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Consumer Confidence: fragile, but improving

Consumer Compass Q3

New data from our latest quarterly report reveals the pressure on household budgets across European markets - despite this, our report demonstrates that opportunities still exist for brands that can remain connected to consumer needs and concerns.

Alex Ward-Booth Director 10/11/2023

A Challenging Context


Around 1 in 2 (49%) of consumers across Europe are feeling less confident about the economy than they were a couple of months ago.

Although there are some important variations between different markets, the consistent picture across the markets we track is that confidence, whilst improving, remains extremely fragile and brands will need to remain connected to the needs and concerns of consumers to benefit from the opportunities for growth that still exist.

Savanta has been tracking the mood of consumers since 2009, and has built up an extensive understanding of how consumers are feeling across Europe. Our Consumer Confidence Index (CCI) measure has been improving over the last 12 months, following the initial shock of the post-pandemic cost-of-living crisis. However, it remains in a negative position, and remains relatively volatile quarter on quarter.

Pressure on discretionary spend, but opportunities exist…

In this environment, it is perhaps not surprising that consumers tell us that they are focusing their household budgets on the essentials, such as petrol, utility bills and groceries, and minimising their spend on ‘treats’. Two sectors that consumers tell us they have been making financial sacrifices on are fashion and eating out. More than half of European consumers (59%) have cut spend on fashion in the last few months. However, this picture is not consistent across age groups, with older generations significantly more likely to cut spend. Eating out has also suffered, with net spending levels down across all markets. Unsurprisingly, eating out appears to have been one of the areas of the economy most impacted by inflation, with three-quarters (75%) of consumers across our markets saying that price increases have significantly impacted their spending on meals out. Interestingly though, we have seen that consumers do not appear to be exiting these sectors entirely but are instead adapting and being more strategic in their spending habits, in order to stretch limited budgets as much as possible.

Redefining value offers, an opportunity for growth…

In short, whilst the trading environment remains challenging, opportunities for growth still exist for brands who can keep their fingers on the pulse of consumer needs. Whilst the key drivers for consumers remain as price and value, we believe that brands do not necessarily have to focus their activities on a race to the bottom on price. We have seen that quality and durability remain as key factors for consumers, offering brands the opportunity to shift consumers from a narrow focus on absolute price points, to a broader focus on value for money.

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