Brexit: Taking Confidence from the Consumer

They say change is a good thing, an invitation to explore new opportunities and experiences. Yet, amid the unpredictability of a post-Brexit UK, the longing for ‘business as usual’ is palpable.

While it is still too early to forecast the economic impact of Brexit, what cannot be argued is that change is indeed afoot. Businesses will need to adapt. Yet, if we wisely pay heed to the lessons learned from 2008’s financial crash, it’s that, firstly, in times of change, there is one constant: the resilience of the consumer. Secondly, in times of uncertainty, businesses stand to prosper simply by keeping their cool, and their marketing budgets intact.

Knocked back, but still in the black.

Though the recession of 8-years ago left in its wake a country gripped by fear and anxiety, that didn’t stop shoppers from spending approximately £1 trillion across 2008 and 2009. Naturally, consumer expenditure dipped, but nowhere near the level predicted. New research suggests history could be about to repeat itself.

A recent study conducted by market research firm Mintel intimates that, while consumer confidence has taken a knock, it’s a case of straightening the collar, employing the stiff upper lip, and pushing on, albeit with a slightly more cautious step. After four or five years of solid growth, the UK is now in a much stronger position to withstand and absorb such a shock. Additionally, with unemployment having been on a steady downward curve, and real wages finally increasing, panic has remained in check.

In fact, if anything, a whiff of detachment fills the air. Of 2,000 adults aged 16+ surveyed, just 23% believed that the vote to leave the EU would impact negatively on their career prospects, while only 27% thought it would have a detrimental effect on household income. 67% of those surveyed either describe themselves as financially healthy, or OK at the very least, a statistic that indicates a lack of serious concern when it comes down to personal finances.

Business as usual

Needless to say, different sectors will be effected by Brexit in different ways, with sales of big ticket items such as housing, cars and kitchens likely to slow in the short- to mid-term. Similarly, financial services may feel the squeeze as consumers are deterred from spending by concerns over credit. The falling Pound will also become a factor on the costs of living, a by-product of which will be the re-emergence of savvy shopping habits – with consumers set to exert their focus on value-for-money and promotions.

However, for those of us who baulk in the face of too much change at once – and we’re a nation traditionally famed for our hostility towards it – there is good news. Mintel found that, generally, it’s business as usual as far as consumer confidence is concerned; there is no obvious trigger for change in many markets, with spending intentions poised to remain robust.

Room to grow

Amid the lingering negativity, it’s easy to forget that the referendum result has created new opportunities. For travel brands whose key sales propositions centre on UK-based destinations, the weakened pound will likely drive higher volumes of overseas tourism to our shores, whilst domestic ‘staycation’ holidays are also set to grow in popularity among more cautious spenders.

For online retailers, the vote could have a similar effect to that driven by 2008’s crash. Affordable treats such as food, alcohol, entertainment and fashion items will prove to be impervious to economic concerns at national level, with retail therapy a mainstay of UK culture. Retailers on the high street are expected to have a slightly tougher time of things, a point that corresponds with the downward trend in terms of spend and footfall over recent years – notably driven by the dual-screen phenomenon and online boom.

There is also the chance – regardless of whether the government negotiates new terms with the EU that maintain access to the single market – for brands to create new export and import relationships with other markets outside of Europe, boosting sales overseas whilst gaining the ability to buy resources more cheaply.

Ultimately, with many businesses mistakenly poised to batten the hatches and draw back their marketing spends, new opportunities will bloom for more intrepid brands to muscle in on the vacated space and increase their share of voice. With consumer confidence taking a much smaller hit than anticipated, those who adopt a proactive approach during this time of economic uncertainty stand to not only benefit in the longer-term, but short-term too.

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