The latest research from accountancy and advisory firm Deloitte indicates that consumer confidence is steadily improving and is now four points higher than a year ago. The improvement has been particularly good in the West Midlands, an area where the level of unoccupied retail properties rose sharply during the recession.
The firm’s Consumer Tracker reveals that confidence in the region inched up by 3 per cent in the second quarter of the year when compared to the first, reaching a score of -4 per cent from -7 per cent. This is a marked improvement, especially as it also managed to increase year on year from the -5 per cent recorded in the second quarter of 2013.
Furthermore, consumers in the West Midlands were shown to have demonstrated a marked improvement in their confidence towards personal debt, with the 8 percentage point increase putting the region behind only the North West in this category. This increase pushed the reading from -5 per cent in the first quarter to a positive reading of 3 per cent, defying the prevailing trend across most of the UK for a fall in confidence.
Unfortunately for grocers such as Tesco, Sainsbury’s and Asda, the tracker noted a continuing trend of consumers cutting back on spending for food and other essentials. However, in the West Midlands, consumers claimed to be spending more on discretionary items such as clothing and footwear, with a four per cent improvement in this area.
Deloitte consumer business partner for the West Midlands, Jane Whitlock, believes the improving economic climate is finally beginning to have an effect upon consumer attitudes towards spending.
She says; “Low inflation, or in some cases deflation, means that consumers are getting more for their money.
“Consumers are edging away from the defensive spending habits they adopted during the recessionary years and spending more on things they enjoy.”
Overall, then, the West Midlands is managing to outperform most other areas in the UK in terms of consumer confidence – something which will certainly be welcomed by retail businesses operating in the area. In fact, the only category in which the West Midlands failed to meet or surpass the UK average was confidence in disposable income which matched the first quarter’s -21 per cent reading; the national score rose by 11 percentage points to -18 per cent.
This may be related to the issue of low wage growth which still poses a problem for retailers and other businesses, both in the West Midlands and nationally.
Retailer Bill Grimsey, the ex CEO of Iceland and author of the Grimsey Review, tweeted this week that there would be “no recovery whilst real incomes fall.”
There is also the prospect of an interest rate rise on the horizon which may lead to consumers tightening their belts again before these encouraging statistics are able to have a significant impact on the high street.
