London, UK – As the UK economy slides back into recession a significant 61% of consumers buying premium products and services say they will not reduce their online spending in 2012, as revealed by a survey conducted by Leapfrogg, the online retail marketing agency.

This is great news for premium and high-end brands in light of gloomy economic reports for Q1 of 2012, especially as 30% of respondents say they will purchase more online due to good service and increased confidence in using online channels.

This is even more surprising considering that the average household salary of respondents is just GBP23K per annum. To take advantage, retailers need to prioritise customer service during the online shopping experience and should include consumer research as part of their digital marketing strategy.

The survey reveals the significance of understanding the online shopping journey, with over a third of consumers using the web to compare and check prices. For 20% of respondents, online search is used for product inspiration and research. Surprisingly, only 14% use online to search for offers or vouchers, emphasizing the need for premium retailers to provide quality products, competitive pricing, useful information and great service over quick-win approaches such as voucher codes.

Naturally, 39% of respondents say that lower prices would encourage them to shop with a premium brand but refreshingly, for 21% of consumers quality of product and great service is enough of a pull to encourage a luxury spend. To remain competitive, premium brands will need to ensure that the communication of product information and an excellent shopping experience is provided.

Rosie Freshwater, managing director of Leapfrogg comments, “Premium and high-end brands shouldn’t be tempted to undersell themselves by overusing voucher codes and heavy discounting. Consumers are willing to commit to higher prices as long as the shopping experience and customer service is as good as their purchase.”

In relation to the importance of the shopping experience, Freshwater continues, “Considering customer needs and optimizing the online shopping journey at every stage is paramount for increasing customer acquisition and sales. Premium brands need to know their customers inside out and consider every angle of the shopping experience from the perspective of the consumer; this should be a core aspect of retail marketing strategy for high end brands.

Premium retailers need to make the whole consumer journey easy, from start to finish, not overlooking the importance of offline interactions such as delivery options and of course post-purchase customer care.”

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“This will be the year Britain sees the world and the world sees Britain,” UK Prime Minister David Cameron said in his New Year’s speech to the British nation.

Many believe that 2012 will be a year of economic uncertainty for the United Kingdom. Indeed, with the rising unemployment rate and the European financial crisis, nothing is certain. “There are fears about jobs and paying the bills,” the prime minister said in the New Year video message. “I know how difficult it will be to get through this — but I also know that we will.” This year seems to be a critical year for the global economy as the euro enters its most vital year to date.

Recently, Mr.Cameron vetoed a proposal to issue an EU financial transactions tax, saying that “Unless the rest of the world all agreed at the same time that we are all going to have some sort of tax then we are not going to go ahead with it.” However, according to the Wall Street Journal, the Prime Minister said that the government’s plan to lessen the country’s budget deficit will result in some protection from the current euro-zone debt crisis, stressing that changes need to be made in order to seize growth opportunities outside of Europe.

The Guardian reported that the economy is expected to expand by merely 0.7% this year. Tony Dolphin, the chief economist of the Institute for Public Policy Research (IPPR) said,

“If the economy does find itself back in recession, it is likely to have to find its own way out of it. There are ultimately only three solutions: the government decides to increase public spending or overseas demand for UK output increases substantially, or UK households and companies are given some reason to spend more.

The first is not going to happen, the second is extremely unlikely, and so we are left with the third. But with no prospect of tax cuts or lower interest rates, it is not clear what in the short term the catalyst for more spending by the private sector will be.”

Despite the current economic situation, there are still several reasons to be hopeful. London will be hosting the Olympic games from July 27 to August 12. The Britons will also be celebrating the Queen’s Diamond Jubilee this June, marking Queen Elizabeth II’s reign of 60 years.

The Prime Minister believes that regardless of the struggles the country is facing, 2012 will be a turning point for the UK. He said, “It must be the year we go for it—the year the coalition government I lead does everything it takes to get our country up to strength.”

Rosli Othman / Shutterstock.com

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Slowly, but surely, the tide has been turning in favor of sterling over the past few months, with the euro now significantly weaker against the pound than it has been for many months. In fact, the last time sterling was at its current level of approximately EUR1.20 to the pound was in the summer of 2010 and, before that, in December 2008.

While the UK economy is not yet showing any significant signs of recovery, it seems the weakness which has affected sterling may finally have bottomed out, with currency markets now punishing the euro, which has weakened against both sterling and the U.S. dollar.

For the UK buyer who has been searching for a new home in France, this is significant. The effect of the exchange rate changes over the past few months has been to effectively reduce property prices by around 10 percent, according to Offshoreonline.org. Add to this the aggressive pricing by developers in areas of the Cote D’Azur, such as Nice and Cannes, and the scene is set for UK buyers to at last be able to take advantage of what has been one of France’s stronger property sectors.

Exchange rate movements are important for buyers from the UK. Put simply, around six months ago, one pound sterling would have bought EUR1.10, but now for the same pound sterling, the UK buyer can expect to receive over EUR1.20. The net effect is to make any purchase of euros around 10 percent cheaper, saving GBP 20,000 on a GBP 200,000 house purchase, for example.

Buyers looking at high end new launches, such as Parc Eugenie in Cannes, should immediately see an enhancement to any rental returns, as with lower upfront purchase cost, the real yield they can expect will rise accordingly.

Commenting on the improved outlook for UK buyers in France, Offshoreonline.org managing director, Tim Harvey, said, “Exchange rates are a vital part of the mix for most UK buyers operating in France, but now it seems the tide may be moving slowly in favor of the UK buyer, with the weakening euro opening up some very attractive options for UK buyers.

With mortgage rates available from 3.45 percent, we have noticed a slow, but steady, increase in enquiries since before Christmas which has continued into the New Year.”

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The prodigious rise in the UK’s unemployment rate has recently led the government to intervene to make people either earn or learn. Britain’s government has set aside £1 billion to help the record number of unemployed nationals. Deputy Prime Minister Nick Clegg recently said that youth “contract funds” will help create internships and apprenticeships in the country.

A youth contract program, starting in April 2012, will provide 4.1m work places over three years for young people, including wage subsidies of 160,000 pounds for jobs and 250,000 pounds for work experience placements. Chancellor of the Exchequer George Osborne’s economic statement mentioned that there will be payments to employers to encourage 20,000 apprenticeships under the program.

Clegg said that unemployment is economic waste and a slow-burning social disaster. The Office of National Statistics said unemployment among youth aged 16-24 has flared up in an unusual fashion in recent years, reaching 1.02 million in the third quarter from 67,000, the highest level since recorded in 1992. Further the office said the unemployment rate in this category is 21.9 percent and has continued to be so from last year.

Unemployment in the UK is on the rise according to Office of the National Statistics which presented that there were total of 2.62 million are left unemployed in the second quarter, highest since 1994, and this has brought the unemployment rate to 8.3 percent in the UK, which has been a jolt to UK’s economic recovery.

According to Chris Williamson, Chief Economist at Markit, “Labour market data will raise concerns that the UK Economic recovery is fading away.” Three factors have played havoc in the UK: rise in unemployment, weak earnings, and ultimately, inflation. Due to the rise in unemployment, uncertainty in the job market and inflation, situations have been created where it looks like the incomes of the households have been squeezed.

Unemployment is the key element that provokes weakness in the economy and if inflation is accompanied for a considerable time, then this might potentially lead to stagflation. And perhaps there are chances of economic doddering in the short-term because of Euro Zone Crisis but this is not exhaustive.

According to the Organization for Economic Co-operation and Development (OCED), Europe is in recession and Britain will follow in 2012. OCED called on the Government to pump up resources to mitigate the impact of raising unemployment. The Government needs to consider easing the programme of fiscal spending cuts so as to revitalize and strengthen economy by the way of increasing public spending.

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