LONDON: Even though consumer confidence in the UK is at its highest since autumn 2007, British consumers are still careful about their spending intentions, according to analysis of the UK segment of Nielsen's recent global consumer confidence index.
Published in July, the Nielsen survey revealed that global consumer confidence had risen to 97 points in Q2 2014 (with 100 as its benchmark for optimism) and to 90 points in the UK, a national year-on-year rise of 11 points.
While the headline figure suggests a much more positive outlook in the UK, a detailed breakdown of the UK findings for Marketing Week reveals UK consumers are still cautious about how they spend their disposable income.
More than half (53%) look for cheaper grocery brands to save on household expenses and 34% intend to continue buying cheaper alternatives even if the economy picks up.
Furthermore, the proportion of those who say they have no spare cash after paying the essentials has remained largely unchanged since 2012 – 28% in 2014 versus 26%.
Of those who do have disposable money to hand, 37% say they intend to save it and 21% are looking to pay off debts although, more encouragingly, the proportion saying that now is a good or excellent time to buy things for the coming year has risen to 40% from 33% in 2012.
The most popular options for extra spending include taking a holiday (28%), new clothes (22%), out-of-home entertainment (19%), home improvements (18%), and new technology (13%).
Mike Watkins, head of retailer and business insight at Nielsen UK, explained that British consumers may be more optimistic but they remain more selective in their spending choices.
"Consumers are much more optimistic and more willing to spend but some are still unable or reluctant to do so as they don't want to end up out of pocket," he said.
"As a result, consumers are shopping around more and using technology to compare prices and share ideas, all of which is really important as it helps them to manage budgets and make informed decisions," he added.
He advised brands to respond by making sure their value proposition is clear to consumers and that brands, particularly in the food sector, continue promotions and discounts.
The rising cost of utility bills is the biggest concern for almost one-third (31%) of Britons, although they are much more optimistic about the state of the economy.
This was their biggest concern two years ago (29%), but the economy is now the biggest concern for just 17%, itself a cause for optimism.
Data sourced from Marketing Week; additional content by Warc