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Leading in
consumption
Indian
consumers, in tandem with their Asian
counterparts, are clearly the world's most
optimistic while the vast majority of Europeans
and Americans maintain a firmly dismal economic
outlook, according to the latest global online
consumer confidence survey by ACNielsen.
The ACNielsen Online Consumer Confidence
Survey, the largest twice-yearly global survey of
its kind, is intended to gauge consumers' current
confidence levels, spending habits and intentions,
and current major concerns. The survey polled over
21,100 respondents in 38 markets from Europe, Asia
Pacific, North America, Latin America and emerging
markets.
Looking back over the last six
months, the Asia Pacific region (41%) and South
Africa (64%) were the most optimistic, while less
than one-fifth of consumers in Europe and North
America respectively believed their local
economies improved in the first half of the year.
Among all, people in India (79%), Hong Kong (75%)
and China (70%) were feeling the most upbeat the
world over.
"Socially and economically,
India is developing at a galloping rate when
compared to the rest of the world. With estimated
compounded economic growth rates of over 8% per
annum, Chinese and Indian consumers have greater
spending power today than they have had at any
time in recent history," said Sarang Panchal,
executive director, Customized Research Services,
ACNielsen South Asia. "In India, the assessment of
economic performance over the last six months has
moved up smartly when compared to the previous six
months. Some 79% of Indians felt that the economy
had improved. The follow-through of this positive
evaluation has obviously carried forward
aggressively."
"For the coming 12 months,
Indians are clearly the most optimistic country in
the world. With 88% of Indians bullish about the
country's economic performance going forward, we
are even more positive than China. In the context
of the global economy, this forms an important
inflection point in our perception even amongst
the international investment community," said
Panchal.
Looking ahead into the next 12
months, Asia Pacific (48%) and South Africa (60%)
had the most optimistic inhabitants. Leading the
world as the most upbeat are the emerging consumer
powerhouses of India and China, the two largest
and fastest growing consumer markets in the world
today, which are also driving Asia Pacific's
confident outlook, with at least 80% of their
people confident of an even brighter future in the
year ahead. Hong Kong was among the world's top
three optimistic markets, with 71% of people
perceiving a continued improvement in the local
economy going forward.
The most telling
indicator of the fact that economic optimism in
India is here to stay is the fact that Indian
consumers are also the most optimistic in terms of
their expectations for employment opportunities
and the health of their personal finances. An
overwhelming 83% think employment prospects are
likely to be good and a similar 85% expect their
personal finances will be in good shape. "The
impact of outsourcing and a growing pool of
literate, employable young adults has resulted in
a flourishing of opportunities. For individuals
this means that their disposable income will have
a greater propensity to increase more rapidly than
before. For businesses, however, maintaining a
check on wage inflation, especially in the
services sector, will be a key challenge," said
Panchal.
This will, however, signal an
exciting and vibrant time for consumer marketing.
As result of the positive outlook on employment,
job prospects and personal finances, the Indian
consumer also feels that this is a good time to
buy products and services. A majority (67%) feel
that the next 12 months will be "a good time to
buy". This contrasts to consumers in other
economies within the Asia Pacific region. Despite
being optimistic on almost all fronts, consumers
in Asia Pacific were less so when it came down to
the state of their own finances over the next 12
months. Only 57% were positive about their
personal finances compared with 71% in South
Africa, 65% in Latin American and 61% in North
America.
Similarly, while over half the
world's consumers described their state of
personal finances as "good", they also said that
now is not the time to spend money on things they
wanted to buy. "Globally, consumers remain
cautious about economic volatility and seem quite
prepared for a sudden change in circumstances.
Right now, they are reluctant to go on any major
spending sprees," Panchal said. The global
exceptions were the Norwegians and the Turkish
(8%), who believed that now is an "excellent" time
to buy the things they want.
Spending
desires
The survey also points to where the
consumer rupee in India is headed as a result of
this optimism. When it comes to how Indians will
spend their spare cash (after basic living
expenses are accounted for) there is a clear order
of priority even though a majority(54%) intend to
save. In the order of magnitude, most Indians are
intent on using their disposable income to invest
in equities and mutual funds (41%), indulge in
out-of-home entertainment (34%), buy new clothes
or embark on a vacation (33%), invest in
decorating their homes or buy new technology
(30%). "Clearly, some industries will benefit more
than others as consumers prioritize their
purchases. These are the industries to watch out
for since they will command a greater proportion
of the consumer wallet and witness fierce
competitive action. It will be essential for
marketers to gain an insight into factors driving
the desire for these products if they are to
successfully ride this wave of optimism," said
Panchal.
Overall, Asians remain the
world's super savers with 51% of consumers putting
any spare cash away for a rainy day, with
Filipinos topping the list (63%). In the recent
Thai New Year, Thai consumers' holiday appetite
remained strong, with 56% choosing to spend their
spare cash on holidays/vacation. Mainland Chinese
consumers were simply unbeatable when it came to
shopping and formed the biggest group of fans in
the region for out-of-home Entertainment (50%),
new clothes (44%) and new technology (41%).
Based on the three dimensions of "Job
Prospects", "Personal Finances" and "Spending
Desires", ACNielsen has established a Global
Consumer Confidence Index designed to compare
confidence levels across all markets in the
survey. At the top of the Index was India, with a
score of 127, followed by New Zealand with 119 and
Ireland with 113. At the very bottom of the scale
was Korea, scoring 58. The global average score
was 92.
Major fears and
concerns
Expressing their major concerns
over the next 12 months, 37% of Indians cite the
economy and job security as being the most
pressing. "On the one hand Indians are world's
most optimistic consumers, and on the other hand
the health of the economy and job security are of
utmost concern to them. This apparent
schizophrenic outlook can be explained by the fact
that this phase of hectic growth is bound to
attract a modicum of doubt about its
sustainability," said Panchal. "The equity markets
are scaling new highs but remain volatile in the
short term, inflation threatens to push interest
rates upward and employee churn within sectors
with the fastest growth rates means that there is
bound to arise slight insecurities about the
sustainability of this positive phase."
Health, too, appeared to be an emerging
concern with 31% of Indians perceiving it as a
reason for worry. Interestingly, though 23% of
Indians cited political stability as a reason for
concern, this number has come down by 8 percentage
points since the last round of the survey in
December 2004.
At an overall level, the
biggest concern for Asians, Europeans and North
Americans is the economy, while job security
topped the most concerned list for Latin Americans
and one-third of South Africans cited Crime as
their main concern. Over 60% of people in
Indonesia, the Philippines and Thailand were most
concerned about the economy. The second major
concern for people in Asia Pacific was job
security (39%) with China, in particular,
recording a significant increase in people
concerned about their jobs (56% versus 47% in Oct
2004).
(ACNielsen) |
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