There has been a stark drop in consumer confidence in September with consumer’s view of both general and personal finances taking a hit. This is according to the latest update to the Consumer Confidence Barometer, a survey run by GfK that’s aimed to understand how willing consumers are to spend money since 1974.
The level of confidence that consumers have in both their personal financial stability and the broader economic circumstances can have a noticeable impact for brands. This is as consumers who lack confidence will typically seek out fewer products or services, take more work to convert into a customer, or demand a greater level of discounting.
Key takeaways from the study:
- Overall consumer confidence saw a sharp drop to -20 in September. This 7-point drop since August places consumer confidence at its lowest level since the start of the year.
- In the same month confidence in the general economic situation saw the starkest drop of 12-points whilst confidence in personal financial situation fell by 9-points. This is the first time in a number of months that consumers have reported a reduced confidence in both general and personal finances.
- Despite consumers showing a greater willingness for major purchases throughout both July and August, the Major Purchase Index saw a 10-point drop in September. Although the most significant fall in recent months, this remains 5-points above the previous year.
- As touched upon in August’s update to the Consumer Confidence Barometer, September’s results imply that the governments ‘gloomy’ messaging since the July election has begun to dent consumer’s willingness to spend money.
The impact on brands:
- Despite what many would have hoped, July’s change in government and the messaging that followed has failed to bolster consumer confidence. Instead the pessimistic outlook appears to have driven doubt amongst consumers in both general and personal finances.
- The results of September’s study suggest that consumers are less likely to part way with their cash for both low and high-value products or services. This is a shift from recent months, when consumers were more willing to make major purchases.
- With overall consumer confidence taking a hit, brand’s will need to work harder to attract new customers than in recent months. That said, all measures of consumer confidence are better than they were at the same point in the previous year.
Although you cannot always take much insight from a single month of consumer confidence data, analysis of several months can indicate the challenges bands are likely to face in the future. We will publish further articles when updates of the GfK Consumer Confidence Barometer are made available.
