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Consumer Market Monitor q3 results 09

Date: 04 Nov 2009

Dublin, Wed, 4th November: UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII) launched the Consumer Market Monitor Q3 results today which show that credit card spending is down by 15% compared to this month last year, as consumption returns back to the level it was in 2005. The monitor reveals that consumer expenditure is forecasted to decline 7.6% by year end with another decline of 4% in 2010. Q3 results show Irish consumers are spending 32% less per transaction, falling from €66.74 in Q3 2008 to €45.64 in Q3 2009. To download the full report visit www.mii.ie.

The monitor, which tracks key indicators of confidence and activity in the Irish consumer market on a quarterly basis, shows consumers have reacted cautiously to the ongoing economic problems with plummeting consumer borrowing and curtailing expenditure.  According to the monitor, retail sales value, excluding the motor trade, decreased by 10.4% for the year ending August 2009 and by 1.6% compared to the previous month. Volume sales declined less dramatically, 5.2% year on year to August 2009 reflecting that prices have dropped faster than unit sales.

The monitor enters into detail on reported record losses across all sectors in retail, with pharmaceuticals medical and cosmetics being the only sector to grow by 3.6% in sales volume in the twelve month period.  One of the hardest hit sectors in value terms has been the motor trade down 31.4% and household equipment down by 17.5% in the year end to August 2009. This has marked the first time that sales of second hand cars exceeded that of new cars, sales of news cars amounted to 51, 414 for the period Jan – Sept of this year, compared to 141, 930 in the same period in 2008, a huge decline of  63.8%.  Other sectors affected are clothing, footwear and textiles down 15%, department stores down 13.8% and food down by 6.7%.

Economic slowdown has continued in private sector lending with annual growth rates of private sector credit becoming negative in June and declining by 3% in August 2009, this coincides with an overall decrease in private sector credit across Europe. Mortgage lending being the largest element of this; has continued to decline for the sixth consecutive month in August 2009. These are the first declines since the records began.  Other personal loans have also declined; the year on year change in outstanding personal loans has been negative since March 2009, with credit outstanding falling by 9.9% in the twelve months ending in August 2009.

Commenting on the monitor, Professor Mary Lambkin, UCD Smurfit School said: “The Consumer Market Monitor this year has brought to light some interesting consumer trends, such as consumers adversity to purchasing on credit, which I feel reflects  that we are now moving away from to the “buy now, pay later” laissez faire attitude we once had. People just don’t know what the future may bring and don’t want to risk mounting debt. It appears cash is once again King.”

Tom Trainor, Chief Executive of the Marketing Institute of Ireland said: “This resource is a great tool to gauge consumer confidence in the ever changing Irish market. It’s encouraging to see a 3.6% growth in sales volume in the pharmaceuticals medical and cosmetics sector. This is really positive news for this sector, and the Irish economy in the midst of this economic slump and we will continue to update this report every quarter to highlight current trends.”

Interestingly, Q3 results draw attention to the climb in consumer confidence in the early part of 2009, particularly in June where Ireland’s confidence reached its highest level in over 12 months. Confidence fluctuated in the third quarter of 2009 but it showed a further sign of improvement in September. However, it is still lower than the United Kingdom and Europe, by 13.1% and 7.1% respectively.

The Consumer Market Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources. To download the full report visit www.mii.ie.

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