Signs of a consumer slowdown The Deloitte Consumer Tracker · 2020-07-27 · The Deloitte Consumer...
Transcript of Signs of a consumer slowdown The Deloitte Consumer Tracker · 2020-07-27 · The Deloitte Consumer...
Signs of a consumer slowdownThe Deloitte Consumer TrackerQ3 2019
The Deloitte Consumer Tracker Q3 2019
Contents
02
Consumer confidence 04
Deloitte consumer confidence index 05
Individual measures of consumer confidence 06
The wider economy and its impact on 13 consumer confidence
UK earnings growth slows after hitting a decade high 14
UK unemployment rises as concerns about 15 Brexit hit the labour market
Consumer borrowing rises at slowest rate since 2014 16
Saving ratio healthier than previously thought 17
Consumer spending 18
Consumer spending in the last three months 19
Retail 21
Retail sales (excl. fuel) 22
Grocery shopping by channels 24
Purchases of consumer product categories 25 by channels
Leisure 26
UK consumer leisure spending in the last three months 27
Leisure spending in the last three months by category 28
Automotive 29
UK car registrations 30
UK car registrations year to date 31
Car purchase plans 32
Affordability of car repayments 33
Outlook 34
The last word 39
The last, last word 40
Contacts 41
The Deloitte Consumer Tracker Q3 2019
Q3 2019 at a glance
*Net balances
Previous
Latest
-8%-9%
Overall consumer confidence (q/q)*
Previous
Latest
-16%-18%
Confidence inlevels of disposable income (q/q)*
Previous
Latest
-5%-3%
Confidence in levels of debt (q/q)*
Previous
Latest
-7%-8%
Confidence in job security (q/q)*
Previous
Latest
-1%-6%
Confidence in job opportunities (q/q)*
03
Consumer confidence
04
The Deloitte Consumer Tracker Q3 2019
Deloitte consumer confidence index
Net % of consumers who said their level of confidence has improved in the past three months
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q
3 20
19Annual moving average
The Deloitte consumer confidence index fell to -9 per cent in Q3 2019.The index was one point lower than in the previous quarter and two points lower compared to the same period a year ago.Six months after the UK was given an extension to delay its departure from the EU until 31 October, the uncertainty surrounding Brexit has persisted and appears to be weighing more heavily on consumers.
*�The�Deloitte�consumer�confidence�index�is�an�average�of�the�net�%�of�consumers�who�said�their�level�of�confidence�improved�in�the�past�three�months�for�six�individual�measures�of�confidence�(see�next�slide).
05
The Deloitte Consumer Tracker Q3 2019
Individual measures of consumer confidence
Current Q3 2019net balances
% point change quarter on quarter
% point change year on year
Household disposable income -2 +1-18%
Levels of debt +2 +3-3%
Job security -1 -3-8%
Job opportunities/career progression -5 -5-6%
General health and wellbeing -2 -5-18%
Children’s education and welfare -1 -3-3%
Source: The Deloitte Consumer Tracker*Please note this measure is not included in the overall index
NEW MEASUREThe state of the UK economy* N/A N/A-55%
Our overall confidence index is based on six individual measures of confidence
06
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about their household levels of disposable income
With falling inflation and earnings hitting a decade high in July consumers were marginally more confident in their levels of disposable income.Confidence in levels of disposable income was one point higher than it was a year ago (‑19 per cent).In particular, confidence in levels of disposable income among the 18‑ to 34‑year olds improved from ‑17 per cent a year ago to ‑7 per cent this quarter, which could be attributed to the nearly 5 per cent rise in the national living wage in April.
Net % of consumers who said that their confidence in their levels of household disposable income has improved in the past three months
-44-40-36-32-28-24-20-16-12
-8-40
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Annual moving average
07
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about their levels of debt
Net % of consumers who said that their confidence in their levels of debt has improved in the past three months
-16
-14
-12
-10
-8
-6
-4
-2
0
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Source: The Deloitte Consumer Tracker
Annual moving average
Confidence in levels of debt increased by two percentage points compared to Q2 2019 and by three points compared to the same period a year ago.This coincides with the Bank of England’s (BoE) decision to maintain interest rates at 0.75 per cent in August.Moreover, lenders have become more cautious and as a result the year‑on‑year growth rate for all unsecured lending including cars and credit cards slowed to 4.9 per cent in August, its lowest rate in almost four years.
08
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about job security
Sentiment about job security was also hit and was three points lower (at -8 per cent) this quarter comparedto Q3 2018.There was an increasing number of job cuts being announced, as well as major companies going into administration or restructuring their operations in Q3 2019.
Net % of consumers who said that their confidence in their job security has improved in the past three months
-16
-14
-12
-10
-8
-6
-4
-2
0
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Source: The Deloitte Consumer Tracker
Annual moving average
09
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about job opportunities
Confidence in job opportunities/career progression fell by a significant five percentage points (to -6 per cent) compared to both the previous quarter and the same period a year ago.Unemployment unexpectedly rose from a four‑decade low in the three months to August.In fact, according to the latest Deloitte CFO Survey, 70 per cent of CFOs expect to reduce hiring in the next 12 months and just three per cent expect it to rise.
Net % of consumers who said that their confidence in their job opportunities and their career progression has improved in the past three months
-16-14-12-10
-8-6-4-202
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Annual moving average
10
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about their general health and wellbeing
Consumers continue to be less confident about their general health and wellbeing this quarter.Consumer confidence in their general health and wellbeing fell by two percentage points quarter on quarter from ‑16% to ‑18% in Q2 2019.
Net % of consumers who said that their confidence in their general health and wellbeing has improved in the past three months
-20
-18-16-14-12-10
-8-6-4-20
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Annual moving average
11
The Deloitte Consumer Tracker Q3 2019
Consumer confidence about their children’s education and welfare
Sentiment about children’s education and welfare also falls this quarter.Consumer confidence in their children’s education and welfare has fallen by one percentage point this quarter.
Net % of consumers who said that their confidence in their children s education and welfare has improved in the past three months
-8-7-6-5-4-3-2-101234
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Annual moving average
12
The wider economy and its impact on consumer confidence
13
The Deloitte Consumer Tracker Q3 2019
UK earnings growth slows after hitting a decade high
Wage growth, including bonuses, rose by an annual 3.8 per cent in the three months to August, slowing from 3.9 per cent in the three months to July.Meanwhile UK inflation remained at 1.7 per cent in September its weakest level since December 2016. The lower rate was driven by the prices of motor fuels, second‑hand cars, and electricity, gas and other fuels.
-1
0
1
2
3
4
5
6
CPI Inflation vs average earnings (inc. bonuses) (year-on-year % growth)
Source: Refinitiv Datastream
CPI inflation Average earnings including bonuses
Sep
2009
Mar
201
0
Sep
2010
Mar
201
1
Sep
2011
Mar
201
2
Sep
2012
Mar
201
3
Sep
2013
Mar
201
4
Sep
2014
Mar
201
5
Sep
2015
Mar
201
6
Sep
2016
Mar
201
7
Sep
2017
Mar
201
8
Sep
2018
Mar
201
9
Sep
2019
14
The Deloitte Consumer Tracker Q3 2019
UK unemployment rate rises as concerns about Brexit hit the labour market
Britain’s labour market remains low by historical standards however there are signs of a possible weakening as the UK gets closer to leaving the EU.Although unemployment remains low, it rose by 0.1 percentage points to 3.9 per cent between June and August compared with the previous quarter.Indeed, while employment rate is still rising year‑on‑year, the growth has cooled noticeably in recent months.
0
1
2
3
4
5
6
7
8
9
10
UK unemployment rate (all aged 16 and over)
Source: Refinitiv Datastream
Jul 2
009
Jan
2010
Jul 2
010
Jan
2011
Jul 2
011
Jan
2012
Jul 2
012
Jan
2013
Jul 2
013
Jan
2014
Jul 2
014
Jan
2015
Jul 2
015
Jan
2016
Jul 2
016
Jan
2017
Jul 2
017
Jan
2018
Jul 2
018
Jan
2019
Jul 2
019
15
The Deloitte Consumer Tracker Q3 2019
Consumer borrowing rises at slowest rate since 2014
UK consumer credit growth slows to lowest rate in five years.According to the Bank of England, growth in consumer borrowing dropped to 5.4 per cent in August, the slowest rate since 2014.
-4
-2
0
2
4
6
8
10
12
Unsecured lending to individuals
Source: Refinitiv Datastream
UK consumer credit – Net unsecured lending to individual (% year-on-year)
Aug
2008
Dec
200
8Ap
r 20
09Au
g 20
09D
ec 2
009
Apr
2010
Aug
2010
Dec
201
0Ap
r 20
11Au
g 20
11D
ec 2
011
Apr
2012
Aug
2012
Dec
201
2Ap
r 20
13Au
g 20
13D
ec 2
013
Apr
2014
Aug
2014
Dec
201
4Ap
r 20
15Au
g 20
15D
ec 2
015
Apr
2016
Aug
2016
Dec
201
6Ap
r 20
17Au
g 20
17D
ec 2
017
Apr
2018
Aug
2018
Dec
201
8Ap
r 20
19Au
g 20
19
16
The Deloitte Consumer Tracker Q3 2019
Saving ratio healthier than previously thought
Household finances are healthier than previously thought after revision to the saving ratio.The main change came from the reclassification of students’ loans as government debt, which helped push up the household saving ratio. In the first quarter, the household saving ratio was revised up to 6.4 per cent from 4.1 per cent and rose again to 6.8 per cent in the second quarter, helped by higher earnings growth.
3
6
9
12
15
UK households’ saving ratio
Source: Refinitiv Datastream
Q3
2009
Q1
2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
Q3
2015
Q1
2016
Q3
2016
Q1
2017
Q3
2017
Q1
2018
Q3
2018
Q1
2019
Q3
2019
17
Consumer spending18
The Deloitte Consumer Tracker Q3 2019
Consumer spending in the last three months
Lower inflation is easing pressures on essential items.Consumers have been reducing their net spending on groceries, utilities and transport an indication that lower inflation is easing cost pressures of essential items.As a result, leisure sector categories such as going out to the cinema or to a restaurant have seen a strong recovery compared to the same period a year ago. A sign that people continue to favour experiences over goods.
See leisure section for more information.
Net % UK consumers spending more by category over the last three months
-20 -15 -10 -5 0 5 10 15 20 25Going out
Restaurants and short break holidaysAlcoholic beverages and tobacco
Furniture and homewareClothing and footwear
Electrical equipmentMajor household appliances
Holidays & Hotels (long break)Education
Health
Landline/mobile phone,internet and cable/TV subscriptions
Pensions and insuranceHousing
TransportUtility bills
Grocery
Source: The Deloitte Consumer Tracker
Q2 2019Q3 2019 Q3 2018
Mor
e sp
endi
ng
Less
spe
ndin
g
19
The Deloitte Consumer Tracker Q3 2019
Inflation remain at its lowest in three years
-1 0 1 2 3 4 5 6
Clothing & Footwear
Transport
Recreation & Culture
Total inflation
Miscellaneous goods & Services
Food & Non-alcoholic beverages
Furn,HH equip & Repair of the house
Housing, Water & Fuels
Health
Alcoholic beverages, Tobacco& Narcotics
Hotels, Cafes & Restaurants
Education
Communication
Source: Refinitiv Datastream
September 2019 August 2019 September 2018
CPI inflation by category (% change y/y)4.1%
3.6%0.9%
3.2%3.1%
2.9%3.2%
2.8%2.5%
3.0%3.3%
4.1%2.6%
2.4%2.6%
2.0%2.4%
2.7%1.9%
0.8%0.5%
1.8%1.8%
1.5%1.7%1.8%
-0.3%1.7%1.7%
2.4%1.4%
1.2%3.0%
0.6%1.4%
5.6%-1.0%-0.9%
-0.4%
UK inflation drops to lowest level since late 2016.The largest downward contributions to change in the inflation rate, between August and September 2019, came from motor fuels, second‑hand cars, and electricity, gas and other fuels.These downward movements were offset by upward movements from furniture, household appliances, hotel overnight stays, and from recreation and culture items.
20
Retail21
The Deloitte Consumer Tracker Q3 2019
Retail sales (excl. fuel)
There was a modest rise in the September’s retail sales reported by the ONS.UK consumers bought 0.6 per cent more in Q3 2019 compared to Q2 2019 and 3.1 per cent more than a year ago. However people seemed to have bought fewer non‑essential items in the past month, with almost all areas of non‑food retail reporting falling sales quarter on quarter.With more retailers going into administration and department store sales slowing, structural challenges around cost and competition continue and there is a clear divergence of performance across categories and business models.
% change in volume and value year-on-year
Source: Refinitiv Datastream
VolumeValue Annual moving average
Annual moving average
-3-4-5
-2-1012345678
Sep
2014
Dec
201
4M
ar 2
015
Jun
2015
Sep
2015
Dec
201
5M
ar 2
016
Jun
2016
Sep
2016
Dec
201
6M
ar 2
017
Jun
2017
Sep
2017
Dec
201
7M
ar 2
018
Jun
2018
Sep
2018
Dec
201
8M
ar 2
019
Jun
2019
Sep
2019
22
The Deloitte Consumer Tracker Q3 2019
Online sales
Online retailers continue to report strong growth, outperforming the high street. Online spending now accounts for 19.1 per cent of all retail spending.Online sales rose in almost all categories compared to last year, led by non‑store retailers including pureplays (+13.3%) and household goods stores (+11.6%) and followed by grocers (+7.1%), clothing, footwear and textiles stores (+6.6%) and other – including key categories such as electricals – retailers (+1.6%). Sales were down year‑on‑year at department stores (‑3.6%).
UK Internet sales as a % of total retail sales
Source: Refinitiv Datastream
0
5
10
15
20
25
Sep
2007
Mar
200
8Se
p 20
08M
ar 2
009
Sep
2009
Mar
201
0Se
p 20
10M
ar 2
011
Sep
2011
Mar
201
2Se
p 20
12M
ar 2
013
Sep
2013
Mar
201
4Se
p 20
14M
ar 2
015
Sep
2015
Mar
201
6Se
p 20
16M
ar 2
017
Sep
2017
Mar
201
8Se
p 20
18M
ar 2
019
Sep
2019
23
The Deloitte Consumer Tracker Q3 2019
Grocery shopping by channels
Grocery shopping online gains shares.While official share of online grocery runs at 6 per cent our data shows 20 per cent of consumers do some of their main grocery shopping online on an average month.As store openings focus on smaller formats, larger stores are losing shares as a channel for main grocery shop to convenience stores and online websites.
Source: Deloitte Consumer Tracker
Q3 2018Q3 2019 Q3 2017 Q3 2016
Channel usage for main grocery shop
Specialist food/drink store
Convenience store
High street or town centre supermarket
Online websites
Discount supermarket
Large supermarkets
5%6%
5%6%
62%66%
65%65%
33%33%
31%29%
19%22%22%22%
20%15%
17%19%
6%5%
7%8%
24
The Deloitte Consumer Tracker Q3 2019
Purchases of consumer product categories by channelsThinking about the LAST purchase you made from eachof the following categories, where did you make your purchase from?
% consumers who last bought in the category
Source: The Deloitte Consumer Tracker
An online website on my laptop/desktop computer
0% 20% 40% 60% 80% 100%Beauty and personal care
Children and baby products, excluding clothesClothing and footwear
Car, motorcycle and bicycleFurniture and homeware
Sports, fitness and outdoors equipmentToys, hobbies, collectibles and art
Major household applianceElectrical equipment
Entertainment excluding digital servicesEvents
Digital servicesHoliday and travel
An online website/app on my mobile/tablet
A store on the high street or in a town centreA store in a retail park A store in a shopping centre
50 41 5222
22
46 4835 39 14 7 4
34 35 20 5 632 25 14 21 7
30 24 15 25 626 28 25 12 825 24 21 21 9
19 17 21 35 818 9 30 39 418 20 34 14 1417 21 31 16 15
11 12 49 14 14
Most large ticket items tend to be bought online.In particular the leisure categories are more likely to be bought online than other categories while clothing, baby and beauty products are more likely to be purchased in a store.
25
Leisure26
The Deloitte Consumer Tracker Q3 2019
UK consumer leisure spending in the last three months
Net % UK consumers spending more by category over the last three months
-20
-15
-10
-5
0
5
Q3 2019
Q2 2019
Q1 2019
Q4 2018
Q32018
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Q1 2017
Q4 2016
Q32016
Q22016
Q12016
Source: The Deloitte Consumer Tracker
Eating and drinking out In-home leisure HolidaysGym/playing sport Other big ticket experiences Betting and gaming
Leisure spending continues to rise.Net spending was up year on year in 9 out of 11 categories. While spending on holidays was slightly lower than in Q3 2018, spending on both small and big‑ticket experiences rose compared to the same period a year ago.
27
The Deloitte Consumer Tracker Q3 2019
Leisure spending in the last three months by category
Current Q3 2019net balances
% point change quarter on quarter
% point change year on year
Long holidays 0 -10%
Source: The Deloitte Consumer Tracker
Short breaks 0 0-1%
Attending live sports events +2 +4-3%
Gym and sports +1 +1-3%
Betting and gaming +1 +2-6%
Other leisure -1 +3-8%
Eating out 0 +5-9%
In-home leisure -1 +5-9%
Culture and entertainment 0 +5-10%
Drinking in pubs and bars -1 +4-13%
Drinking in coffee houses and sandwich shops -3 +3-15%
28
Automotive29
The Deloitte Consumer Tracker Q3 2019
UK car registrations
New car sales slow as consumers become cautious over major purchases.September saw moderate growth (+1.3 per cent year on year) against a particularly low volume month in 2018. However, the UK new car market fell by ‑2.5 per cent in the first three quarters of the year, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Overall sales this year are lagging behind the rest of Europe and are actually at their lowest level since 2013 with UK consumers increasingly wary of making major purchases.
-25
-20
-15
-10
-5
0
5
10
15
20
25
Annual moving average
UK car registrations % change year on year
Source: The Society of Motor Manufacturers and Traders (SMMT)
Sep
2010
Jan
2011
May
201
1Se
p 20
11Ja
n 20
12M
ay 2
012
Sep
2012
Jan
2013
May
201
3Se
p 20
13Ja
n 20
14M
ay 2
014
Sep
2014
Jan
2015
May
201
5Se
p 20
15Ja
n 20
16M
ay 2
016
Sep
2016
Jan
2017
May
201
7Se
p 20
17Ja
n 20
18M
ay 2
018
Sep
2018
Jan
2019
May
201
9Se
p 20
19
30
The Deloitte Consumer Tracker Q3 2019
UK car registrations year to date
Consumer preferences and government legislation are changing the shape of the marketThe overall shape of the car market is changing with consumers increasingly switching from diesel to petrol and from hybrid to fully electric. The long term decline of diesel car sales means that problems are accelerating for manufacturers and their partners.
YTD 2019 YTD 2018 % changeMarket
share 2019Market
share 2018
Diesel 480,388 605,355 ‑20.6% 25.8% 31.7%
Petrol 1,217,577 1,186,277 2.6% 65.4% 62.1%
BEV 25,097 11,299 122.1% 1.3% 0.6%
PHEV 22,773 32,144 ‑29.2% 1.2% 1.7%
HEV 77,921 67,566 15.3% 4.2% 3.5%
MHEV diesel
19,490 1,857 949.5% 1.0% 0.1%
MHEV petrol
19,025 6,322 200.9% 1.0% 0.3%
Total 1,862,271 1,910,820 -2.5%
BEV – Battery Electric Vehicle; PHEV – Plug‑in Hybrid Electric Vehicle; HEV – Hybrid Electric Vehicle; MHEV – Mild Hybrid Electric Vehicle
Source:�The Society�of�Motor�Manufacturers�and�Traders�(SMMT)
31
The Deloitte Consumer Tracker Q3 2019
Car purchase plans
Planned car purchases at their lowest level since the tracker began.The immediate prospects for the automotive industry are a concern, with less than 4 per cent of consumers planning to purchase a car in the next three months. There has been a steady decline in planned purchases over the last year as consumers show more caution over major purchases.
% of UK consumers planning to purchase a car in the next three months
0
1
2
3
4
5
6
7
8
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Source: The Deloitte Consumer Tracker
Annual moving average
32
The Deloitte Consumer Tracker Q3 2019
Affordability of car repayments
Keep the status quo (pay the same)
Upgrade your vehicle (pay more)
Downgrade your vehicle (pay less)
End lease
Source: The Deloitte Consumer Tracker
9%
Thinking about your current financial situation, if you were offered the chance to change the terms of your finance/lease plan of your car(s) with no penalty which of the following would apply to you?
% of consumers who own a car on finance
4%
4%
57%
Despite concerns over levels of debt, consumers are generally comfortable with the affordability of their car payments.After housing, car repayments are often the single biggest monthly expenditure a consumer will have. Personal contract purchases in particular have been under scrutiny with the Financial Conduct Authority (FCA) recommending a more responsible approach to affordability checks.According to our analysis, while the majority of consumers who own a car on finance are comfortable with the repayments they make (57 per cent), 13 per cent would be willing to downgrade their car or end their lease to reduce their monthly costs.
33
Outlook34
The Deloitte Consumer Tracker Q3 2019
Outlook for consumer spending – essential vs discretionary spending
Consumers expect to spend less in discretionary categories in Q4 2019.The outlook for consumer spending suggests that consumers intend to spend more on essential categories and less on the more discretionary categories over the next three months.
Net % of UK consumers spending more by category over the next three months
-25
-20
-15
-10
-5
0
5
10
Source: The Deloitte Consumer Tracker
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Essential Discretionary
35
The Deloitte Consumer Tracker Q3 2019
Outlook for consumer spending – by category
Spending is expected to accelerate across key essential categories but also for the more discretionary categories such as restaurant and short break holidays.However, while the UK might have just averted a recession in the third quarter of 2019, and although consumers have been quite resilient since the EU referendum, a deterioration in the jobs market could see some contraction in consumer spending especially in the discretionary categories.
Net % UK consumers spending more by category over the next three months
-30 -25 -20 -15 -10 -5 0 5 10 15 20 25Restaurant and short break holidays
Clothing and footwear
Electrical equipment (e.g. PCs/laptop,television, mobile phone device, etc.)
Major household appliances (e.g. washing machine,fridge, cooker, vacuum cleaner, etc.)
Furniture and homeware
Alcoholic beverages and tobacco
Going out (e.g. cinema, theatre, concerts, etc.)
Landline/mobile phone, internet and cable/TV subscriptions
Education
Pensions and insurance
Health
Housing (e.g. rent, mortgage, maintenance)
Transport
Grocery shopping for food and non-alcoholic beverages
Utility bills (e.g. water, electricity, gas and other fuels)
Source: The Deloitte Consumer Tracker
Q2 2019Q3 2019 Q3 2018
Mor
e sp
endi
ng
Less
spe
ndin
g
36
The Deloitte Consumer Tracker Q3 2019
Leisure spending in the next three months
Net % UK consumers spending more by category over the next three months
-20
-15
-10
-5
0
5
Q3 2019
Q2 2019
Q1 2019
Q4 2018
Q32018
Q2 2018
Q12018
Q42017
Q32017
Q2 2017
Q12017
Q4 2016
Q32016
Q2 2016
Q12016
Source: The Deloitte Consumer Tracker
Eating and drinking out In-home leisure HolidaysGym/playing sport Other big ticket experiences Betting and gaming
‘Tis the season to be jolly?Spending on leisure will continue to be on consumers’ agenda for the last quarter of 2019. The spending intention data for Q4 2019 is higher compared to the same period last year in almost all categories.However, leisure businesses need to keep a close eye on how the consumer fundamentals perform over the coming months, especially businesses in the habitual, small‑ticket leisure categories where spending can rapidly contract if consumers’ circumstances change.
37
The Deloitte Consumer Tracker Q3 2019
Leisure spending in the next three months – by category
Current Q3 2019net balances
% point change quarter on quarter
% point change year on year
Source: The Deloitte Consumer Tracker
Long holidays -9 -1-9%
Short breaks -7 +2-8%
Attending live sports events -2 +2-6%
Gym and sports +1 +4-1%
Betting and gaming 0 +3-9%
Other leisure -3 -1-10%
Eating out -1 +7-12%
In-home leisure 0 +3-12%
Culture and entertainment -1 +4-9%
Drinking in pubs and bars -3 +3-13%
Drinking in coffee houses and sandwich shops -1 +3-15%
38
The Deloitte Consumer Tracker Q3 2019
The last word
The Deloitte consumer confidence index fell to ‑9 per cent in Q3 2019, one point lower than in the previous quarter and two points lower compared to the same period a year ago. Confidence is now at a level last seen in Q4 2018 and below the Deloitte Consumer Tracker’s long‑running average.
Takeaway 1Six months after the UK was given an extension to delay its departure from the EU until 31 October, the uncertainty surrounding Brexit has persisted and appears to be weighing more heavily on consumers.Additional new data from our survey, indicates that over the last three months consumer confidence in the state of the UK economy was weak (‑55 per cent). By contrast, confidence levels among consumers who do not own a home improved, a sign that they might be benefiting from property price growth being the slowest in six years.
Takeaway 2Consumers appear more confident about their own personal finances than the state of the economy overall.Compared to a year ago consumer sentiment about personal finances improved while confidence in the job market deteriorated. Confidence in levels of debt increased by two percentage points on Q2 2019 and by three points compared to the same period a year ago. Meanwhile consumers’ confidence in their levels of disposable income was one point higher than it was a year ago (‑19 per cent).
Takeaway 3However, our data shows that confidence in job opportunities/career progression and job security have continued their downward trend this quarter.Despite unemployment at historical lows, it unexpectedly rose from a four‑decade low in the three months to August. Indeed, according to the Tracker, confidence in job opportunities/career progression fell by a significant five percentage points (to ‑6 per cent) compared to both the previous quarter and the same period a year ago. With the increasing number of job cuts being announced, and major companies going into administration or restructuring their operations, sentiment about job security was also hit and was three points lower (at ‑8 per cent) this quarter compared to Q3 2018.
Takeaway 4In a sign that people are continuing to favour experiences over goods, our leisure sector analysis shows that net spending was up year‑on‑year in 9 out of 11 leisure categories.Net spending in each category indicate that consumers have been reducing their net spending on groceries, utilities and transport an indication that lower inflation is easing cost pressures of essential items. As a result the leisure sector continued to performed well. Net spending was up year‑on‑year in 9 out of 11 leisure categories. While spending on holidays was slightly lower than in Q3 2018, spending on both small and big‑ticket experiences rose compared to the same period a year ago.
39
The Deloitte Consumer Tracker Q3 2019
Ian StewartChief Economist, DeloitteUp to now we have seen a slowdown everywhere but in the jobs market and in the consumer economy.
The slowdown in consumer confidence this quarter combined with a fall in official unemployment figures show that the period of resilience in jobs and earnings is coming to an end. Indeed among businesses, perceptions of uncertainty are elevated and corporate risk appetite is low. The priority appears to be curbing costs, not expansion. With Brexit cited as the biggest risk, the last quarter has also seen heightened concern over slowing growth in the UK and Eurozone.
The headwinds from a major global slowdown and uncertainty at home point to weaker growth ahead. As a result 2020 is likely to see not only lower levels of consumer confidence but also see consumer spending growth continuing to slow.
Mike WoodwardAutomobile lead partnerUK consumers appear to be increasingly wary of making major purchases. The UK new car market declined ‑2.5 per cent in the first three quarters of the year and is now at its lowest level since 2013. Unfortunately, there is no sign of a quick fix, with less than 4 per cent of consumers planning to purchase a car in the next three months, the lowest level recorded since the Tracker began.
In addition to a fall in new car sales, there are a number of potential headwinds for the automotive industry. For example, the value of the pound against the euro has fallen by 12 per cent over the past three years. So far, the consumer has been shielded from price rises associated with currency fluctuation, but if the pound continues to fall, manufacturers may be forced to pass on the costs to consumers.
Simon OatenHospitality and Leisure lead partnerIn a sign that people are continuing to favour experiences over goods, our leisure sector analysis shows that net spending was up year‑on‑year in 9 out of 11 leisure categories. While spending on holidays was slightly lower than in Q3 2018, spending on both small and big‑ticket experiences rose compared to the same period a year ago.
However, consumers enter the fourth quarter in a relatively cautious mood and maybe for good reasons. While most of the UK economic fundamentals remain solid including the level of unemployment close to its historic low, there are already some signs of strain. The UK might have just averted a recession in the third quarter of 2019, and although consumers have been quite resilient since the EU referendum, a deterioration in the jobs market could see some contraction in consumer spending especially in the discretionary categories.
The last, last word
Ian GeddesRetail lead partnerThe second half of 2019 is being more challenging for many retailers. Consumers have held back from spending on larger discretionary items such as household goods until the Brexit uncertainty recedes. However, online continues to show strong growth, and some retailers still deliver a solid performance considering the structural challenges around cost and competition.
Retailers are now looking ahead to the business end of the year and will be planning for big retail events such as Black Friday and Christmas. While discounting and promotion strategies are important, there is also a real opportunity for retailers to attract new customers as well as retain loyal customers through continued investment in their online and in‑store experiences.
40
The Deloitte Consumer Tracker Q3 2019
Contacts
Aino TanAuthor Manager,�Transportation,�Hospitality�and�Services�Research
[email protected] +44 20 7007 4406
Celine FenechAuthor Manager,�Consumer�Products�and�Retail�Research
[email protected] +44 20 7303 2064
A note on the methodologySome of the figures in this research show the results in the form of a net balance. This means that in a survey of 100 respondents, assume that 30 reported they are spending more, 50 reported no change and 20 reported they are spending less. The net balance is calculated by subtracting the number that reported they spent less from the number that reported they spent more, i.e. 30 – 20 = 10. This means 10% of consumers reported that they spent more rather than less.
Ben PerkinsContributor Head�of�Consumer�Research
[email protected]+44 20 7007 2207
Dr Bryn WaltonAuthorManager,�Automotive�Research
[email protected] +44 20 7007 2352
41
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This�survey�was�conducted�online�with�a nationally�representative�sample�of�more�than�3,000 UK�adults aged�18+�between�27 and�30 September 2019.
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