Buying behaviour of Belgian consumers in times of crisis

What impact is the economic crisis having on the Belgian consumer’s buying behaviour? To discover the answer, the Vlerick Brand Management Centre conducted a quantitative study of the Belgian consumer in times of crisis. Here are the results of this unique consumer research initiative.

In May 2009, 500 Belgian consumers − representative of the Belgian population between the ages of 21 and 65 − were asked about:

  • their confidence in the future
  • the impact of the crisis on their budget
  • the degree to which they have altered their buying behaviour in comparison with the period before the crisis.

Belgian Consumer going through the Crisis with Confidence

Consumer confidence has a particular impact on the buying behaviour of the average Belgian. People who view the future as less than bright are going to consume less today, are less loyal to a particular brand and look for lower-priced alternatives. However, despite the persistently negative news reports, the study has found that the majority of Belgians see their own situation as bright for the coming year. In fact, 76% of Belgians think that their family’s financial situation will at least remain the same or will even improve. When it comes to the health of the country, though, people are more cautious. Only 45% expect the Belgian economy to perform better in the coming 12 months. Belgians think that this will especially be reflected in higher unemployment figures (82% of Belgians think that unemployment will rise further). But all things considered, these percentages indicate that the Belgian consumer is going through the crisis with confidence.

Loyal to Strong Brands vs. Cheaper Retail Channels

The vast majority of Belgian consumers are remaining loyal to brands that they were buying before the crisis. An examination of buying behaviour in 30 product categories shows that over 75% of Belgians have not changed their choice of brand. However, 10% do admit that they are now buying their familiar, trusted brands in less expensive supermarkets or shops. So, it’s not surprising that Colruyt’s market share has risen sharply in the past few months. Consumers who do change brands are switching mainly to cheaper A-brands (14%) or house/discount brands (10%).

How are the Consumers Reacting? Four Belgian Crisis Segments

The Belgian population can be divided into four segments that are clearly reacting differently to the crisis. This segmentation is based on two dimensions:

  • the psychological dimension: the consumer’s confidence in the future
  • the financial dimension: the degree to which the crisis is having a noticeable impact on the consumer’s personal life (his/her own work and financial situation, or that of family, friends or acquaintances)
‘carpe diem’ consumers (30%)
Who? Mainly young people in their 20s and 30s across all income levels These consumers have not yet experienced the crisis personally and, furthermore, they have a positive view of the future. None of them reports that he or she, or someone in their immediate environment, has suffered a loss of job or income as a consequence of the crisis. So, the crisis is having little or no impact on their buying behaviour. In certain cases, their consumption will even increase, because their purchasing power has increased due to falling prices. It’s noteworthy that more Flemings than Walloons are going through the crisis free of concern.

people who are ‘well-off’ (24%)
Who? Mainly white-collar workers or executives (75%) in the higher income brackets These Belgian consumers are in good shape financially to be sure, but still they are experiencing the consequences of the crisis in their immediate environment. They have not been affected personally, but there are people in their circle of acquaintances who have lost money or work. Still, they are looking to the future with full confidence. They remain loyal to their familiar brands and are not inclined to postpone purchases or scale back their expenses.

‘hopeful victims’ of the crisis (28%)
Who? Mainly the older segment of the population (more than half are 50+) These people have been hit hard by the crisis, especially via loss of personal investments. And yet they are still reasonably optimistic and they believe that they will bounce back. These consumers try to reduce their expenditures. Therefore, they go to a restaurant or café less often, but they invite friends to their home. More expensive purchases (like a laptop or camera) are postponed, and they try to extend the life span of large household appliances via repairs.

‘emergency brake’ consumers (18%)
Who? Mainly labourers and unemployed persons These people are very pessimistic about their future, especially because a lot of people in their environment have been hit hard by the crisis. So, they expect to become a victim too, and they save wherever possible. Large purchases are postponed; for smaller purchases, they look for cheaper alternatives via generic brands or discounters. The majority keep strictly to their shopping list. It’s noteworthy that we find many more Walloons than Flemings in this segment.

How are the Brands Reacting?

In the short-term, via all kinds of tactical campaigns, brands can gear their offer and communication to the modified situations of the four types of crisis consumers. For example, Haacht brewery chose not to raise its beer prices even though competitors like Alken-Maes and AB InBev did so. In their communication, they cleverly added that a price increase for the consumer ‘would be inappropriate in these times of crisis’. This is an elegant way for Haacht to create an emotional bond with the consumer. Car brand K.I.A. is trying another approach: it is insuring its buyers for their purchase price against the event of job loss. Removing a part of the uncertainty can be just that decisive bit of buying incentive for the consumer. Over the long-term, it’s important to continue building up the company’s brand − which can be done via innovation and advertisement. The consumer naturally wants a good reason to pay more for a particular brand in a time of crisis. And retailers are responding accordingly. Thus, Carrefour has launched its less expensive ‘Carrefour Discount’ label. Moreover, companies that continue to build their brand during a recession invariably do better − both during that recession and in the years thereafter − than their competitors who stop their brand investments.

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