(1)

Credit Crunch Tracking

February 2010

The Road to Recovery?

(2)

Substantial increase is seen in consumer confidence – the highest in the past year!

But we remain cautious about increasing our spend – waiting to see if the recovery is permanent.

On the Road to Recovery...?

(3)

Consumers believe the Irish Economy is improving.

(4)

Highest expectations in a year!

1 in 5 now expect the economy to improve, while half expect it to stay at least unchanged.

But half still expect the Irish economy to fare worse over the next 6 months!

2938 39 32

35

5440 41

29 17

8 9 718

21

1 1 1

21

Much better (5)

Much worse (1)

Average

Stay the same (3)Slightly better (4)

Slightly worse (2)

1.92

12

1.70

7

1.88

11

2.32

18

NET Same/Better (3-5) 2216 19 38

How do you expect the Irish economy to fare in the next 6 months?

May‘09%

July‘09%

Oct‘09%

Feb‘09%

2.54

26

48

Feb‘10%

(5)

Higher expectations seen among the youth, the retired and those born outside of Ireland.

(6)

Expectations for the Irish economy 6 months from now % Stating they believe it will be the same or better (3-5)

48 4947

53

4542

5148 47 47 48

46

57

18-34%

35-44%

45-64%

AGE

65+%

Any%

None%

CHILDREN

Male%

Female%

GENDER

ABC1%

C2DE%

SOCIALCLASS

TOTAL%

COUNTRY OF ORIGIN

Ireland%

Other%

(7)

A positive outlook for the World economy, is driving the Irish outlook.

(8)

38 33 3421 17

33

15 11

85

1431 31

4453

1

3 2

55

Much better (5)

Much worse (1)

Average

Stay the same (3)

Slightly better (4)

Slightly worse (2)

NET Same/Better (3-5)

2.72

16

2.11

12

2.77

18

3.18

19

5027 51 68

How do you expect the World economy to fare in the next 6 months?

May‘09%

July‘09%

Oct‘09%

Feb‘09%

3.36

20

78

Feb‘10%

3 in 5 now expect the World economy to improve 6 months from now!

Only 1 in 5 expect the World economy to worsen over the next 6 months.

(9)

Expectations are also increasing for housing and job market…but many still fear it may get worse

(10)

3544 40 37

35

2437 38 36

39

43 21 22 19 13 6342 40

28 21

1515

3 7 712 12

22

2 1

711 12 11

11

2 2Much better (5)

Much worse (1)

Average

The Housing Market 6 months from now?

Job security 6 months from now?

2.29

Stay the same (3)Slightly better (4)

Slightly worse (2)

1.85

20 11

1.86 1.53

13 7

2.32 1.89

23 14

2.43

26

2.24

20

NET Same/Better (3-5) 33 1921 1037 2243 34

2.59

36

53

2.34

27

40

May‘09%

July‘09%

Oct‘09%

Feb‘09%

Feb‘10%

May‘09%

July‘09%

Oct‘09%

Feb‘09%

Feb‘10%

How do you expect the Housing and Job markets to fare in the next 6 months?

(11)

The expected tough budget did not materialise for most consumers, reducing the perceived impact of the recession on them personally

(12)

14 22 2839 29 47 31

1610

1411

191624

High impact (8-10)

Limited Impact (1-3)

Expected Personal Impact of Recession - Overall

Average

July‘08%

5.7

May‘09%

5.8 6.6

Feb‘09%

5.1

Sept‘08%

6.1

July‘09%

7.0

Oct‘09%

Some Impact (4-7) 60 58 51 48 55 44

6.0

Feb‘10%

53

But 1 in 3 still expect to be heavily impacted by the recession!

(13)

4743

49 49

55

45

30

44

4951

43

31 30 31 3230

34

21

26

3634

28

18-34%

35-44%

45-64%

AGE

65+%

Any%

None%

CHILDREN

Male%

Female%

GENDER

ABC1%

C2DE%

SOCIALCLASS

Expected Personal Impact of Recession – Net High Impact (8-10)

TOTAL%

The biggest change in impact appears to be among middle class families, who have become far less negative about the impact of the

recession

(14)

The percieved impact on monthly spending, lifestyle and job security also decline with increased optimism.

(15)

18 24 28 36 30 43 3113

21 2131 24 38 26

19 2316

21202124

35

1518

162120

28

Monthly Spending

Average

Your Way Of Life

5.6 5.35.7 5.46.2 5.95.0 4.65.9 5.66.7 6.4

High impact (8-10)

Limited Impact (1-3)

Some Impact (4-7) 54 5348 5641 4953 5051 5541 45

July‘08%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

July‘08%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

5.9

49

Feb‘10%

5.6

51

Feb‘10%

Expected Impact of Recession on….

(16)

1824 23

3224

3124 21 26

32 34 30 4635

4027

1925283035

4226

3727

383651

Average

Full-time Workers Part-time Workers

5.0 5.14.7 5.45.6 5.74.1 4.54.9 6.55.6 5.7

High impact (8-10)

Limited Impact (1-3)

Some Impact (4-7) 39 3637 3840 3629 3638 4440 34

July‘08%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

July‘08%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

4.7

34

Feb‘10%

5.7

34

Feb‘10%

The perceived impact on job security also improves, but the fear of job loss remains...

(17)

It appears that a large proportion of consumers do have the household income to potentially resume some spending.

(18)

34 36

1720

33 26

16 18

Concerns About The Future

Lower Prices/Cost-of-Living

Not Reduced Spending

Lower HouseholdIncome

Suggests that income is available for improved

spending when consumers feel more

secure!

Main reason for reducing spend to date, if at all...

Oct 2009%

Jan 2010%

Only a third have reduced spend due to

lower household income

(19)

%

37

37

22

44

37

35

40

32

36

C2DE

Males

Females

18-34

45-64

35-44

65+

ABC1

Age

SocialClass

Sex

TOTAL

Reduced spend due to lower income...

Women and the 45-64 year olds are more likely to have decreased their spend due to lower income – suggesting men and those in the older and youngest age groups are most likely to start spending again first.

(20)

However, in spite of the most positive outlook in a year, on the whole consumers are as yet reluctant to increase their spending.

(21)

63 64 63 67 68 65 62 64

13 12 11 8 12 1320 16

19 18 1916

16 1613 15

4 6 57 3 4

3 5Already increased

Not likely to increase

Entertainment such as going out, eating, drinking or

socialisingGrocery spend

Consumer goods and services – e.g.

hairdresser, clothes, mobile

phone, gaming etc.

Holidays and short

breaks

Likely to increasein next 6 months

Likely to increasein next 12 months

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Likelihood to increase spend in...

Some small shifts in increased spending have already occurred, but the majority remain reluctant to increase

(22)

% Likely to increase spend in next 12 months

EntertainmentGrocery Spend

Consumer Goods/

Services

Holidays/ Shorter Breaks

Total 35 32 34 35

Gender

Male 36 30 33 36

Female 35 32 34 34

Age

18-34 50 39 45 46

35-54 31 31 32 31

55-64 20 18 30 28

65+ 22 25 26 26

Social Class

ABC1 36 31 34 39

C2DE 33 32 34 31

But, younger age groups and higher social classes are most likely to increase spend again...

(23)

Summary...

• Highest consumer confidence in a year suggests that consumers feel that we are on the way to recovery.

• But consumers are reluctant to increase spend – until they feel the recovery is permanent.

• The research suggest that a large proportion of consumers will be in a position to increase spend however, once they believe the recovery is permanent.

(24)

Summary...

• It is crucial that the high consumer optimism is enforced rather than reversed by policy makers – this could ultimately drive Ireland out of the recession.

• Young consumers are most likely to increase spend and have the highest confidence in a recovery – this should be the starting point of marketeers.

(25)

Methodology – RED Express

• 1,000 telephone interviews (CATI) using a random digital sample to ensure coverage of all households, including ex-directory.

• Quotas were set and data weighted to ensure a national representative sample of the population aged 18+ years.

• This is the 7th wave of the credit crunch tracking – fieldwork was conducted 8th-10th February.