Renew Membership | Print Page | Contact Us | Sign In | Register

   
 

Consumer Market Monitor Quarter 1 2013

The Consumer Market Monitor is designed to track key indicators of confidence and activity in the Irish consumer market as a resource for marketers and the wider business community.
Download
Overview

Property Tax and Rising Costs Putting More Pressure on Cash-Strapped Consumers

Consumer Confidence remains weak, says Consumer Monitor

Data from the Monitor shows that consumer confidence remains weak as unemployment remains high and rising costs, including new taxes, continue to put pressure on already cash strapped consumers.

Mary Lambkin, Professor of Marketing, UCD Smurfit School, and one of the authors of the Monitor, said “Consumer spending accounts for over 60% of GNP in Ireland and is a critical factor in driving any recovery of the economy. Consumer spending is affected by the combined influences of how much money people have available to spend coupled with their confidence in spending it. But consumers are exercising caution by paying down debt rather than spending, even when they have secure incomes. The cautious outlook seems likely to persist for some time to come. However, various forecasts agree that the retrenchment in consumer spending may have run its course as real disposable incomes begin to stabilise, with a decline of just -0.2% for 2013 and a modest growth returning from 2014 onwards (+0.4%)¹.”

 

The Consumer Market Monitor relies on a model of consumer behaviour which sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influences consumer behaviour including spending, saving and borrowing. The Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources.

Key findings from CMM Q1 2013 include:       

  1.  Consumer Confidence rose from -24 in December 2012 to -16 in January 2013, a significant improvement. While consumer confidence for Q1 2013 was five points higher than Q4 2012, (-19 compared to -24), it was about the same for Q1 2012, suggesting confidence is still very weak.
  2. Property Tax and Pay Cuts Cause Concern: A slight drop in consumer confidence occurred in February and March 2013, due to concern about the impact of the new property tax and pay cuts on household finances.
  3. Household Lending Continues to fall: Loans for house purchases account for over 70% of lending to households. While house loans increased by 8% between November and December 2012 to avail of mortgage interest relief before it ended, total household lending continues to fall in 2013, down -4% in the first quarter of 2013.
  4. Consumer Lending Falls Fastest: Consumer lending peaked in 2008 at €24 billion but had declined to €12 billion by December 2012. In Q1 2013, consumer lending was down -11%, continuing to fall fastest of all the categories.
  5. Major Boost to Property Market: Mortgage Lending to double in 2013: State controlled banks are expected to double mortgage lending in year ending 2013, from €2.5 billion to €5 billion. “This could mean as many as 20,000 new mortgages being issued, if this lending follows through into a doubling of new mortgages. This would be a major boost to the property market, which has been crippled by a lack of mortgage lending in recent years,” said Lambkin.
  6. Credit Card Debt Declines: Credit card debt continues to decline in Q1, 2013, down – 8% year on year, reflecting reduced consumer spending. The average credit card debt in Ireland is €1, 275²
  7. New Car Sales Struggle: Sales in the motor trade have been difficult for several There was a decrease in new car sales of 12% for the year ending December     2012, with 10,676 less new cars sold than in the same period in 2011. Sales in Q1     2013 were down -14.3%, (36,286 new cars sold) over the same period last year.Second Hand Motor Sales Increase: In contrast, the sales of second hand cars saw a slight rise in Q1 2013, increasing to 13,305 sales, a 9.1% year on year increase.Most Retail Categories Fall: Many retail categories experienced decline in Q1 year    on year; fuel was down -0.5% but up in value 1.7%; clothing, footwear and textiles       were   down -1.7% in volume and -3.4% in value; Books, stationery, etc, were down –    9.9% in value and -3.4% in value. Bar Sales were down -4.8% in volume and -2.1% in    value.
  8. Retail Spending Bottoms Out: After the seasonal peak in Q4 2012, retail spending has slowed down in Q1 2013. Spending was virtually flat for the first quarter of 2013       year on year, suggesting, at best, that the market has bottomed out and may finally be             “While these conditions are very challenging for many retailers, it is still a   positive sign that retail sales may be stabilising after four years of decline, with         growth prospects in some categories,” added Lambkin.
  9. Credit Card Debt Declines: Credit card debt continues to decline in Q1, 2013, down – 8% year on year, reflecting reduced consumer spending. The average credit card debt     in Ireland is €1, 275².
  10. Major Boost to Property Market: Mortgage Lending to double in 2013: State controlled banks are expected to double mortgage lending in year ending 2013, from           €2.5 billion to €5 billion. “This could mean as many as 20,000 new mortgages being   issued, if this lending follows through into a doubling of new mortgages. This would          be a major boost to the property market, which has been crippled by a lack of            mortgage lending in recent years,” said Lambkin.
  11. Essential products, such as food, hold up well: Essential products, including food,   held up well in the first quarter. Food sales were up .4% in volume and 1.7% in value.        Non specialised stores (supermarkets) were up .5% in volume and 1.75 in value;             Department stores up 1.8% in volume and 1.0% in value.

Tom Trainor, Chief Executive, The Marketing Institute, said “Conditions in Ireland over the past five years have seen the amount of discretionary income decline steadily due to a combination of rising unemployment, reductions in pay and increases in taxes and other essential costs. Not surprisingly, this has seriously damaged confidence and consumers have responded by taking a cautious approach, increasing their savings and reducing their debts. On the plus side, employment seems to be picking up slightly in the private sector and there is some evidence of increased activity in the property sector, both of which should boost activity in the consumer economy.”

About the author

The Consumer Market Monitor is a service provided by The Marketing Institute of Ireland in collaboration with the UCD Smurfit Graduate Business School.


Download

   

©2016 The Marketing Institute of Ireland CLG. All rights reserved.