Posts filed under 'economic downturn'
Recession 2.0
Giles Powdrill writes:
“A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter-and getting smarter faster than most companies.” So said the Cluetrain Manifesto almost exactly a decade ago. The prescience of the work lay in the authors’ clear understanding of the connective potential of the web and the shift in power from companies to individuals which would accompany its growth.
However, despite witnessing this shift in power, the majority of organisations still haven’t adapted their business practices to embrace the internet. They are not making use of the networks, the empowerment or the easy conversation and collaboration made possible through the social media technologies broadly described as ‘Web 2.0′ to help create new types of relationships with their customers. For many, the internet is still just another channel.
But maybe this is beginning to change: perhaps the current recession, the first of the truly digital age, will be looked back upon as being the spur to growth of new types of online commerce. We are already witnessing the growing success of online shopping, price comparison websites and digital advertising in the downturn, but these are only first steps – doing old things in a new way. The real challenge is about greater engagement; working with and for consumers in an open way. It is about companies demonstrating that they know enough about customers and their behaviours to deliver a benefit. Combining transparency with networked data and new technological infrastructure can create situations where all gain, customers and companies alike, but if companies don’t work out how to use these new networks, they may find themselves bypassed as people decide to do it for themselves instead.
A good example of a company getting it right is Zopa, the social lending site set up by banking professionals on which people lend directly to borrowers online. Borrowers bid for funds, and lenders choose whether to respond. Lenders get good returns, and borrowers get lower cost loans. Zopa makes its margin by charging both parties a fee. Default rates are low and lenders can see their borrowers and follow the progress of the their loan. Zopa has disintermediated the banking business by adding social networking and a human touch. In terms of Recession 2.0 it’s a sign of the times. As the Cluetrain Manifesto said: markets are conversations.
The picture, ‘the garden of Zopa’, is from a digital campaign by the social lending site to demonstrate the benefits of personal involvement and mutual help.
1 comment 26 March 2009
Most recent Henleymail now online
Jo Phillips writes:
The latest edition of HenleyMail (our free regular think piece email) is now available to read online here. There’s a chance to consider responses to the economic downturn in both the lead article by our UK managing director on how brands can adapt to a recession, and a perspective from Yankelovich in the United States on undermining the ‘fear factor’. There’s also an article on some of the work we have been doing on long-term futures – sharing some of the learnings and indeed the challenges that arise when we look to expand our strategic horizons in this way.
After over 60 issues, this is the last edition of HenleyMail – but only because we’re changing the name. As a result of our merger and rebrand, from now on the newsletter will be known as Futureproof. If you’d like to receive it you can sign up here.
The picture at the top of this post is ‘Hard Times’, by the 19th century painter Sir Hubert von Herkomer. From The Victorian Web.
1 comment 19 January 2009
Repairing the material world
Emily Pitts writes:
Demos’s recently launched ‘It’s a material world’ argues for the social value of heritage conservation, at a time when budgets for conservation courses are being slashed and the future of the discipline seems threatened. It calls for a national conservation strategy that includes education in schools, involves local communities in preserving the public realm, more support from government and a call to arms directed at professionals in the conservation and cultural sectors. If we don’t make the effort to be inclusive in how we look after the public realm, they argue, and make choices collectively about what to conserve, then social capital also declines.
An increasing interest in preserving social capital and a renewed vigour in community life is something we have been tracking for a little while, and early signs are that the economic downturn is increasing the extent to which we think of collective good. According to Yankelovich Monitor, 41% of American consumers define being a good citizen as ‘Not buying a home that is larger than you really need to help reduce energy usage’ compared to 34% just a year ago. Our data from the UK, whilst not directly comparable, hints at a similar sense of personal empowerment and responsibility, with the majority of consumers agreeing with the statement ‘I feel that I can make a difference to the world around me through the choices I take and the actions I make’. Interest in community life is also strong; according to our Planning for Consumer Change survey, since 2005 more people agree that the quality of life is better improved by looking after the interests of the community than those of the individual.
With changing attitudes towards community in evidence, the time might be right for the cultural sector, and conservation in particular, to push away from the individualistic outlook of the early ’00s and emerge in the schoolrooms and town halls of every community as a mainstay of our society. But is it possible for conservators to be more professional and more inclusive of the public at the same time, as Demos asks? Resolving conflict between public priorities and those of the experts could prove tricky, but rather than seeing these clashes of opinion as either/or tradeoffs, can we instead look to them as latent energy areas for future innovation?
The image is of the filming of the final of the BBC series ‘Restoration’ Village‘at the Weald and Downland Open Air Museum. More images can be found on their Flickr site.
Add comment 22 December 2008
Understanding consumer attitudes to saving
Giles Powdrill writes:
Since 2004 The Futures Company has worked with Aviva, one of the world’s largest insurance companies, on an annual survey focussed on understanding consumer attitudes to saving and investing. In total, more than 100,000 people have taken part in the survey since its inception. Geographically, the scope has grown year on year from 11 countries in 2004 to the 25 covered in 2008.
2008’s global survey was also topped up by an additional omnibus survey of key tracking questions in six markets, to understand how attitudes were changing as the credit crisis intensified, in late October 2008.
The results formed the basis of a recent speech given by Amanda Mackenzie. Aviva’s Group Marketing Director, at Chatham House (opens in pdf). To summarise some of the main findings:
Short termism – In 2008, the majority of people surveyed, in every market, said that the short term (within the next 5 years) was the most important timescale for them when thinking about savings and investments and the importance of this short term context overall has been a growing trend since the survey began.
Financial vulnerability – People feel financially exposed. The 2008 survey revealed that across the markets surveyed only one in four people felt that they had enough savings or investments to cope with the unexpected. Although this sentiment was felt most strongly in many of the Central and Eastern European countries, the omnibus research in October showed that feelings of vulnerability in more economically mature countries like the US and Germany have increased noticeably over the preceding nine months.
Aversion to risk - Less than a third of those interviewed in 2008 agreed that they were prepared to accept a higher level of risk for their savings in return for a higher possible return and although this figure had remained consistent across the five years of core research, the omnibus survey showed evidence of this risk aversion strengthening in the more mature economies since the credit crunch took hold. The research has highlighted consistently that when people think about financial returns from their savings they tend to prefer products which offer safer or guaranteed options over those which offer the highest or most competitive returns.
Barriers to saving - The greatest reported barriers to saving more have consistently been lack of affordability and existing debts, however lack of trust in financial institutions as a determining factor has risen dramatically over the course of this year. For instance only 8% of respondents in the US cited it as a barrier in Q1 2008 but this had then risen to 25% by Q4. Over the same period it rose from 15% to 27% in Ireland and from 13% to 22% in the UK.
Retirement concern – In almost every country surveyed the majority of pre-retired people said that they were worried that they wouldn’t have enough money when they retire to provide an adequate standard of living, and this has been the case since the survey began. However, significantly fewer people in most countries said that they were actually regularly setting aside money for use in retirement (despite also acknowledging that saving or investing regularly was the most practical way to secure a comfortable retirement). A mismatch between anxiety and action which creates some potentially worrying pension provision gaps.
Working later – One response to this potential lack of retirement provision, from a consumer point of view at least, may lie in simply working until later in life. In fact, rather than seeing this an unappealing prospect, in 2008 the majority of pre-retired people agreed that they would like to work, either full time or part time, after the usual retirement age. There was considerable geographical variation in answering this question though; the more established Asian markets such as Hong Kong, Singapore and Taiwan expressed the greatest desire to carry on their employment into their later years whilst those in Continental Europe (France, Germany, The Netherlands and Belgium) were least enamoured with the idea.
Countries covered in the 2008 research: Hong Kong, Singapore, Taiwan, China, Russia, Ireland, India, Australia, Romania, USA, Italy, Lithuania, Turkey, UK, Sri Lanka, Poland, Canada, Spain, Czech Rep, Malaysia, Hungary, Belgium, Netherlands, Germany, France.
A summary report of the key findings from the research has now been published and is available for download on Aviva’s website.
Add comment 12 December 2008
Designing for austerity
Andrew Curry writes:
Alice Rawsthorne has an interesting article on the impact of recession on design in the International Herald Tribune. It seems it’s all good news. This shouldn’t be a surprise; innovation thrives on scarcity and constraint, and design is no different. And certainly the historical evidence bears this out. The Bauhaus and the Modernist movements emerged in the 1920s and ’30s, and the Italian post-war design boom from the depths of its post-war austerity.
The current financial and economic crisis requires that we think again about how our systems work, and – as she writes – designers excel at simplifying complex issues and collaborating with other disciplines. Rawsthorne anticipates that designers will help companies to cut costs by thinking about new ways to use materials and by imagining new service models (for example part-ownership or ‘renalism’ rather than outright purchase, as is happening with the Parisian Velib bicycle initiative – or Streetcar and Zipcar, come to that).
Beyond this, there are whole new approaches to service and system design, and she commends the work of Live|Work, which has redesigned support services, for example in its work in Sunderland, to put the user at the centre and access resources from multiple agencies rather than being caught between them.(It also works in the private sector).
The final bit of good news? The market for expensively designed objects has tanked. Half of the lots at Sotheby’s design auction last month went unsold.
Thanks to core 77 for the tip. The picture of a Velib station at the top of this post is from an article about the Velib scheme in Post-Carbon Cities.
Add comment 1 December 2008
Credit crunch cliches
Andy Stubbings writes:
One of the great lines in the film Network is when the news anchor Howard Beale covers the news of the 1970s recession by telling viewers,
“I don’t have to tell you things are bad! Everybody knows things are bad. It’s a depression!”
But in the days of 24-hour rolling news channels and multi-supplement newspapers, such brevity is no longer good enough. There’s a correlation between the amount of actual ‘news’ anyone can report, their level of knowledge of the subject, and the amount of cliche they generate. The formula for this is probably M x I = C, where M is how massive the story is, I is the journalists’ general level of ignorance, and C is the volume of cliche. There are even blogs which celebrate the best crunch cliches. Here’s my list of current favourites.
- Brokers with their hands on their faces. The first and possibly still the best.
- The dramatic falling red line on a graph. It’s like the classic cartoon graph, which plunges off the edge of the chart, and never (well hardly ever) has scales or axes.
- The knock on effect. The human interest story designed to explain economics’ multiplier effect: the local corner shop skimps on window cleaning, so the window cleaners have cut back, so the chammy leather business is struggling, and in no time at all we’re at 3 million unemployed by Christmas.
- The unlikely winners. The little-known (but still beaten-to-death-in-popular-journalism) phenomenon of unlikely goods, usually discretionary luxuries, succeeding in the prevailing economic environment. Examples cited include pizza home delivery, condoms, dining in for a tenner, and even Karl Marx.
- The unfortunate loser. Sometimes seen alongside number 4. This sometimes appears to be the publication’s revenge on things it’s never liked much, from smoothies to BMWs.
- The credit crunch as Malthusian check to greed and selfishness. To achieve full cliche status needs to include the phrase ‘financial wizardry’.
- The undeserving bankers. If they aren’t about to be sacked (see number 1), they will be drinking champagne at an ING-sponsored party on the proceeds of the tax-payers’ bail-out.
- The worst….since the great depression. Or other periods of general purpose crisis, such as the Second World War, Roosevelt’s New Deal, rationing, the Blitz, etc. The Sun is the runaway leader here. Its “Backing British Business” campaign even uses the slogan “Your country needs you“.
- The list (ahem). Usually money saving tips which can be constantly recycled from one story to another.
- ‘The credit crunch’. The biggest cliche of the lot. Used as shorthand for everything, and shoe-horned wherever possible into every other Sunday supplement article e.g. ‘credit crunch chic’, ‘credit crunch lunch’. And now being seen in other company as well – as in “the oil crunch“.
Thanks to Josh Hunt and Joe Ballantyne for their contributions. The picture at the top of this post comes from Brokers With Hands On Their Faces, and there’s a lot more there.
2 comments 20 November 2008
Grant Park’s tipping points
Editor’s note: Walker Smith, who runs The Futures Company’s Yankelovich division in the United States, has sent a long post reflecting on the 40-year context of Barack Obama’s Presidential victory this week. The conventional wisdom is that blog posts should be short and pithy. But we think that from time to time it’s better to give an argument the space and time it needs to unfold. Walker’s short essay is one of those occasions.
Walker Smith writes:
Barack Obama’s victory on Tuesday night was not unexpected. Three weeks out, political pundits knew that Obama had a lead that has never been overcome in modern political history. (Horse race political junkies will enjoy my favorite campaign resource, www.fivethirtyeight.com.) The real drama came an hour later when Obama took the stage with his family to honor this historic moment in his moving victory speech.
Chicago’s Grant Park, the scene of the victory rally, is a beautiful, expansive park bordering Lake Michigan that to this day still stirs up grueling memories for Baby Boomers like me, of the police violence at the 1968 Democratic National Convention. The question that hangs over Barack Obama’s election is whether it really does represents the end of a 40-year cycle of deep political and cultural division, even though his electoral victory was built on effective party-political organisation rather than cutting across party-political lines.
1 comment 7 November 2008
Understanding the ‘Aldi effect’
Alastair Morton writes:
The Guardian last Friday splashed pictures of baked beans and ‘Beamers’ across its front page to make the point that consumers’ habits are changing as a result of the credit crunch and other pressures on incomes. In particular, there are some startling statistics about BMW sales (down 40% on last year) and people’s levels of savings (down 48% on last year). In all of this, they suggest that a number of companies are benefiting from the ‘Aldi effect’, meaning that budget retailers and products (such as Aldi, Premier Inn budget hotels and own label foods) are more in demand as consumers tighten their belts.
However, the headline effects of downturn mask some more complex value trade-offs that consumers are making, and will continue to make, as they manage their squeezed finances. Over the last 5 years, discounters (especially Lidl) have added branded goods to their shelves, reaching levels as high as 30% of the product assortment in UK stores (sourced from MVI research). So switching to these retailers need not mean buying different products. Are consumers trading down and buying lower quality, or are they simply looking for the same quality, even branded, products at a cheaper price? Paul Foley, UK Managing Director of Aldi, argues ‘there is no trading down in buying the same quality product. You are just trading down in price.’
In ‘Feeling the Pinch’, a piece of research that we did recently, we were able to dive deeper and unpick the different ways that consumers are managing their money differently. Using a factor analysis, we found eight themes of coping behaviour that consumers are likely to draw on over the coming year, from spending wisely to borrowing to cutting back to reducing ethical consumption. Obviously there’s far more detail in the 70-page report, but a couple of core findings stand out.
First, people’s initial response to downturn is to try to buy the same things cheaper rather than buying fewer or different things. After this they buy less or cut out treats or luxuries. Secondly, levels of anxiety about economic downturn are a strong predictor of consumer behaviour – the more anxious consumers are, the more likely they are to make specific changes to their consumption behaviour in order to save money. Measuring consumers’ anxiety levels about their economic position – and how they’re changing – is the best way to gauge how rapidly consumer behaviour is likely to change.
The ‘Feeling the Pinch’ report is available for £3,500+VAT. Tailored briefings, which explore the findings and their implications for individual companies’ strategies and brands, are available from £6,000+VAT. To find out more, please email ftp@hchlv.com.
Add comment 11 September 2008
