLOTHING AND ADORNMENT - Brits dress to impress
The clothing and adornment sector has enjoyed healthy growth over the last ten years. Mintel estimates the value of the clothing and adornment market at just over £47.1 million in 2010, an increase of 31% over the last decade.
Men’s and women’s outerwear account for 61% of the total value. There has been a significant rise in women investing in quality clothes, with almost a quarter (23%) buying fewer items but better quality garments, compared with one in eight in 2010. In contrast, Supermarkets have become the most popular outlets for buying menswear, with nearly four in ten (38%) men shopping there, rising to almost half of 45-54s.
FOOTWEAR – Shoes march on through the recession
According to Mintel estimates, the footwear market was worth £4.3 billion in 2010, an expansion of 30% over the last decade. Last year witnessed an impressive performance from the footwear sector, with annual growth of over 8%. Fashion played a major role in driving expenditure and a second cold winter provided a significant boost in the sales of ladies boots.
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