McKenna highlighted a monthly survey Asda does to track its customers’ income. In May, this recorded its biggest ever monthly fall, she said, with customers supposedly £14 a week worse off than they were a year ago. McKenna reckons that UK consumers are effectively in recession – arguing that, for Asda’s customers, the weekly shop has become an exercise in ‘managing household inflation’. Or to put it another way: ‘Many of our customers are now faced with the choice between buying a new pair of shoes for their kids, or filling up the car.’
So how can businesses help? McKenna says Asda feels a responsibility to 'hold back inflation for our customers', ie, keeping prices down. Because it has such detailed knowledge about the pressures its customers are under, she suggested, Asda can decide where to reduce costs or provide that extra bit of help. So when fuel prices are high, for example, the supermarket would have an offer on petrol. And when people started switching in droves to its own brand products, it put extra cash into improving that range.
Now, obviously Asda isn’t doing all of this out of the goodness of its heart – it's operating in a ferociously competitive sector, and you only have to look at the temporary uplift in retail sales around the royal wedding to realise that, given the right conditions, people are still willing to dust their off their credit cards. But McKenna argues that if businesses can get enough information on their customers, they can create the sort of environment that will overcome the ‘toxic mix of fear’ that's paralysing spending. 'This is the new norm. Businesses need to adjust and price accordingly to compete.’ And if that means us paying less for the things we really need, so much the better.
McKenna made her comments at yesterday’s MT/CBI growth summit, where Cabinet Minister Francis Maude and small business minister Mark Prisk outlined how the Government is planning to help businesses return to growth, while the TUC’s Paul Nowak and former deputy PM Lord Heseltine went head to head over private sector involvement in public services. But the Government remains part of the problem; as legendary promoter Harvey Goldsmith pointed out during an interview with MT editor Matthew Gwyther, it's not just consumers who are short on confidence – excessive regulation means businesses are having a pretty hard time of it, too...