New Zealanders Are More Pessimistic Than Average

International Study Shows The Majority Of People Believe The Recession Is Not Going To Get Worse. New Zealanders Are More Pessimistic Than Average But Have Become Much More Optimistic

SURVEY DETAILS

International market research company Synovate, in conjunction with retail analysts Synovate Aztec, recently surveyed over 16,000 people in 26 countries, asking them about the current economic crisis. The survey was a repeat of a survey first conducted in November 2008, thereby allowing changes in people’s behaviours and attitudes to be tracked over time.

New Zealanders were included in both these surveys, providing a rich insight into what New Zealanders are thinking and doing in the recession, and how we differ from the rest of the world.

The New Zealand sample for the most recent, July 2009 survey, was 405. The maximum margin of error for a survey of 405 people is 4.9%.

KEY INSIGHTS
Synovate has found that people are slowly regaining a positive outlook about the recession, becoming more optimistic for themselves and their country’s economies. The people believing that their countries’ economies are going to worsen are now a minority (20% of the global sample), outweighed by the larger numbers believing that things have flattened out (44%) or are even in the brink of starting an improvement (30%).

In New Zealand, 36% feel the economy is going to worsen, a decrease from the 51% recorded in November. The proportion believing that the economy is going to remain the same has increased 8% to 27% and 29% feel that New Zealand’s economy is going to improve over the next 12 months (up 6% since November).

Debra Hall, Executive Director of Research at Synovate’s New Zealand office, says this flattening out means that the bulk of consumers’ changes in spending habits will have now occurred. “If habits were going to change, they have largely already changed. We can also see growing boredom towards the recession and a creep towards small indulgences as people seek some respite. In many areas life has been getting cheaper throughout this year. This helps, of course, to still afford items with which to indulge yourself.”

Hall notes that there’s a strong desire to bounce back to where we were: “Emotionally, people would like to not have to worry anymore – and do seek out enjoyable things to do as an escape. But rationally they know that it’s too soon to get complacent.”

The survey also revealed that New Zealanders are amongst the most likely to report making spending cuts. 61% of New Zealanders reported making spending cuts in the last six months, down from the level of 73% reported in November. However at 61%, New Zealanders are still 8% more likely than the global average of 53%.

Areas where New Zealanders claim to be spending less are fast food (52%), soft drinks (40%), and alcohol (40%). But we are not cutting back where out pets are concerned! Only 5% reported reduced spending in this area, the same figure reported for the global sample.

New Zealanders have also rediscovered home baking as a means to saving money.
Synovate Aztec’s supermarket sales data shows substantial value increases of 13% to 23% in the amount being spent on items such as flour, baking accessories, herbs and spices.

New Zealanders are also saving money in quite different ways to those overseas.
We are holding onto the lifestyle expenditure such as holiday travel and dining out, but cutting back on the smaller day to day expenses such as treat foods and branded items that can be replaced with ‘house’ supermarket brands. Synovate Aztec’s supermarket sales data confirms that over 2008 the value of supermarket house brands being sold increased an average of 22% in value over the previous year. Over the last few months this has reduced to 15%, showing that supermarket house brands are still growing faster than total sales overall at 7%.

Hall notes that spending less does not automatically mean people are spending less:
“The major fast food brands are all offering substantial value deals, fighting to keep their market share. Consumers are discovering that their fast food dollar is going further than it did a year ago. Likewise we know that while less is being spent on wine, more is actually being consumed – Kiwis are drinking their way through the recession!”

NEW ZEALANDERS BELIEVE THAT THE RECESSION HAS BOTTOMED OUT

A total of 56% of New Zealanders now believe that the recession has bottomed out and is not going to get any worse, with fewer expecting deteriorating conditions, and more expecting an improvement:
• 36% felt that the New Zealand economy was going to get worse over the next 12 months, down 15% from the 51% reported in November 2008. Although this is slightly more negative than the total global sample (where 31% shared this negative view), New Zealanders are more positive than their Australian neighbours, 42% of whom expect a deteriorating economy.
• In contrast, 27% felt that the economy is going to stay the same, 8% more than the 19% recorded in November. The July figure for the global sample was also 27%, for the Australians it was 24%.
• And 29% feel it is going to get better over the next 12 months, up 6% from the 23% in November last year. The July figure for the global sample was higher 37%, for the Australians it was the same as the New Zealanders, on 29%.
The optimistic countries, where people are most likely to feel that their economies are going to improve are:
• United Arab Emirates (72%); Brazil (64%) and South Africa (58%).
The pessimistic countries, where people are most likely to feel that their economies are going to deteriorate are:
• France (51%); Serbia and Germany (both on 48%) and the UK (47%).

NEW ZEALANDERS ARE MORE RELAXED ABOUT THE RECESSION THAN PEOPLE OVERSEAS

Compared to the total global survey sample:
• 29% of New Zealanders say that they find the economy boring and pay little attention to it (compared to 20% of the global sample).
• 16% of New Zealanders say that they are worried about how much their partner is spending (compared to 23% of the global sample).
16% of New Zealanders say that they have changed a major life decision due to the recession (compared to 29% of the global sample).
• 14% of New Zealanders say that they are regularly checking the stock market (compared to 29% of the global sample).
• 12% of New Zealanders say that they are worried about the recession but just can’t stop spending (compared to 33% of the global sample).

BUT NEW ZEALANDERS HAVE BECOME MORE CONCERNED ABOUT JOB SECURITY

New Zealanders are divided in their worries. Compared to November 2008, 4% more are worried about possible redundancy, yet another 4% more report having no concerns about the recession at all:
• The biggest concern for New Zealanders is having the households’ main income earner becoming redundant: 33% are concerned about this, up 4% from November. This is similar to the level of the global sample (35%) but it shows that New Zealanders are much more worried about job losses than Australians, of whom only 19% have such concerns.
• There has been a 4% drop in the number of New Zealanders concerned about paying their rent or mortgages (now at 16%).
• There has been a 4% drop in the number of New Zealanders concerned about their ability to buy sufficient food for their families (now at 10%).
• 14% (up 4%) said that they had no worries at all about how the recession could affect them.
Overseas, we see that:
• Indonesians are the most concerned about job losses (71%; NZ on 33%).
• Brazilians are the most concerned about putting food on the table (21%; NZ on 10%).
• Japanese are most concerned about maintaining retirement funds (27%; NZ on 2%).
• Taiwanese are the most concerned about giving up luxuries (15%; NZ on 4%).
• Canadians and Australians are the most concerned about losing money on their investments (20% and 16% respectively).
• The Dutch and Koreans are the least concerned, with 39% and 36% respectively reporting no personal concerns about the recession.

NEW ZEALANDERS REMAIN MORE LIKELY TO HAVE MADE SPENDING CUTS

61% of New Zealanders reported making spending cuts in the last six months, down from the level of 73% reported in November. However at 61%, New Zealanders are still 8% more likely than the global average of 53%.
• The countries most likely to have reported making spending cuts were Turkey (77%); Argentina (74%); Serbia and the USA (both on 71%).
• Of our key export markets, the reported spending cuts were 65% in the UK; 61% in Australia; 67% in Japan; and 71% in the USA.

NEW ZEALANDERS HAVE REDUCED EXPENDITURE IN MANY AREAS, BUT NOT WHERE THEIR PETS ARE CONCERNED

Areas where New Zealanders claim to be spending less are:
• Fast food (52%)
• Soft drinks (40%, compared to 30% of the global sample)
• Alcohol (40%, compared to 22% of the global sample)
• Cosmetics (34%, compared to 25% of the global sample)
• Healthcare products (28%, compared to 17% of the global sample)
Debra Hall notes that these cut-backs do not necessarily mean that people are doing without: “Many businesses, especially in fast-food, are now offering value deals that are allowing consumers to keep buying what they always did, but at reduced cost. These businesses are ensuring that they keep their customers through the recession, and will be in better shape for it once things improve.”

Wine is one such area where consumers are in fact buying more, but spending less. Says Hall: There is certainly evidence across the wine industry of both trading down to cheaper labels, and of discounting at unprecedented levels to clear stock. There is very little evidence to suggest that New Zealanders are drinking any less in this recession than they were before!”

But we are not cutting back where our pets are concerned! Only 5% reported reduced spending in this area, the same figure reported for the global sample.

HOME BAKING IS HOT AGAIN

New Zealanders have rediscovered home baking as a means to saving money.
Synovate Aztec’s supermarket sales data shows substantial value increases of 13% to 23% in the amount being spent on items such as flour, baking accessories, herbs and spices.

NEW ZEALANDERS STILL WANT SOME RETAIL THERAPY

Despite their concerns, 67% of the New Zealanders surveyed agreed that “they will always find a way to afford the items that make them feel good”.
How are they affording such retail therapy?
• 30% are buying less expensive, less healthy food.
• 21% are stockpiling food in case prices rise further.

NEW ZEALANDERS ARE SWITCHING FROM THE BIG BRANDS TO THE CHEAPER SUPERMARKET HOUSE BRANDS

New Zealanders are saving money in quite different ways to those overseas.
We are holding onto the lifestyle expenditure such as holiday travel and dining out, but cutting back on the smaller day to day expenses such as treat foods and brand items that can be replaced with ‘house’ supermarket brands.
• Globally, spending cuts were most likely to be made in holiday and leisure travel (16%), but only 13% of New Zealanders reported such cuts.
• Globally, dining out with the family was the second-most cited spending cut made (14%). Again, New Zealanders were less likely to have made such cuts, at 11%.

Instead, New Zealanders are much more likely to have:
• Reduced expenditure on treat foods (17%; 8% more than the global sample).
• Reduced expenditure on branded items when cheaper ones are available (at 14%, 5% more than for the global sample).

Synovate Aztec’s supermarket sales data shows that over 2008 the value of supermarket house brands being sold increased an average of 22% in value over the previous year. Over the last few months this has reduced to 15%, showing that supermarket house brands are still growing faster than total sales overall at 7%.

COMMENTARY

The comments below are from Debra Hall (Executive Director: Research), and are based on her interpretation of the results combined with other Synovate New Zealand researchers Matt Benson, Diane Dickinson, and Grant Storry.

In your experience, how are people feeling about the economy now?

It's still a very confusing situation. And it's very much dependent on who you talk to and when. For every bad luck story there is a positive one. We are being told by the media, by our Prime Minister, by the Treasurer and by the banks that the worst is over. At the same time we are being warned that the situation is fragile and that recovery is still very much in our hands. If we go back to our credit-fuelled spending we'll fall again.

There is an underlying sense of fear among some industries - those in the building trade for example are seeing their work running out with no signs of it picking up. Likewise the tourism sector has been badly hit. But then there will be some conflicting news about a business doing well and people’s hope picks up.

Have people been affected as much as they thought they would be?
We think people are now starting to believe the recession is happening and not just a news story. But, here again, the impact has been felt in different ways by different people.

For some, the recession has been a positive thing. Those who have kept their jobs and have mortgages have more money in their pockets than before as the interest rates dropped. And with retailers dropping prices all over the country, they are saving money without having to cut back!

But as people increasingly come to know others who have become unemployed, many have said they don't want to appear to be spending recklessly when others around them are struggling.

It's especially hard hitting for those who were living a lifestyle beyond their means. Some have lost their jobs and many of these would never have thought that could happen to them - they just weren't prepared. It's been a sharp wakeup call for them and a signal to everyone that we cannot spend the way we have been.

But as with any society, it is no doubt the people who had less to begin with who are first to feel the real bite. The gap between rich and poor could be growing wider, with a few more slipping toward the poor end.

What is the mood now when it comes to spending money?
We still love it. The malls and retail zones are buzzing on the weekends, and even during the week. But the nature of spending is changing. We hear that people are holding back more than usual on some things or trading up for better quality on others. Expensive purchases in high end boutique stores will be exchanged for a purchase of better value from a department store. It seems people are trading down when it comes to the cheaper everyday items, but perhaps trading up when it comes to higher end goods. After all, that's where the biggest bargains are right now.

We're thinking more carefully. Still spending but trying to make smarter decisions. For example, renting a DVD instead of going to the movies. Buying a board game to save money on going out (and it was probably 20% off). Having friends around for pizza instead of a meal out with babysitter fees added.
There is a sense that people are being careful because they think they should be - but not having a really specific understanding of why - it just seems to be the thing to do. Some people have said they don't want to appear to be spending recklessly when others around them are struggling. New Zealand still has a fairly egalitarian ethos, and those who flaunt their wealth when others are suffering are soon criticised. So, perhaps there is a degree of guilt developing?

Emotionally, people would like to not have to worry anymore - and they do seek out enjoyable things to do as an escape. But rationally they know that it's too soon to get complacent. So escapism, be it local theatre productions, cheap picnics or the movies, will do well.

If people have changed habits due to the economy, do you get the feeling the changes are permanent?

We sense that a lot of these habits are likely to stay for quite some time, because many are learning for example that cheaper supermarket house brands are often of acceptable quality, and so logic would say that those brand choices will remain.

But like many things, as times get better we will forget the lesson and start aiming to consume again and to feel good through our brand choices. Brands need to stay visible and relevant and wait for that to happen.

If you were advising a brand on how to position itself at the moment, what would you suggest?

Now that it’s almost socially irresponsible to be spending beyond our means, brands should be pushing the more rational aspects of themselves. We seem to have stepped back in time, marketing-wise. People want to be seen to be spending wisely.

It's no good just promoting a funky brand personality anymore. Brands have to come across as smart - value for money - pragmatic - functional - intelligent. Consumers are wanting to appear to be making good decisions - getting the best they can afford. Another possibility is environmental or social responsibility. Brands need to be seen to be giving back to their customers through the wider community.

A supermarket brand in New Zealand has launched a new ad campaign with a local TV chef waxing lyrical about the joys of cheap recipes and foods from a generation ago - all available at this supermarket. This is a smart move. It taps into memories of the past - emotionally a place where times were good and we were all much more responsible. It also signals a very positive message that times have been tough before but we all survived. These messages will all be seeping into that brand.

Likewise we see brands like Mitre 10 flaunting their local history, which if you can do with credibility, is a recommended action to reassure consumers

ABOUT SYNOVATE

Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions.
The network provides clients with cohesive global support and a comprehensive suite of research solutions.

Synovate employs over 6,000 staff across 62 countries, including New Zealand. More information on Synovate can be found at www.synovate.com.

ENDS

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