Austerity Britain: Families Cut Out Luxuries

From the pages of yesterday's Daily Telegraph - Can we help the average family? Of course we can - but you have to tell them what we have to offer... See my notes in the text...

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FAMILIES are having to cut back on groceries, eating out and holidays as the credit crisis starts to have a profound effect on household spending, research by The Daily Telegraph has shown.


With the cost of living going up by £1,800 a year for the average home, the first evidence has emerged that families are changing their spending habits to cope with the economic squeeze [many of them could be on your "no for now list", contact them again now... before someone else does!].


Middle-class consumers are turning to budget supermarkets, discount stores, low-price hotels and car rental firms, all of which have had booming sales in recent months [and to the Utility Warehouse Discount Club, when they know about us... you need to speak to people!]


While high street sales have fallen, Primark, the discount clothes retailer, has seen trade increase by 4 per cent. Aldi, the budget supermarket, has reported a 25 per cent increase in sales, with rising numbers of middle-class customers. Tavelodge, the low-cost hotel chain, has increased sales by a quarter, while the number of people making inquiries about British holidays has risen by almost a half. Restaurants have reported falling trade, with food stores saying that customers are opting for ready meals to make up for not going out.


The British Retail Consortium reported a 1.6 per cent fall in sales this week compared with a year ago, as clothing, furniture and electronics stores suffered most.


Mintel, the market research company, released figures showing that 57 per cent of consumers have trimmed their spending because they were unsure of their finances. Twenty per cent have delayed a family holiday, 16 per cent have put off home improvements and 11 per cent have failed to top up their savings.


Disposable income has been affected by a range of increased costs. Gas, electricity, water, food and drink bills, council taxes and mortgage payments have all increased by more than the rate of inflation. Together, they cost an average household £21,495 annually — £1,800 more than a year ago, said uSwitch, the price comparison website.


Figures released this week suggested that food shopping alone now costs the average family £600 more [and we can save that average family over £600 across all their utilities... IF you tell them and ask them if they would like to try our services!].


Retail experts said families were economising. Nick Gladding, an analyst at Verdict research, said: “It is clear that people are cutting back on discretionary spending. “Electricals, furniture and DIY items are all showing signs of the slow-down. There is going to be a cloud over the consumer economy all year. “And there are signs that middle-class shoppers are trading down, with discount stores doing very well out of people’s belt tightening.” [Yes we are doing VERY well - those of us who are telling people what we have to offer]


High street retailers of electrical goods and furniture have suffered very poor sales in recent months, with many consumers choosing to rent televisions, as well as designer handbags and works of art. DSG, the owner of the Curry’s and PC World electrical chains, issued its second profit warning since Christmas after finding that consumers were “shopping more cautiously”. The company said that although shoppers were buying flat-screen televisions, laptops and fridges in moneyoff promotions, they were shunning full-priced products. [We are giving away FREE laptops with our Broadcall Laptop tariff!]


Many budget operators have reported that they are benefiting from consumers trying to rein in spending. Primark, which sells £6 jeans and £2 sunglasses, has increased sales by 4 per cent. Trading at Aldi, the value supermarket is even stronger. Customer numbers were up 25 per cent over the past year, said Tony Baines, the managing director of buying. “People are more price conscious now,” he said. The supermarket said half of its shoppers are from the ABC socio-economic groups, with middle-class shoppers increasingly finding ways to trim sky-high food bills. Tesco, Britain’s biggest supermarket, has increased the proportion of goods it sells for less than £1 in an effort to win over budget conscious shoppers. Waitrose said it was selling more “restaurant-style ingredients” such as dry-aged beef and duck, as people cut back on eating out and now cook at home. Sales of its “As Good As Going Out” range of premium ready meals, which aim to replicate restaurant quality, are up 30 per cent.


Travelodge, the discount hotel chain, said bookings for the two May bank holidays were up 22 per cent on last year and that in January it sold five times as many rooms for the summer as in 2007. The strong euro, which has deterred people from taking holidays in Europe, combined with the credit crisis, has caused the sharp uplift in sales, the company believes. Guy Parsons, its chief operating officer, said: “There is no doubt UK travellers are switching to the budget sector. Brits book their foreign summer holiday in January but this year there looks to have been a change of heart with more deciding to stay within these shores.”


Its rival, Premier Travel Inn, said sales were up 10.5 per cent on last year. This is in sharp contrast to the overall hotel sector, where occupancy rates fell 1.3 per cent in three months. With rumours that more than 10,000 jobs could go in the City, many are switching to renting a lifestyle rather than buying one. [Boomtime for letting agents - have you got any in your business?]


Car clubs are taking off in London and other large cities, as people try to save thousands of pounds a year. These allow members to use cars at cheaper rates than would typically be available from normal car hire firms. They can also use cars for as little as an hour at a time. Zipcar, an American firm that entered the British market last year, has signed up 4,000 members. Paul McLoughlin, its general manager, said: “The credit crunch is forcing people to re-evaluate their expensive consumerist lifestyles.”


Fractional Life, the comparison website that lists 300 rental, leasing and collective ownership firms offering everything from boats to handbags, art and property, reported a 90 per cent increase in website hits in the past six months. Many professionals are hiring art rather than buying it. Ivan Tennant runs Art Lab, which charges from £15 a month to rent works by reputed artists that are worth up to £2,000. He said the number of private clients had doubled in a year. “For bankers who might lose their jobs but want to keep up appearances, it’s very affordable.” He stressed, though, that none of his current clients was in that situation.


Jo Hodge’s Bristol-based firm Handbags from Heaven, has increased rentals by 25 per cent. She charges £36 a week to hire bags by designers such as Jimmy Choo, Chloe, Gucci and Mulberry, that would sell at up to £1,000. Oxfam said sales at its charity shops were booming — up £1.2million on last year. “Our profits in the first quarter have been significantly higher than last year and we are in a very enviable position,” said a spokesman. “Economic downturn certainly has a lot to do with our increased sales.”


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You are in a recession proof business and if your business is not growing and your commission cheque is not growing every month then you are doing something wrong - probably being a secret agent and not telling EVERYONE what we have to offer. Get yourself booked on training as soon as possible and join those of us who, like the discount stores, are making serious money!

For those of you who are working the business - keep on going because it will get harder out there for most people and we have the ability to make a massive difference to so many peoples lives. Your income, as a result of helping others, will make a difference to your lives too.

Have a brilliant week and I look forward to seeing many of you and celebrating our many successes next week at MAD in Northampton.

Tony Griffiths