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7 November 2008
Taipei
While the world today remains firmly ensconced in credit crunch mode, millions of consumers in the world’s fastest developing countries believes the global recession will be over within a year, according to the Nielsen Global Consumer Confidence survey which polled 26,202 consumers in 52 countries in the midst of the global financial crisis earlier this month.
“For global consumers, the last twelve months have been challenging and turbulent, but in some parts of the world, the view is that things might ease in the next 12 months, especially if financial markets stabilize, which will encourage the return of consumer confidence” said Gordon Stewart, Managing Director, The Nielsen Company Taiwan.
Fifty-one percent of Indians, 45 percent of Vietnamese and around one in three Chinese and Russians expect the global recession to end within the next 12 months, according to the Nielsen survey.
“Despite being impacted by the current global conditions, corporations and consumers in these large developing markets, especially in the growing economies of BRIC countries, are aware that their medium-to-long-term prospects remain strong,” said Stewart.
Meanwhile, in the growing economies of China and Vietnam, many product and service categories continue to post strong double digit growth and consumer spending has not been affected to the same extent as Western economies.
Taiwan, despite a short-lived spike in consumer sentiment in the first half of the year resulting from the change of the local political scene, recorded a significant 23-point decrease to 60, the biggest single drop of all in its Consumer Confidence Index. Nine in ten say Taiwan is in an economic recession at the moment and only 15% respondents say Taiwan will be out of an economic recession in the next 12 months.
For sure, spending will remain tight over the upcoming Christmas season for western nations but consumers are hopeful that things will be better by the end of 2009. One in six US consumers also expected to see the end of a global recession within twelve months.
“While the recent global financial turmoil clearly confirmed consumers’ worst fears of an imminent global slowdown – consumers had braced themselves. Our research showed that consumers were prepared for a tough 2008 and confidence in many countries including the USA, UK, Italy and France actually recorded their most significant declines six to twelve months ago. That’s when consumers in every region began to tighten their belts,” said Stewart.
“While no-one could have predicted the extent of the recent global financial crisis, consumers already started changing their spending patterns and shopper behaviour a year ago,” said Stewart. “At the end of 2007, the USA was already entrenched in the sub-prime crisis and consumers around the world were grappling with falling property prices in tandem in rising food and fuel prices and volatility in local stock markets. These events had already forced consumers to make changes to their lifestyle and right now they are simply intensifying these changes and cut-backs as they shift gear into serious credit crunch mode.”
According to another Nielsen survey on consumer recessionary behaviour, one in two global consumers will cut back on buying new clothes and try to save on gas and electricity bills. Forty-seven percent will cut back on out-of-home entertainment and one in three consumers will switching to cheaper grocery brands during shopping trips.
Cutting down on out-of-home entertainment (55%), spending less on new clothes and cutting down on take-away meals (both 45%) are the main strategies for Taiwanese consumers when the going gets tough economically. People in Taiwan are not holding back from spending entirely but are willing to open their purse strings for good bargains since 44% would switch to cheaper grocery brands. Despite a more cautious spending sentiment, there are opportunities for companies which can provide value for money products and services which meet consumers’ needs.
Among US consumers, 67 percent said they will try and save on gas and electricity, while over 50 percent are also cutting down on out of home entertainment and take away meals, spending less on new clothes as well as using their cars less often.
"Staying In has become the new Going Out for a new breed of credit crunch consumers,” said Stewart. “And while restaurants and bars may already be feeling the pinch, the “stay-in” trend is providing new marketing opportunities for innovative at-home entertainment options as well as at-home food and beverage products, along with premium and prepared food ranges specifically aimed at home entertaining”.
Nielsen’s survey results suggest that the global clothing retail sector may be among the hardest hit, and the personal technology sector can also expect a challenging 2009 as 40 percent of global consumers plan to delay technology upgrades (mobile phone/laptop) as part of their spending cut-backs.
“Compared to previous downturns, 2008 is likely to have a serious impact on lifestyle and cultural factors in many parts of the world,” said Stewart. Nielsen Consumer Panel research, for example, has revealed that French consumers will cut down on their consumption of meat and wine during 2008 - the mainstays of their cuisine – while 37 percent will now also cut back on at-home entertainment, an integral part of French lifestyle.
One in five US consumers said they had no spare cash after paying basic living expenses, as well as 28 percent of Portuguese and 19 percent of Austrians and Dutch.
However, only 7% Taiwanese said they have no spare cash after paying basic living expenses. Saving for a rainy day is again the top priority for Taiwanese consumers (67%). Consumers in Taiwan in the meantime remain willing to recreate wealth in an economic downturn, with 40 percent claim to be investing in shares or stocks and mutual funds if they have spare cash - the world’s fifth highest.
Opportunities in difficult times
Globally, three in five (62%) consumers described their state of personal finances as not so good/bad –a clear indication that extravagant spending sprees aren’t being on the cards in the near future. “However, even during economic slowdowns it’s important to remember that there are gaps and opportunities for savvy marketers,” said Stewart. “Companies that continue invest in their brands and products and stay constantly engaged with their target consumers will come out of this downturn as winners. Consumers today will remember the companies and products which best understand their changing needs and demands during a slowdown. For marketers, brand investment during a downturn has never been more important to drive and secure brand loyalty for better days ahead,” added Stewart.
Although consumer confidence declined across all global regions in the last five months, Latin America remained the most optimistic region, with a regional Consumer Confidence Index average of 96.8, followed by EMEA at 88.5 and Asia Pacific at 85.1. Consumer confidence in North America fell 2 points to 83 while Europe fell five Index points to 77. The global Nielsen Consumer Confidence average fell four Index points from 88 to 84 points.
Despite a drop of eight points in the past five months, India (114) and Denmark (112) came out on top of global Consumer Confidence rankings this month, while South Korea, which saw its stock market close at its lowest since October 2005 last Friday, languished at the bottom of Consumer Confidence rankings at 36 points, a loss of 14 points in the last five months.
Norway, the world’s most optimistic nation in May this year, dropped to fifth place this month with a Consumer Confidence decline of twenty points. Sweden also dropped 14 points. Singapore, Chile, Ireland and Latvia recorded further double-digit declines in Consumer Confidence for the second time this year –a clear reflection of the global nature of this economic slowdown.
The only nations which recorded marginal increases in consumer confidence were Brazil (4 points), Philippines (3 points) and New Zealand, China, Venezuela, Thailand and South Africa gained one point compared to five months ago.
About The Nielsen Global Online Consumer Survey
The Nielsen Global Online Consumer Survey, conducted by Nielsen Customized Research, was conducted from Sept 22 – October 6th 2008 among 26,202 internet users in 52 markets from Europe, Asia Pacific, North America and the Middle East (Argentina (AR), Australia (AU), Austria (AT), Belgium (BE), Brazil (BZ), Canada (CA), Chile (CL), China (CN), Colombia (CO), Czech Republic (CZ), Denmark (DK), Egypt (EG), Estonia (EE), Finland (FI), France (FR), Germany (EG), Greece (GR), Hong Kong (HK), Hungary (HU), India (IN), Indonesia (ID), Ireland (IE), Israel (IL), Italy (IT), Japan (JP), Korea (KOR), Latvia (LV), Lithuania (LT), Malaysia (MY), Mexico (MX), Netherlands (NL), New Zealand (NZ), Norway (NW), Pakistan (PK), Philippines (PH), Poland (PO), Portugal (PT), Romania (RO), Russia (RU), Singapore (SG), South Africa (ZA), Spain (ES), Sweden (SE), Switzerland (CH), Taiwan (TW), Thailand (TH), Turkey (TR), UAE (AE), United Kingdom (GB), US, Venezuela (VE) and Vietnam (VN).)
The largest half-yearly survey of its kind, the Nielsen Global Online Consumer Confidence and Opinion Survey provides insight into current confidence levels, spending habits/intentions and the major concerns of consumers across the globe. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend.
About The Nielsen Company
The Nielsen Company is a leading global information and media company providing essential integrated marketing and media measurement information and analytics and industry expertise to clients across the world. Nielsen maintains leading market positions in marketing and consumer information; television, online, mobile and other media intelligence; and trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). Nielsen is a privately held company and is active in more than 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com.
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