Myth one: people turn to drinking at home in recessionary times
The pub trade’s problems are well documented. The combined effects of the smoking ban, increases in alcohol duty and the recession have hit its takings hard.
However, the latest sales figures, for the first quarter of this year, compiled by the British Beer & Pub Association, reveal that the slump is not confined to the on-trade. Sales of beer in supermarkets and off-licences were down 11% compared with the same quarter in 2008 – the biggest three-month decline since 1997.
Richard Brown, managing partner of strategy firm Cognosis Consulting, claims consumers are cutting back on drinking partly because of health concerns, but also because the scale of this recession is becoming more clear.
‘The drinks industry is on a far more slippery slope than it thought it was going to be,’ says Brown. He adds that, while in previous recessions drinkers traded down, this time, they are simply trading out.
Myth two: women still buy lipstick as an affordable treat
The ‘Lipstick Effect’ – the idea that women purchase lipstick as a ‘pick-me-up’ during hard times – had proved a resilient concept over the decades. Last week, however, Mintel research revealed that only 3% of female consumers said they had bought a lipstick to make themselves feel better during the current downtown.
The same research found that 60% of women are instead spending the same or more on foundations and ‘essential products’ such as shampoo and cleansers.
‘In this recession, “austerity chic” – or looking good for less – is replacing the Lipstick Effect,’ says Nica Lewis, head consultant at Mintel Beauty Innovation. ‘Beauty is now marketed as a necessity rather than a luxury. This means women are investing in moisturisers, body lotion and haircare, rather than lipstick.’
Myth three: all charities will suffer from declining donations
The public is still willing to donate to charity despite the hard times. Last month’s London Marathon raised a record £22.4m for charities, according to donations website Justgiving.
Interestingly, the average donation fell from £32 to £29.50, but an increase in the overall number of donors resulted in a 7% rise on the 2008 total.
The site will continue to process marathon sponsorships for three months, and the final figure raised is expected to be about £25m.
Meanwhile, in March, the biennial Comic Relief/Red Nose Day fundraiser also bucked expectations by bringing in £57m on the night, an increase of £17m on the previous event in 2007 – when the economy was still in rude health. The total has since risen to more than £65m.
Myth four: shoppers will abandon brands for own-label products
Many a branded-goods marketer must have shuddered when the big supermarkets began to promote their own-label value ranges in earnest. Last September Tesco launched its Discount Brands range, while Sainsbury’s has pulled no punches in telling consumers to ‘Switch and Save’ to its Basics range.
Yet TNS figures for the 12 weeks to 22 February show that brands’ value sales are growing faster than those of own-label goods; the former were up 7.3% on the same period last year compared with 6.6% for own-label.
David Iddiols, senior partner at research company HPI, says his firm’s latest ‘Crunchometer’ poll revealed that 51% of consumers said they were buying more own-label goods and cheaper brands than they used to, but he notes that ‘a lot of counter-balancing goes on’. In other words, most consumers do not trade down across the board. ‘I suspect consumers find solace in some of their favourite trusted brands during hard times,’ adds Iddiols.
Myth five: staying in is the new going out
While it is true that consumers are staying in more, there are still some activities that can tempt them off the sofa and out of the house.
Despite gloomy predictions from industry-watchers on how cinema would suffer at the start of the downturn, the medium is flourishing.
In January, cinema admissions hit a five-year high – 14,504,588, up 7.7% year on year, according to the Cinema Advertising Association. Figures for February showed that this was not a blip, as admissions rose further still, up 16.4% year on year.