Changing Consumer Behaviour Hints at Extent of UK’s Financial Woes Thursday 24 July 2008 PDF Print Changes in consumer behaviour highlight the difficulty of coping with the cumulative effects of today’s economic problems, according to debt management company gregorypennington.com. The rising cost of living is just one element of the ‘perfect storm’ of financial problems currently affecting UK residents. By limiting access to credit, the credit crunch is keeping some individuals from making necessary purchases, managing their debts and dealing with their short-term cash flow issues; it’s also affecting businesses whose growth depends on consumer spending as well as actual business loans. The third major factor is the uncertainty in the housing market, which has reduced homeowners’ ability to access finance by drawing on their equity. Together, these issues have dramatically reduced consumers’ spending power and have led many to seek finance through other means than bank loans, remortgages and credit cards. It may seem significant that the negative figures emerging from various mainstream financial companies contrast sharply with the increasing profits of pawnbrokers and internet auction sites. According to the BBC, 94% of member stores surveyed by the National Pawnbrokers Association reported increased business in the last six months, and 97% expected business to improve in the next six months. Internet auction site eBay has just reported its third consecutive $2-billion plus quarter, with Q2 revenue of $2.2 billion, up $361 million from the same period last year. At the same time, long-established supermarkets seem to be losing ‘well-heeled’ customers to discount stores such as Lidl, Netto and Aldi, whose combined sales have risen by 11.3% over the past year, according to timesonline.co.uk. “Figures such as these indicate the extent to which consumers are prepared to alter their behaviour,” commented a spokesperson for debt management company Gregory Pennington. “In one way, this can be seen as proof of consumer resilience in times of economic hardship – it seems Britons are making necessary changes to their lifestyles, rather than sliding (further) into debt. For example, it’s encouraging to note that the total number of insolvencies in England and Wales in Q1 2008 was actually down more than 13% on the same period a year before.” “Having said that, we’re seeing indications that changing consumer behaviour may be merely softening, rather than negating, the impact of today’s various economic crises. For instance, the Council of Mortgage Lenders (CML) reports that in Q1 2008, 14,246 Possession Orders were made on mortgaged properties in England and Wales – the highest number since Q3 1992.” “Plus, there’s the question of which ‘new’ behaviours are sustainable or even advisable. Selling off unwanted items may be an excellent way of raising funds, but it’s no long-term solution, as people have finite amounts of things to sell. What’s more, selling a £500 stereo for £250 clearly isn’t good financial sense, especially if it was bought on credit in the first place and actually cost the original owner £600.” “Nonetheless, in most cases, the worst way of reacting to financial problems is to do nothing – to carry on as though all was well, rather than looking for debt help and finding ways to cope. In short, however people choose to react to today’s challenging conditions, perhaps the most important thing is that they do react.” For more information, contact Melanie.Taylor@gregorypennington.com (0845 056 6480) This press release was distributed by ResponseSource Press Release Wire on behalf of Gregory Pennington in the following categories: Personal Finance, Business & Finance, for more information visit https://pressreleasewire.responsesource.com/about.