With the financial climate leaving consumers hard-pressed to make ends meet and think twice about spending on non essentials, consumer companies that sell at-home services are seeing a rise in their profits.
Too big to sacrifice
Cable group Virgin Media and its rival TV provider BSkyB say that they have maintained financial growth through the recession because they can cross-sell a multitude of services.
These services, mainly cable television channels and broadband internet, are among the last things consumers will sacrifice.
This is because research has shown that the fears of a double-dip recession have people staying at home more in order to shave down their budgets. As a result, Virgin’s customers are looking to their services more than any other expenditure for their entertainment needs.
As Finance Director Eamonn O’Hare said in an interview, the habit of “going home and watching telly” instead of going down to the pub has made business for media providers “pretty robust in the face of tough times.”
The culture of staying in
Retailer Asda recently released a survey that showed British families around 60 pounds per month worse off than they were a year ago. Energy, transportation, and food costs are squeezing family budgets across the country.
William Hill, Britain’s biggest book producer, showed that the culture of staying in is on the rise by discovering a 28% rise in online gambling revenue in the most recent financial quarter. There was a 3% decline in its retail businesses.
In contrast with at-home products soaring, Night club operators Luminar were forced to enter administration on Wednesday. The company had already issued profit warnings throughout the recent economic downturn, citing widespread youth unemployment which has kept young people at home rather than out on the town.
Official retail data, released last week, shows that the fears about inflation forcing consumers to cut spending are all too true. In fact, a report shows that consumer confidence fell for the fourth straight month in October.