VAT reductions and Stay and Spend incentive will benefit the retail and hospitality sectors...
Daniel Murray, Partner and Head of Consumer at Deloitte Ireland, welcomed the measures announced in the July Stimulus package to encourage spending, including the six-month reduction in the standard rate of VAT from 23% to 21%, which will particularly benefit the retail and hospitality sectors. The package comes as Deloitte’s State of the Consumer Tracker shows consumer confidence holding steady into July, with Ireland now in second place in Europe for consumer confidence in visiting stores in person.
This is the latest of the new bi-weekly survey, which tracks Irish consumers’ attitudes towards personal well-being, financial concerns, travel and hospitality, transport and retail. 60% of Irish consumers now say that they want to make purchases in-store, up from 58% in the previous wave of research. Confidence in visiting physical stores is up a further 5%, with 61% of consumers now feeling safe to do so, putting Ireland second in Europe for this, just 1 point behind the Netherlands.
The results are based on a survey of 1,000 consumers across 18 countries respectively (1,000 Irish consumers). The most recent data was gathered between 7 and 11 July, one week following Ireland entering the third phase of the lifting of restrictions put in place in response to the COVID-19 pandemic.
In response to the July Stimulus announcement, Daniel Murray said: “Currently, only 20% of Irish consumers are actively seeking travel deals, which is consistent with the previous Tracker. With Irish consumers’ intent to spend on travel having plateaued, the Stay and Spend incentive, combined with an increase in confidence in hotel accommodation (38% – up from 30% since the last index) may drive an increase in staycations in Ireland during the off season.”
“The results of the latest wave of the State of the Consumer Tracker are encouraging for businesses getting back on their feet as the economy continues the steep climb that is reopening. Consumer confidence held steady as we entered July and the third phase of easing lockdown restrictions, with Ireland overtaking the UK to become Europe’s sixth-most confident country,” said Murray.
“Perhaps most notable are significant rises in confidence in visiting restaurants – now at 38% – and in engaging in one-to-one services, with more than half of us now feeling safe to visit a hairdresser, barber or beautician. The steady increase in consumers feeling safe to make in-store purchases is a testament to the work done by retailers across the country in preparing their premises for reopening and, in some cases such as grocery and pharmacy, adapting their stores while remaining open during the initial phase of lockdown restrictions.
“However, while consumer confidence remains consistent, so too do many of the concerns that the pandemic has inflicted upon us. The slight uptick in consumers’ concern for their physical wellbeing and that of their families, as well as persistent uncertainty about their personal finances and job security, serve as a reminder that the negative impacts of the pandemic are not yet behind us. Business leaders must recognise this renewed consumer confidence in tandem with people’s continued concerns, and strike a delicate balance in attempting to rebuild what has been lost to the crisis, while also ensuring that consumers’ safety is never compromised upon.”
Consumer confidence
Consumers reporting feeling ‘less anxious than last week’ has remained consistent (27%) when compared with the previous wave of research (representing mid-June). While UK consumers were ahead of Ireland in terms of confidence in previous waves of research, Ireland is now Europe’s sixth-most confident nation, with the UK now two points behind.
48% of consumers in Ireland remain worried about their physical well-being, an increase of 2% since the previous Tracker; 61% are concerned about the health of their family, up from 58%. Job loss is becoming slightly less of a concern at 29% (down from 31%). Nearly a quarter (22%) remain worried about making upcoming payments, consistent with the last index.
Consumer spending
Consumers are becoming more confident in engaging in one-to-one services such as hairdressers, with confidence level rising by 6% to over half of the respondents (58%). The “convenience consumer” is now steady, with 46% happy with spending more on convenience for the third index in a row (up 1%). Consumers remain hesitant to make large purchases, with 37% still planning to delay such spending (down 4%): this aligns with the global average (39%).
Retail
Planned expenditure in restaurants has surged, with 37% now confident in visiting a restaurant (up from 28% in mid-June). However 57% of consumers would still prefer purchasing take-away food via online channels. Confidence in visiting physical stores is up a further 5%, with 61% of consumers now feeling safe to do so. This puts Ireland as second in Europe for consumer confidence in visiting stores in person, just 1 point behind the Netherlands. 60% of Irish consumers now say that they want to make purchases in-store, up from 58% in the previous wave of research. This is significantly ahead of the UK (43%) and the global average (52%).
Travel & hospitality
Irish consumers’ intent to spend on travel has plateaued, with 20% actively seeking travel deals, consistent with the previous Tracker. Confidence in air travel has remained consistent (19% feel safe – down from 20%) while confidence in hotel accommodation has increased significantly (38% – up from 30%) since the last index. Some European countries are slightly bolder on travel intent – with the UK (23%), France (39%), Italy and Belgium (29%) seeing increased confidence in air travel over the last month.
Transport
As the health crisis slowly improves, consumers are planning travel within and outside of their locality, with intended spend on vehicle fuel/oil remaining steady (2% increase). Reliance on personal vehicles is likely to persist, with 64% of consumers still planning to limit their use of public transport over the next three months, consistent with the last wave of research. Indeed, 52% of Irish consumers now report that they are planning to keep their current vehicle longer than originally expected (down from 58%). 20% now say they would consider buying a vehicle online (up from 15%).
28/07/2020