Kiss and Tell

THE RECESSION AND BEYOND 05 May 2009

Kiss researcher Jo Knights investigates the stories behind the headlines in the current recession.

For the majority of 2009 the world’s media has been throwing around financial terminology that supposedly explains with clarity our surrounding world’s economic self-destruction. After many extensive articles, news specials and survey results, it has been painstakingly explained to us that we are in the midst of a deep and dark recession. However these rather large spoonfuls of facts, warnings and alerts can be hard for us to digest comfortably.

In the US, car brand Hyundai looked beyond the figures and created a clever incentive in order to counteract slipping sales. Buy a Hyundai car and if you lose your job or declare personal bankruptcy within a year, the vehicle can be returned without you owing a cent on a loan or losing your credit rating. For Hyundai, this clever idea resulted in Hyundai being the only US car manufacturer to post growth across 2008 (check out Hyundai to read the full story).

At Kiss we want to explore these clever and creative marketing methods to see what’s happening beyond the gloomy headlines. We want to you to know the little facts that you may find surprising, not only for Kiss and its listeners, but the world of radio at large.

As we are aware, the gross domestic product has to decline on a quarter by quarter basis for a total period of six months in order to be defined as a recession. Today GDP has continued to show decline past the initial six months period. We are all now very conscious of our placement in the heart of a ‘full blown’ recession. However the comparisons between the current climate and any of the previous five full-blown post-war recessions are to be taken with caution. Predictions based on past experience are easy to regurgitate, but they are only a quick fix for breaking news necessities and seek to feed sensationalism.

This sensationalism can be seen in comparisons to the great depression, the largest economic catastrophe in the 20th century. These words immediately induce fear, not only of the financial but the emotional trauma it caused. George W. Bush clearly exampled and perpetuated this sensationalism in his last speech as president, claiming that in September 2008 his chief economic advisors had said that the economic situation could at some point become “worse than the Great Depression” (George W. Bush Press Conference Transcript, January 12, 2009). Lacking in evidence and vague in specifics, this quote is symptomatic of recession anxiety.

Sensational predictions can and are being contradicted. An example of recession contradiction is shown on April 6 2009 when Wall Street Journal’s economist Vernon L. Smith commented that ‘It appears we're witnessing the second great consumer debt crash, the end of a massive consumption binge’. Yet perceptually high end supermarket Sainsbury’s has become the fastest growing of the big four supermarket groups. Indeed, Reuters commented that Sainsbury’s were a ‘likely casualty of the economic downturn because of its reputation for higher quality and also higher prices’, Sainsbury’s seems to have contradicted these predictive assumptions. Further to this, despite Sainsbury’s growth, they are by no means dominating this robust market, Tesco's profits have risen 10 per cent in a year to a record £3billion and there are plans to open another 600 stores. Any pattern analysts think they can identify can often be knocked down by contradictory reality.

A recession truth has been noted that, the brand leader of a market will always stay strong in a recession as they have the heritage and supremacy of their brand to see them through. The cheapest item will also do well as people will turn to the cheapest item to give them the saving and value they desire. For consumers the choice is clear, the cheapest will save them money, but if they are going to splash out they want the best, therefore those brands stuck in between are prone to suffer. Without competitive pricing or known quality the product falls short in offering its consumers a reason to purchase. For these brands, they’ll have to work harder and with greater creativity to give people a reason to invest.

For avid Kiss Confidential users, you would have already seen the insight carried out with our listeners. Although this takes the form of one of the many statistical break downs of consumers in the crunch, it does clearly show there is optimism for future spending. But, with a younger breadth of listening, Kiss are perhaps more prone to optimistic outlooks as they are yet to be hit as hard as the middle aged generation who are weighed down by mortgages, loans and credit card debt.

Of greater interest within this insight are the details of obscure success stories. There are many positive examples as well as clever methods of management in dealing with this recession, we just need to look beyond the ‘depression’.

To begin with online has vastly benefitted from high street evasion. Online fashion retailer ASOS is sailing through the recession with sales up 104% in the last 12 months. Sales have grown to £165m and the company is predicting another year of strong growth. (computerweekly.com). The radio advertising bureau have explored this online upsurge and noted that the inclusion of more online in Radio can help traditional spot advertising. According to the RAB, in 2008 the radio industry had grown online and promotional revenue at a rate of 9%. (To check out the full details click on the following link for the RAB) Online is not the only winning element for increased revenue but younger fashion is proving resilient to the recession. Fast fashion retailer Primark has reported a 5% increase on like for like sales, but it’s not just cheap fashion that are reaping the rewards. Upmarket and unadvertised brand Superdry has seen flourishing sales. A shop specialising in urban cool aimed at 18 to 23 year olds (who will be unaffected by financial difficulties) has a leather jacket favoured by David Beckham costing £175, with average items costing around the £40 mark. And for those in the capital, retail generally has not been hit as hard as the rest of the country. London stores benefited from European shoppers taking advantage of the weak pound as well as school holiday visitors from elsewhere in the UK. Industries set to suffer are finding solutions appear that work around the problem.

Away from the high street, habits within the home have changed in a surprising manner. The Telegraph commented this month that ‘Scrabble is back in vogue’, handicrafts generally witnessing increase as people turn to home entertainment as recreation. A dated way to have fun has suddenly become new to a generation of savers. Further to this the gaming industry has broadened its appeal past the addicted teenagers as 5 million homes now own a Nintendo console. The UK has become a technology hungry group of Wii Fitness fanatics and as the Telegraph points out, this is shown in the change of the average age of a gamer, once 13, in these recession days it has risen to 30.   

Richard Meyrick has witnessed an interesting cultural change that has been to his own benefit. Richard runs a Piano Studio in London. His studio has been inundated by ex lawyers and bankers " in search of diversion from the pressures of work, or if they've been made redundant with a considerable pay-off, they finally have the time to pursue an ambition they've had for years," Meyrick told the Telegraph this month. The effect of the recession for him has been a business boom, up 25% on the year.

Within the gloomy motor industry, the average price of UK petrol has risen 4.45p in a month according to the AA. This leap has increased the cost of a tank of petrol, lifting the monthly fuel spend for a family with two petrol cars by £9.65. (Mintel 20-04-09 from Sky News) On top of that people’s budgets can be so tight that if their car was to require repair, they wouldn’t have the cash to do it, so the reliance on cars can be a risky one.

It seems however, that London at large can avoid this problematic dependency in comparison to our Northern equivalents as we have a greater relationship with public transport, however for the radio industry this could have a knock on affect as in-car radio listening is sacrificed along with the car.

However, placing this contextually within the lifestyle habits of Kiss listeners, it would seem that this hardship may be avoided. Our listeners are in tune with their portable needs and already have the personal technology to take themselves, and the radio, around the city without a car. To back this up TGI tells us that Kiss listeners are 90% more likely to use the radio on their phone than the rest of London. And across the UK generally, in the last four years alone, listening via mobile phones has increased by 146%. Thus proving that the technology is there for people’s radio habits to change from car to mobile. (And for more information on how young people consume radio please click to the following article)

A reliance on cars is symptomatic of the reliance on expensive luxuries that needs to be avoided, self sufficiency can help you through an economic downturn. Managing the reality rather than turning it into the depression that sensationalists want.

Mintel have commented on the rising growth in people growing their own vegetables as a method of immunity to some inflation and, exploring this further, Mintel explains that people will have to learn to do jobs they previously paid someone to do for them. Whether that be the small changes such as making your own coffee instead of paying your local coffee shop to do it for you. Or this may mean a bigger change, ditching the fuel guzzling car for a less convenient bus, tube and cycle to the office.

From a Kiss perspective, our audience has the ability to roll with these changes. Our progressive youth may have to downsize their frivolous needs, but they have a desire to learn as they are on the brink of self discovery, so self sufficient opportunities only seek to help them flourish. The conscience consumers may also need to tighten their purse strings, ditching the yoga tutor for the DVD tutorial. But they will also be in their element, glorying in the idea of ‘the good life’ in all its Penelope Keith, wellington wearing glamour. And with our modern mainstreamers and family guys, it may be a holiday in Cornwall instead of Corfu, but they are our consumers that can take it on the chin.

For many people this recession will have varying consequences, and we need to look at how we can manage our lives differently, with a view to this benefitting us rather than depressing us as the headlines would want. For the Kiss listeners it can be about gaining independence rather than losing out on luxuries. For London it’s the environmental benefits of using public transport instead of fuel guzzling cars. And for the UK at large, we can save our livers from drowning in white wine, and instead enjoy the thigh burning, family unity of the Wii fit in the nation’s new found relationship with technology.