Irish consumer spending habits
The shopping habits of the Irish consumer have changed drastically over the last twenty years. The last five years alone has seen our new levels of prosperity reach farcical levels as the children who grew up during the boom of the Celtic Tiger splash their cash. This has been highlighted by the changes made to the typical Irish shopping basket by the Central Statistics Office. As the National Consumer Agency point out it ‘reflects our changing spending habits in modern Ireland’:
Among the everyday items dropped or modified, girls’ trousers have replaced girls’ dresses, the sweeping brush usurps the sweeping brush handle, and tinned sweetcorn has given way to tinned tomatoes. Streaky rashers, shoe polish brushes and wallpaper borders are now off the list. But shellfish, fake tan and coffee makers have all been included for the first time. Technology has also had an impact on the index, with the addition to the basket of plasma screen TVs, home cinema systems, digital printing costs and MP3 players.
For those that are interested here are some stats and trends which reflect the changes in Irish society.
Holidays
The Central Statistics Office reported that Irish people spent nearly €1.5 billion on international trips in the last three months of 2006 - a figure 25 per cent higher than the amount spent during the same period the previous year. However to get a true picture of consumer spending you have to look back to the CSO’s previous figures on holidays abroad by Irish people which showed that we took 5.3 million trips between January and September last year, that’s a rise of almost 40% from 2003 when Irish people made 3.8 million for the same period.
The interesting thing about these stats is that the majority of these trips are increasingly being made by people aged between 60 and 69, which reflects the importance of this age group due to the end of the cocooning trend. To highlight a paragraph of Pamela N. Danziger’s book ‘Let Them Eat Cake‘ which is quite relevant in this instance:
One of the most significant changes on the horizon for luxury goods marketers, especially those that sell home goods, is the end of the cocooning trend that has dominated our consumer culture over the past 20 years. The cocooning, or nesting, trend (as it is variously called) was identified in the mid 1980s by trend tracker Faith Popcorn to describe how people how people were turning their focus inward to hearth and home. The trend was largely driven by demographics, because during that period the baby boomers were in the cocooning phase of life, the period when they were raising young children, and practical necessity kept them grounded at home.
Car purchases
2006 was a landmark year for the Irish car industry. Not because it was a bumper sales year. Instead more supercars (Porsches, Ferraris, Aston Martins, etc) were sold in the first three months of the year than in all of 2005. In the past eighteen months you don’t have to drive around Dublin for long to pass a Bentley, and since the reopening of the Shelbourne Hotel an exotic vehicle in some shape or form seems to be permanently parked outside.
The worrying thing about the buoyancy of the car industry isn’t the level of sales of supercars, but as any BMW dealer will tell you that people are coming into dealerships asking how much it will cost them per week. When you go to a repossessed car auction it isn’t luxury brands you see up for sale, but cars like Peugeot 207s or Golf GTis.
Eating habits
A Food Futures study (pdf) carried out by Amarach Research for Campbell Catering in 2005 is quite insightful despite being two years old at this stage. The report points out:
As Ireland has become more affluent, our eating habits have changed to reflect cultural influences arising from increased travel abroad, changing work patterns and increased discretionary spend. For the first time in our history, we spend more on food to eat outside the home than in the home, which illustrates the transformation that has happened in Ireland in the past decade. If eating out was once the preserve of the ‘well to do’ in Ireland, it is certainly no longer the case.
Forget flash cars and more holidays abroad, if there’s anything that shows how spending habits have changed it’s our eating habits. The potatoe which was once the core of our diets, is now second place to pasta and rice. This reflects one of the four emotional drivers set out in Michael J. Silverstein’s ‘Treasure Hunt - Inside The Mind Of The New Consumer‘:
Questing is about buying goods and experiences that enable people to challenge themselves and try new things. Examples include a car, travel, exotic foods, exercise equipment, entertainment, and collectibles. As the world has opened and Americans are better educated and more widely traveled, they are eager to push their limits and constantly move from one thing to the next.
Levels of Debt and the Housing Boom
Ireland has one of the highest levels of consumer debt in Europe. On top of that the majority of consumers are unaware of the interest rates they are being charged on the amount of money that they owe. Due to a few hiccups in the economy there is a voice that is beginning to grow louder and is raising concerns about debt levels - mortgages in particular. Sunday Business Post journalist, Richard Curran, has a programme on RTE at the moment that is getting a lot of talk at the moment. Futureshock aims to examine whether Ireland’s property bubble is about to burst. In the programme Richard Curran assesses the chances of a significant readjustment to Irish property prices, and asks who will feel the most pain if the market does crash?
A couple of very interesting statistics we came across recently though is that 62% of housing in the country currently has no mortgage associated with it. Furthermore 25% of houses purchased since 1996 have no mortgage associated with them. Brings new meaning to the popular Irish phrase, ‘Do you take cash?’ Hopefully these figures may allay some concerns about the property market.
*Thanks to Davy Stockbrokers, SIMI, National Consumer Agency, and the CSO for the information. If anyone has any other interesting stats please point us in the right direction in the comments section.
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