Economic Crisis


6%

of Czechs are convinced that there was no crisis at all

14%

consider it exaggerated by media

44%

think the crisis will never be over completely

61%

think they will experience another economic crisis



The economic crisis has affected each of us in different way. What we have in common is the feeling of the uncertain future that we did not know before. How did the crisis affect the way how people cope with their income and expenses? What is the role of banks and insurance companies in their minds? How did they modify their relation to chain stores? Do consumers really solve their problems by running into debt? The study Future of the Czech Republic answers these questions and the answers are surprising in many cases.

The near future of the Czech Republic is characterized above all by the loss of consumers’ trust in institutions, including the market and brands. It is in the economic crisis where we must search for roots of this loss and answer the question how to regain the consumers’ trust again.



Uncertain Future


70%

of young people up to 35 years think it will be more complicated to take out a mortgage due to the uncertain work.

The crisis has changed our view of the future. Half of Czechs think their prospects of the future are worse than those their parents had in the same age. In the age of 30–45 years even 60% of the Czech population are convinced of that. The main reasons are the financial uncertainty related to the instability of the labour market and the uncertainty of the old age pension. More than a half of people over 45 years expect their standard of living to get worse in the future. 57% of Czechs think the crisis has changed their financial situation for the worse. Only 6% feel the crisis has improved their financial situation.




Interviewer: „If you look at your parents do you think your old age will be the same or your financial situation will be worse or better? What will be the difference?“
Respondent: „I don’t dare to say… Because in 20 or 30 years when we retire nobody knows what the situation will be…“
Respondent: „Above all we will get no old age pension I think.“
Respondent: „Well… when the population is growing older and there are less children there will be no money for pensions. So it is better not to think about that because such thoughts would be sad.“
Source: Ethnographic interviews, Future of the Czech Republic.



The future presents an existential uncertainty for many people. Almost 28% of Czechs are afraid of reaching a poverty line in the future. Among the people over 60 years even 37% are afraid of that. 77% of Czechs in the economically productive age of 25–45 years fear the constantly increasing retirement age.

The negative perception of current conditions in the labour market is not connected only with fear of burnout but especially the situation of women on maternity leave is perceived as very critical . Almost 80% of Czechs wish more flexible work conditions for women on maternity leave were available—in a form of home office, part-time work or children’s playgrounds in a workplace.


To what extent are you afraid of being personally affected by the next situations in the future?

73%
73%
are afraid of increasing retirement age

69%
69%
are afraid of increasing housing costs

67%
67%
are afraid of the old age without money

67%
67%
are afraid of unbearable increases in food prices

64%
64%
are afraid of their economic situation getting worse

45%
45%
are afraid of losing their job


Source: Future of the Czech Republic 2014, N=1575.

What does it mean for the market in the future? 4 of 5 young people up to 35 years think they cannot be sure of having a job for the whole life. Their plans for the future and view of mortgages and loans are influenced by this uncertainty. For example 70% of young people up to 35 years think it will be more complicated to take out a mortgage due to the uncertain work. The same percentage finds a repayment of consumer loans dangerous due to the uncertain work.



Distrust in Institutions, the Market and Brands


People trust fast food about as much as political parties.

The crisis has also influenced the credibility of institutions, corporate brands and in the end the whole market. It is evident that the authority of experts, institutions and some corporate brands systematically decreases. In 2009, 60% of Czechs trusted big companies, whereas in 2013 only 20% did (Eurobarometer/nVision, 2013). Our research confirms this trend.




Interviewer: „And do you believe the state will take care of you?“
Respondent: „No, I don’t. When I see the situation… Instead of improving it gets worse and worse.“
Interviewer: „And who do you think will help you? What is the solution?“
Respondent: „Well… I don’t think about it like that, because when I see the trend, how the retirement age increases… My mother retired at the age of 55 and it seems I will retire at about 70 if ever. So I think we have no chance to live to the retirement age.“
Source: Etnografické rozhovory Future of the Czech Republic.


Consumers trust the state and the market very little because they find the whole system of our society doubtful. In the consequence they change their attitude not only towards traditional values but towards products and brands as well. Consumers feel that nobody defends their rights—neither the state nor the companies. It would be naive to think this attitude was systematically developed only by media. During our ethnographic visits people spoke above all about their own experience, disappointment with brands, services and their quality. Unfortunately they compared the product quality on the Czech market to a dustbin of Europe too often.

Consumers expect the state to be more engaged in a quality control of products imported from abroad. 82% of respondents demand the state should solve the problem of low-quality food import (for example from Poland) and guarantee the quality.

Consumers doubt not only the state and institutions but also brands and the market. People trust more information from „independent sources“ like internet consulting or comparison tools than bankers, lawyers or local offices.



8%

think big supermarkets care about consumers’ interests

4%

think banks care about their customers’ interests

3%

think political parties care about consumers’ interests

2%

think property developers care about consumers’ interests



The trust is closely related to transparency and fair attitude to consumers—whether we have in mind texts on food labels or contract conditions when concluding mortgages or entering contract with mobile operators. It also seems that trust development is closely related to the offer of products whose ingredients and origin are easy to verify.

The future way to a marketing success is: Czech origin + local setting + transparency. Brands must put their cards on the table and be honest to consumers!


What is important in your opinion for the future of the Czech Republic as a state in order to improve the quality of life?

89%
89%
want to improve a financial literacy (to inform about possible consequences of debts etc.)

88%
88%
want to support Czech brands

85%
85%
want to support Czech farmers

83%
83%
want to improve knowledge in the area of finance (mortgages, loans)

75%
75%
want to support small local shops and small local companies

53%
53%
want to improve knowledge of food ingredients (additives, preservatives)


Source: Future of the Czech Republic 2014, N=1575.



Consumer Reactions to the Crisis


66%

of consumers go to restaurants less frequently and eat more often at home

Some consumers have learnt about the crisis through media, the others were affected directly when they lost their jobs, their salary was decreased or colleagues were sacked. Whether directly or not the crisis is considered a time of uncertainty, dangerous to all that is important for a consumer. The immediate reaction to the crisis is the effort to solve the uncertainty of a family budget income.



Consumers lost their trust in institutions and the market (brands) and developed their own strategies how to challenge the financial uncertainty and the economic crisis.

co je důležité


It might seem reasonable to take advantage of discounts. But almost 55% of Czechs say they are glad to pay extra for a quality. There are evidently other ways how to save money. Two thirds of Czechs say they prefer cooking at home more often as opposed to spending money in restaurants. Every second person has a primary and a secondary job and we might assume the crisis contributed to the Czech handyman revival. 69% of Czechs maintain they started to repair things themselves at home due to the crisis and almost 90% of them want to continue this strategy even if their economic situation improves.

The study Future of the Czech Republic reveals strategies of key importance for understanding the future behaviour of each consumer segments. A more comprehensive view is necessary to understand the strategies taken by each consumer and their motivations. It is not sufficient any more to take into account only age, sex, education or lifestyle attitudes. Only thanks to a comprehensive attitude we can understand how people handle things which are important for them. Consequently, we can better understand how to communicate these values correctly to them through products and services.



Loyalty programs


Consumers have loyalty cards of almost 400 brands in their purses. Nevertheless they use only a fraction of them.

Consumers make use of only about 10% of loyalty programs to a large extent. The main reason is that advantages offered by loyalty programs are not worth taking. What qualities should they have in order to be interesting for consumers and increase their loyalty? This is a direct challenge for companies. The study Future of the Czech Republic can help them in this respect.


59%

of consumers began to use loyalty programs during the crisis

93%

of them intend to continue using some loyalty programs in the future





Interviewer: „And have you got for example loyalty cards?“
Respondent: „Well, perhaps we have some… Do you mean for example cards from shops where we get a bonus? So I have a lot of them.“
Interviewer: „And do you use them?“
Respondent: „Well sometimes I do when I think of that, sometimes I don’t. But I have cards from sports shops.“
Respondent: „We have something like a credit card. There is a Sphere card with different discounts.“
Interviewer: „And what do you think about the cards in general, if you have them?“
Respondent: „OK, they force people to come to their shops more. But I think when you have to decide it is true that if you have two shops next to each other you go to that one where you get an advantage.“
Interviewer: „Have you got anything else in mind?“
Respondent: „Sometimes you get a small bonus but nothing interesting.“
Respondent: „It is pleasant to use a card when I go shopping. But I don’t go intentionally to shops where I can use my card.“
Respondent: „Well, one is lazy… so for example I go to my favourite shops which I like.“
Source: Ethnographic interviews, Future of the Czech Republic.



Czech Consumer and Loans


75%

of Czechs spend only what they earn.

Every day we are pressed by media to think it is easy to borrow money for any purpose, including holiday or Christmas presents. However 60% of people asked what they would do with unexpected income like lottery win, they replied they would save them. More than a half of us save money for worse times, three quarters spend only what they earn. 95% of population in the productive age would never borrow money for a holiday. Only 4% of Czechs maintain they borrow money and do not worry about the consequences.




Interviewer: „And what do you think about loans?“
Respondent: „Well, it is a good thing but one must be sure of being able to repay it. I am not an enemy of loans because when I began to live together with my husband we had nothing and we took up many loans. We always repaid one loan and then we took another so we were used to wait and not to have everything at the same time. But today there is another lifestyle, young people do want to have everything at the same time. The most important are mortgages—this type of loan makes sense because people have place to live and it is an investment.“
Source: Ethnographic interviews, Future of the Czech Republic.



To what extent do you agree that the crisis has influenced your life in the following areas?

60%
60%
I try to save more money

55%
55%
I would rather save money than live in uncertainty about the future

54%
54%
I create financial reserves

37%
37%
Only irresponsible people can take up a loan


34%
34%
I save money for housing

30%
30%
I rather invest to experiences than to savings

27%
27%
It is possible I could face a distraint one day

4%
4%
I borrow money and don’t worry about the future


Source: Future of the Czech Republic 2014, N=1575.