The State Of The Nation
Prepared by Luke Reaper For The Marketing Society 26th FEBRUARY 2009
IMAGE HERE INTO GREY AREA.
The Agenda
Who we are – past, present and future Climate Perceptions: are consumers coping? Continuing and emerging trends Is it all doom and gloom?
2
Who we are – Past, Present & Future
3
Record Population Growth in Recent Years 6.5 6.0 5.5 5.0 4.5 4.0
By 2016 we are forecast to hit over 5 million (at the moment!)
3.5 3.0 2.5 2.0 1.5
2.8 million Historic low
1.0 0.5 0.0 18 41 18 51 18 61 18 71 18 81 18 91 19 01 19 11 19 26 19 36 19 46 19 51 19 56 19 61 19 66 19 71 19 81 19 86 19 91 19 96 20 01 20 06 20 08 20 11 20 16 20 21 20 26 20 31 20 36
Mil.
Current population stands at 4.4 million
4
Components of Population Change 110
Persons (thousands)
90 70
Natural increase Natural increase
50 30 10
Population Populationchange Change
-10
Net mMigration igration Net
-30 -50 2636
3646
46-51 51-56 56-61 61-66 66-71 71-79 79-81 81-86 86-91 91-96 9602
0206
07
08
Intercensal period
Natural increase outstripped net migration and contributed to just over half (54%) of the population increase in the year to April ’08. Also lower mortality rates nowadays.
5
2009 Forecast Net Migration Emigration/Immigration 80s
90s
00s
110 90 71.80
70
55.10
50
41.30 32.80
30 0
19.20
-30
-2.00 -23.00
26.00 17.40 17.30
32.00 30.70
38.50
8.00
7.40
10 -10
67.30
-0.40
-4.70
-0.19
-22.90
-41.90 -43.90 -50.00
-50 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
ERSI Forecasting a 2009 net migration figure of -50k, with 25k inwards and 75k exiting. This would be the highest net migration since 1989.
7
Long Term Population Change (‘000s) 1986 - 2016 Population Census Ageing population: 20-25% of population will be aged 65+ by 2041
1986
1996
2002
20-29 age bracket to shrink by 4-6% over the next 10 years (decline in births now impacting)
CSO Projection (M2FI) 2006
2008
1024.7
864.4
859.4
912.0
632.7
25-34 35-44 45-54 55-64 65+ Total Dependants Dependency %
617.9
641.5 617.5 506.1 421.5 309.3
520.0
412.0
562.9 480.4
722.4 623.4
783.6 652.3
587 827.0
+9%
820
+5%
647.0
+4%
518.0
+6%
646.0
+3%
847.0
705 584.0
521.8
543.3
407.0
431.2
466.0
291.8
351.6
384.4
413.9
436.0
468.1
481.7
536.0
3,621 1,237 35%
3,917 1,264 32%
4,240 1,333 31%
4,422 1,394 32%
4,686 1,493 32%
5,094 1,695 33%
+4.3%
+10.5%
+8.7%
-
+2.2%
+8.2%
+8.2%
-2.3%
591
282.2
3,540 1,409 40%
Pop growth %
617.4
496.1
+6%
957.0
632.9
15-24
2016 1049.0
827.4
0-14
2011
% Change ’08 vs 06
8
Number of Households 1987 – 2006 ‘000
1469
1450
1350
1319 However, household size has declined.
1250
1227
1123
1150
1029
1050
987 950 '87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'06
Source: HBS (CSO)
The number of households stands at 1.469 million (2006 census), a 31% increase over a 10 year period. Has had implications for many household related categories. However, we are not going to see such record growth in the future.
9
Growth In Smaller Households 1986 - 2006 1986
1996
2002
2006
744 639 499
1 /2 people
379
% Ch ’06 vs ‘02
+16%
(50%)
(48%)
(44%)
(39%)
+9% 3 / 4 people
5+
Total
302
371
466
509
(31%)
(33%)
(35%)
(35%)
295
253
226
217
(30%)
(23%)
(17%)
(15%)
976 Growth
1123 +15
1332 +19
1470 +10%
-4%
+10%
11
Death Rate per 1,000 Population 1986 – 2007 • •
Rate per ‘000
10
9.5 9 8.5
Impacting on traditional lifestages They are being stretched and redefined
9.5 9.1 8.8 8.9
8.9
8
8.9
8.9 8.7
8.8 8.6
8.7
8.5
8.6 8.5
8.2 7.8 7.5 7.2
7.5 7
7.0 6.6 6.5 6.5
6.5
19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
6 • • •
As a result of long-term falls in mortality rate, people are living longer. Thus a customer for life takes on a new meaning It’s estimated that 1 in 4 of the population is now on long term medication Increased strain on our healthcare system
14
Unemployment Rates 2008
% of labour force 20 17 18 16 14
14
While the Q3 QNHB in 2008 had a jobless figure of 160k, the latest estimates are over 195k people and climbing.
15.5 13.2 11.5
12
Feb estimates
10
8.3
8 5.5
6
3.9
4
4.4 4.4 4.6
4.9 5.4
6
9.6 10.4%
6.9
Jobless rate could hit 12-15% in 2009
2 at e im
Ja n
20 09
es t
De c
Ju ne Se pt
h ar c M
Ja n
'0 7
'0 6
'0 5
'0 1
'9 9
'9 6
'9 3
'9 0
'8 6
'8 3
0
2008 Average for ’08 was 6.3 The unemployment rate does not take into account reduced working hours up to 3 days a week, etc as does the Live Register
15
However the Live Register has Higher Figures 327,861 on the Live Register in Jan 2009 (monthly increase of 12%) 143% increase in redundancies in Jan ’09 compared to Jan ‘08
Persons on live Register
327,681
339,000
Total Persons (Feb 354,400)
289,000 268,586
238,240
Irish Nationals
240,217
263,527
239,000 197,992
201,756
199,776
181,449
189,000 166,363 160,543
160,138
218,710 199,003
166,873 168,477
158,752
154,961 145,677
142,180
144,642
c. 64k non-Irish Nationals (almost 20% of all persons on the Live Register, driven by those from the EU Accession States)
139,610
139,000 Month
2005 (1)
2006 (1)
2007 (1)
2007 (6)
2008 (1)
2008 (3)
2008 (5)
2008 (7)
2008 (9)
2008 (11)
2009 (1)
2008 * The Live Register is not designed to measure unemployment. It includes part-time work e.g. seasonal & casual workers who work up to 3 days per week
16
Economic Status Number of Workers in Household 1987
Two+ working
23.6
‘94/’95
‘99/’00
‘04/05
26.8 35.8
35.7
34.7
33.0
14.9
15.1
One working
43.2
Pensioners Unemployed Other households
11.1
38.3
13.3
11.4
8.6
10.6
12.9
4.2 10.5
2.8 13.5
Prime driver of increased wealth Source: HSB/CSO
17
Other Key Demographic Changes
Smaller families… average number of children per family declined from 2.2 (1986) to 1.4 in 2006.
Cohabiting couples are the fastest growing type of family unit. In addition, almost two-thirds of these are couples with children.
Muslims the third largest religion (after Catholicism and Church of Ireland) – 32k.
More flats, apartments and bedsits … now 148k+* (1.77 million housing units in total).
*Source Census 2006
18
Other Key Demographic Changes
Increased urbanisation… but in towns rather than cities (Dublin, Cork, Limerick). While all counties in Leinster increased the highest growth. Will people try and retreat to the cities?
Postponing of commitment to traditional family structures.
19
Other Key Demographic Changes
Ireland – still a cultural melting pot. It is difficult to estimate percentage of foreign nationals still in Ireland. Estimates place numbers at 10-12% (with about one-third under 25).
Divorce on the increase (up 70% between 2002 - 2006)… 9% now separated/divorced (2006).
20
Volume & Value of Retail Sales (All business combined)2003-2008 (Index 2000 = 100) Up to Dec 2008 Index 150 143 140
Value 132
131 130 121 124
120 114
Volume
116
109
113
110 109 101
100 '03
104 '04
'05
'06
2008 a bad year and set to continue
'07
'08
Year
21
Retail Sales Value & Volume: Annual Change Dec ’07 vs. Dec ‘08
Hardware, paints and glass Pharmaceutical, medical and cosmetics Household equipment Textiles and clothing Footwear and leather Books, newspapers, stationery Food, beverages and tobacco Electrical goods Furniture and lighting Motor trade Bars
Value of Sales
Volume of Sales
Long term Annual % change Dec ’07 v Dec ‘08
Long term Annual % change Dec ’07 v Dec ‘08
-18.0 -1.2 -19.6 -10.3 -10.7 -10.6 1.5 -22.5 -16.3 -16.5 -5.4
-19.8 -3.5 -20.1 -5.3 -4.6 -14.1 -2.4 -21.6 -16.0 -14.9 -9.8
Source: CSO
23
Negative Inflation for First Time Since 1960 % Annual Change
5
Jan ’09 Negative Annual % Change + = Lower prices for consumers - = Margins lower, can affect jobs
+4.3 +4.0
4
3
+2.5
2 +1.1 1 -0.1
0 Sept '08
Oct '08
Nov '08
Dec '08
Jan '09
Ulster Bank’s Pat McArdle expects CPI to remain negative for all of 2009, going below minus 4% in several months – impact of further rate reductions and as recession bites.
24
Most Notable Changes in the Year Impacting on Our Negative Inflation All Items -0.1% Food & Non-Alcoholic Beverages
3.0
Alcohol & Tobacco
6.9 Clothing & Footwear
-6.9
Housing/Water/Electricity/Gas etc.
-7.9 -1.1
Furnishings/H/H equipment
Health
-4 Communications Recreation
5.8 Transport 0.7 0.5
Education Restaurants & Hotels Misc Goods & Services
5.6 3.3 7.7
Factors impacting: • Lower mortgage rates, petrol and diesel prices • Drop in home heating price • Household equipment prices down • Increase in health and car insurance premiums pushed up miscellaneous goods & services Source: CSO
25
Rich Man – Poor Man Disposable Income – Household Data Household Quintiles
94/5
1999/2000
2004/05
€
€
€
Bottom Quintile
102
140
201
2nd
195
291
424
3rd
304
469
704
4th
448
681
1057
Top Quintile
740
1177
1826
Total
358
552
842
Gap between Rich Man – Poor Man has actually increased over the above 10 year period Source: Household Budget Surveys
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Section One:
Climate Perceptions: How are Consumers Coping?
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What Are We Doing Less Of?
Doing ‌ Nowadays
More
Going out to a restaurant for a meal 2%
Going out for a drink 2%
Using garage forecourt shops to buy food or 2% groceries
Using local shops like Centra, Supervalu
10%
Same
Less
46%
51%
59%
38%
67%
29%
66%
22%
30
What Are We Doing More Of?
Doing ‌ Nowadays
More
55%
Buying items on special offer Using discount stores like Aldi & Lidl
Drinking at home Using public transport
40%
47%
Buying shops own label products Using major supermarkets
Same
48%
43% 26% 21% 14%
51% 63% 68% 78%
Less
2% 2% 4% 9% 9% 5%
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Continuing & Emerging Trends
32
Continuing & Emerging Trends Consumer Reactions to the Recession are in a Constant State of Flux Fear
Denial Guilt
Some are living in a state of FEAR (e.g. job, mortgages etc.)
Some are doing well still and have a sense of GUILT
Many are still in DENIAL, not wishing to believe that things could get worse
However, is the nightmare of meltdown more Dublin and Rest of Leinster?
33
Continuing & Emerging Trends We have moved from this inspirational leader
To‌.
So what are we searching for?
34
Continuing & Emerging Trends Need Companies That Care
In these ‘ugly’ times, people crave empathy, sympathy and comfort.
A longing for organisations that care.
Implications for Business
Customer service will become increasingly important to retain share. However, this is often an area cut in hard times.
Brands need to build even deeper relationships with customers in times of strife.
Consumers have the internet in this recession – hence the need to sympathise and interact with customers will never be greater. Online forums, talk shows etc. will be the soapbox of the consumer.
Customers are likely to start answering back more – something we Irish have been very poor at!
35
Continuing & Emerging Trends Rediscovering Home
This is a continuing trend, but is likely to be amplified in the coming months.
Part relates to a redefining of values and part due to practical financial concerns.
Implications for Business
Catering for this home market has much opportunity.
Remember people who are used to a high standard of living are likely to get cabin fever… they will need entertainment.
The values of home do not necessarily have to be boring or dull.
36
Continuing & Emerging Trends Search For ‘Real’
We have been searching for this since the Celtic Tiger began!
In hard times consumers increase their search for what truly makes them happy as they reevaluate their lives.
We have a values gap – many have not experienced a recession, they have high expectations for living standards etc.
Implications for Business Consumers will value the simple things, the practical over the ephemeral A search for solidity is evident.
37
Continuing & Emerging Trends Wider Sense of Community
On a positive note, hard times can bring people together. Our recent ‘blizzards’ were a case in point. Sense of community is an important part of human
nature and this is even more marked in Ireland than globally.
While Ireland always had a trend of being community oriented, this is likely to become more prevalent.
Elements which are likely to feed into this sense of community include: Helping others less fortunate via voluntary work (albeit
not recently on the donations front). A return to a more inward focus; Irishness, local
(looking after our own) and the sense of nostalgia about the peaceful times.
Implications for Business
Brands can convey a relevance via tapping into the local heritage, which can convey a sense of comfort 38
Continuing & Emerging Trends Back to the Cosbys?
With the recession biting harder, our household composition could start to alter. Moving back in with the parents (not just
themselves, but couples etc.). Elderly relatives living with siblings. Taking lodgers in to help pay mortgage.
Implications for Business
Monitor those trends and show an empathy with consumers
If sufficiently large developments – cater for emerging trends
39
Continuing & Emerging Trends Redefining of Luxury
Luxury brands will still be consumed, albeit they will be under pressure. Consumers will veer towards small indulgences, rather than excessive ones. An embarrassment about flaunting wealth will return Lavishness will be emotionally wrong. Luxury will need to be earned (i.e. allow consumers to purchase guilt free – via quality, heritage, time, longlasting, more useful, comforting etc.). Luxury will be about helping people vent in the current climate.
Implications for Business
Examine brands’ DNA to see the elements to leverage
40
Continuing & Emerging Trends Adaptability of Consumers
Nothing new here?
Sure the country is in active promotion seeking mode.
But have you picked up on the following? Increased prevalence of bartering prices down or
look for extras Consumers texting each other regarding good
bargains found. Usage of online to buy cheaper goods
(remember, no internet during the last recession). Are we likely to see more disparate shopping to
get bargains? Discounters are becoming more mainstream.
Implications for Business
Assess your offer…note naggins are again being discussed… are we likely to see flagons return?
41
Continuing & Emerging Trends Media Consumption
Media consumption is still high. We are still watching TV, listening to radio and surfing the
net.
People, while certainly interested in the news and current events as they unfold, are searching for happier times. For example programmes like: ‘The Riordans: Tea, Taboos and Tractors’ attracted an audience of 555,000. One episode of Desperate Housewives attracted 420K. Six Nations is also doing well, as we search for good
news and indeed inspiration.
Remember this…. 43
Is it all Doom and Gloom?
44
Positive Factors
Infrastructure has improved significantly (and Broadband to some extent)
Tax rates are low
2 million still likely to be working at the end of the year compared to only 1-1.5 million in ’80s
Mortgage interest rates declining 45
Physically we are Left with Some Lasting Achievements
Luas
Restoration of historic buildings such as: Royal Hospital Kilmainham, Dublin Castle etc.
Croke Park
The O2
Temple Bar
Dublin Airport
46
Also The New Aviva Stadium
Recent reports – it will bring €250
million to the local economy per year. UEFA Europa League Final to take place in 2011. Will be aiming for other major events.
The question is – could we have done more? 47
So are we Likely to be Doing…. Less of this….
Foreign holidays
And More of this…..
Holidays at home
48
So are we Likely to be Doing…. Less of this….
Formal dinner out
And More of this…..
Takeaways
49
So are we Likely…… To seek information
But also need more of this….
50
So are we Likely to be Listening to…. Less of this….
And more of this…..
But maybe at some stage a return to….
51
So are we Likely to be Doing…. Less of this….
Hair salon
And More of this…..
Home hairdo
52
In Summary Inaction is the riskiest response. Protect the existing business. In past recessions, companies that slashed marketing spend often found that
they had to spend far more than they saved in order to recover. In softer, less cluttered media environments you can be heard louder. Search for opportunities…consumers still spend. Consumers need to be communicated with more and not just on a rational
level…remember Obama. Times are a-changing so fast we need to understand and track the consumer
like never before – if you want to gain the competitive edge. And remember, the one thing we can be certain of, is that recessions always
end.
53
Thank you
54