Consumer confidence across Europe:

Our latest consumer compass report tracks confidence across markets on a quarterly basis throughout the year, with the latest wave offering insight into the first three months of 2024.  We have uncovered three key themes emerging from the Q1 data which will help brands plan for the needs of consumers throughout 2024 and beyond:

Signs of the green shoots of economic recovery
Looking at our Consumer Confidence Index almost all markets tracked saw an uplift in scores this latest quarter, some significantly so, setting a positive tone for the remainder of the year. The exception to this is Germany who saw a very slight decrease in Consumer Confidence, whilst the UK and the Netherlands attained the largest uplift, with the latter of these achieving a positive score (>100), something we have not seen since 2021. Financial pressures seem to have been slightly alleviated across European households as the majority of markets have seen an increase in perceived disposable income levels. As a result, we are seeing less consumers fall into the financially challenged groups, who are taking all measures to cut back on spending, and more falling into the ‘Insulated’ bucket of consumers who feel resilient to economic challenges.

So what? 2024 could be a year of growth for brands who have lost out to the tough economic environment of 2023, but it is key to remain agile as circumstances can change swiftly.

Consumer still wary about spending on the ‘nice-to-haves’
This quarter we have seen spend on essentials begin to flatten, with that of bills seeing a significant decrease compared to Q1 last year, however we are yet to see a significant shift in discretionary spending in response to this. Evidently consumers are staying cautious as inflationary pressures remain present despite moving in a positive direction. Notably younger consumers show most willingness to spend, as their perceptions of household budgets have improved the most resulting in positive confidence scores.

Holidays (+4%) and home improvements (+4%) saw some of the biggest uplift in spending this latest quarter as consumers look ahead to summer. However social spending also seems to be climbing up on the agenda as spend on eating out (+4%) saw equivalent levels of uplift.

So what?: It remains important for brands to consider fiscal barriers to purchase as consumers keep their purses tight. But with discretionary spend moving in a positive direction, albeit slowly, maintaining a strategic and unique offering will help drive share of wallet.  

Sustainability has suffered but opportunities remain
Consumer sentiment regarding sustainability paints an alarming picture – despite a worsening environmental scenario with 2023 being the hottest year on record, consumers concern over climate change has seen a significant drop. Price remains a top priority for consumers and has increased in importance when shopping, whilst sustainability has decreased. This is largely consistent across markets, with the Netherlands seeing the biggest drop despite presenting the most positive financial outlook.

Brands therefore need to be strategic when communication to consumers around sustainability; considering their offering as well as the channels they are using. Providing additional incentives, coupling sustainability with other consumer priorities (such as quality, value for money and convenience), is a strategy which has seen success for a number of brands.

So what?
It is necessary for brands to have a sustainable roadmap, but engagement with the topic is fragile, so keeping on top of consumer priorities and marrying these up with sustainability will encourage positive behaviour change, as well as drive an ownable point of difference for your brand

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