With hopes for a full economic recovery accelerating in 26 out of the 28 major global markets surveyed as part of the Nielsen Global Consumer Confidence Index in late June, consumers around the world might be expected to return to their previous spending patterns.  But according to a new report from Nielsen, some consumers may find it hard to shake recessionary habits.  The severity of the recession has brought about a change in consumer values, spending habits and lifestyle choices in some parts of the world, and the indication is some consumers in the West will continue to refrain from excessive or unnecessary spending across all aspects, at least in the short term.

Highlights from the report include:

• Nearly one-third (29%) of consumers will continue to economize on gas and electricity, with 48 percent of Americans saying that they will continue to save on utility bills.
• One in six global consumers will continue to cut back on take-away meals, with 22 percent of Australians indicating that’s one area they will continue to reduce spending. Significant numbers of New Zealanders, Japanese, Irish, South Africans, Brazilians and Americans also indicated they would stay away from take-away.
• One in six global consumers say that they will continue purchasing cheaper grocery products, spend less on new clothes and cut down on out-of-home entertainment.

The findings were not all cautious, however.  Consumers in the BRIC markets (Brazil, Russia, India and China) are generally looking forward to putting recent recessionary behaviors behind them and returning to their previous spending patterns.  Buoyed by rising stock markets and continued (if slower) economic growth, these consumers offer marketers, retailers and others some hope in the short term.

Findings included:

• Chinese remain the most confident of an economic rebound in the near future, and sales of consumer goods products remained robust last year – up 21 percent.
• One in six Russians said that they would not retain any of their recessionary habits once the economy improves, and are particularly eager to spend their money on clothing.
• Technology such as home computers and mobile phones look to be early winners: consumers in Japan, Korea and the Philippines are looking forward to upgrading their current gear.
• More than 40 percent of Americans say they expect to increase their spending on travel and holidays, dining out and out-of-home entertainment in the coming months.

As economic recovery gather pace, consumption and spending will increase, but the post-recession consumer is likely to consume very differently.  She will think twice – and maybe thrice – about making purchases big or small.  It’s now fashionable in the West to be frugal and trendy to be thrifty.  But marketers that are able to convey the value of their products and services will likely continue to grow and prosper.

Download the full report: Consumers in a Post-Recession World

In Latin America, Nielsen reports sales of mobile phones have had a noteworthy increase in the last years, even though they are starting to have a diminution in the growth rate. Comparing the first quarter of 2009 against the same period of 2008, the sales rate has slowed down to 12%.

Countries such as Mexico and Brazil—where the density of devices per inhabitant is still smaller than that of the regional average—prompted sales with double digit unit gains of 20% and 16% respectively. Corresponding U.S. dollar sales rates were more modest, at 3% for Mexico and 6% for Brazil. Together, given their relative size, mobile device sales in these two countries offset the combined unit sales losses unilaterally in Argentina, Chile, Colombia and Venezuela.

Considering the market size in the region, if each mobile phone owner has at least one line, it is estimated that there are 460 million active lines in Latin America. This represents an important new growth channel and significant opportunities for the Telecom industry. It is estimated that in the next few years, sales of Smartphones will continue to increase, giving rise to the growth of the Value Added Services (VAS) penetration.

Like their North American counterparts, Latin Americans were interested in mobile phone features. In the last year, handsets sold in the region included camera (61%), radio (55%) and MP3 player (35%). All of these features showed considerable growth when compared to the previous year.

Motivating factors
An in-depth segmentation analysis in Brazil was conducted to understand what cell phone users in the region were looking for—convergence, greater connectivity, more entertainment or features. Four distinct segments of cell phone consumers were identified: 16% of Brazilian subscribers use only voice features, 28% use voice and SMS capabilities, 37% use features offline (such as; camera, MP3 player, etc.) and finally, 19% use value-added services, which include Internet access, ringtone downloads, etc.

Value-added service users accrue greater expenses—bills are typically 20% more than the average voice-only mobile user’s tab. These consumers tend to be younger (almost two-thirds are under age 34) and 40% reside in more affluent socio-economic levels, which makes the middle class an important market opportunity for expansion.

In Brazil, the VAS consumers are using the device as a downloader tool, when going online.

Understanding the particular segmentations in each market becomes crucial in order to reach the consumer with the most appropriate offer. This kind of analysis provides a more complete and insightful look into subscribers to understand motivations that drive the decision-making process.

In the U.S., consumers remain skittish.  Shifts to private label brands continued at a strong pace, as they have for the last eight months, while consumers are shopping less frequently and spending less per trip.  Canadians, on the other hand, are spending more per trip, and are taking advantage of retail promotions.  Unlike in the U.S., private label brands are struggling to gain share as national brands step up promotional activity.

In Europe, the French remain relatively unchanged in their shopping.  Value channels continued to see growth and more retailers were selling on promotion, leading to a modest increase in the amount spent per trip.  Germans showed very little change in the number of shopping trips they took, nor did they increase or decrease how much they spent.  Unit sales increased, however.  In the UK, sales volume improved slightly from the previous month, while budget store brands’ growth slowed as consumers began returning to premium brands.  British shoppers were also spending slightly more per trip.  Italians continued to move to store brands and value channels, although they were reducing their shopping frequency.  Spaniards, who have been among the most optimistic, have not seen that reflected in spending.

Brazilians showed an 8 point surge in optimism, and this translated into more frequent shopping trips and higher sales, in both volume and value terms.  Hong Kong and China both showed growth in sales, but Taiwan showed declines, and optimism there was among the lowest in Asia.  Indian consumers’ confidence was high, and volume and value sales both increased by more than 5 percent.

“While things are starting to look up, it’s clear that Americans and Western Europeans aren’t quite convinced that recovery has taken hold and remain cautious when it comes to shopping.  The labor market is clearly affecting this behavior.  It comes as little surprise that Brazil, India and China – countries that have generally been less affected by the global recession – are among the first to see renewed consumer confidence and sales growth,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.

The Buzz

While the idea of recovery hasn’t opened up global consumers’ wallets quite yet, it has started to infiltrate their discussions on the Web.  In June, 71 percent of survey respondents thought that their countries were in recession, an improvement from the 77 percent who thought the same in April.  Additionally, 26 percent believed that their country will be out of a recession in the next twelve months, up three points from April.  Global recession buzz has declined 27 percent since March.  In July, however recessionary buzz perked up, primarily in Western Europe.

“We are likely to see an overall downward trend in recession discussions, but it will be choppy until consumers really feel as if they are experiencing the recovery,” said Russo.

Download the latest Nielsen Economic Current.

“In the previous Nielsen Global Consumer Confidence survey conducted in March, we were seeing the first signs that as far as the world’s consumers were concerned, the recession had bottomed out. Three months later, they’re starting to embrace the idea of recovery – which is a major turning point,” said Jonathan Banks, Business Insights Director, The Nielsen Company.

In Nielsen’s latest survey, which polled 14,029 online consumers in 28 countries late in June, 71 percent of respondents thought their country was in recession – a positive reduction of six points from a high of 77 percent when the survey ran in March 2009.

“The BRIC and Asian markets have recorded the greatest jumps in Consumer Confidence Indices in the past three months,” noted Banks. “Consumer confidence in India jumped 13 Index points, and climbed 9 points in Japan, South Korea, Hong Kong and Indonesia. Consumer confidence rose 8 Index points in Taiwan and Brazil, and 7 points in Singapore, Turkey, Russia, Philippines and the UK. The only exceptions to this upswing were in the USA and New Zealand, which held flat in the second quarter, with Germany the only country to register a decline of one Index point,” said Banks.

Even in the market registering a small decline – Germany – there are encouraging signs that a recovery is imminent. According to the Nielsen survey, nearly one in three Germans (29%) said the recession would be over in the next 12 months, compared to only 22 percent three months ago. One in three Germans also thought “now is a good time to buy the things they want”, indicating a renewed willingness to spend on discretionary items. Thirty-eight percent described their personal finances as “good” for the next year.

“This is one of the strongest indicators of a global consensus among consumers that the worst is over, and that finally, there is light at the end of this long tunnel. And consumers in emerging and Asian markets are clearly of the view that they are driving in the recovery lane now,” added Banks.
The latest Nielsen Confidence numbers are a welcome return to positive, confident territory for consumers in the developed Asian markets of South Korea, Taiwan and Japan, who have been battling economic inertia and political instability for several quarters.

“Asian consumer confidence appears to have been boosted through successful government economic stimulus packages that were speedily and effectively implemented at the onset of the global recession,” noted Banks. In the world’s second largest economy, the Japanese government implemented tax breaks, introduced cash deductions and subsidies on new car purchases, as well as providing cash payment and premium gift coupon schemes to stimulate spending.

“As well as expanding credit terms to small and medium sized businesses, in Japan there are even incentives to purchase eco-friendly household appliances as part of the government’s new environmental policy, and national toll prices for motorways have been discounted to encourage domestic tourism,” observed Banks.

Stock market gains in the BRIC and Asian markets have also had a major impact on consumer confidence,” said Banks. More than any other region, stock markets in Asia have rallied and property prices are starting to regain their pre-recession values. Russia’s stock market is up 60 percent from the start of the year and Taiwan is up over 50 percent. Brazil and Singapore’s stock markets have gained around 40 percent in the past six months and the South Korea and Hong Kong stock markets are up over 30 percent. With stock market gains so intrinsically linked to consumer confidence in Asian markets, it’s no surprise that Asian consumers are most confident about a receding recession, led by Hong Kong (-14 pts), Taiwan (-13 pts), Singapore and Japan (-12 pts), India and China (-10 pts).

“Positive economic news and growing consumer optimism in the past few months have definitely led consumers in these markets to believe that economic recovery will come sooner rather than later,” said Banks. According to the Nielsen survey conducted in March this year, 28 percent of Singaporeans said they expected their recession to end within 12 months – last month this number rose to 39 percent. UAE consumers also share this sentiment. In March, 32 percent of UAE consumers thought the recession would be over within a year but in June 43 percent said they expected the recession to be over before the middle of 2010.

Latest Nielsen data also shows that consumer confidence in the UK – a country that has suffered one of the most dramatic downturns in consumer confidence in the last year – is on the rebound, climbing 7 Index points in the second quarter. “UK consumers are getting the hang of consuming less. People with jobs – still the overwhelming majority – now have more disposable income as they reduce spending on big-ticket items like cars and holidays. With mortgage interest rates at their lowest levels, savings rates are increasing quickly and this has increased financial confidence,” said Banks.
“Consumers know that recovery won’t happen overnight but there has certainly been more good news than bad in the past few months,” noted Banks.

The decline in constant bad economic news in the media has directly impacted on the topics consumers are talking and blogging about. According to Nielsen Buzzmetrics, Nielsen’s service for measuring online conversations, the number of online discussions, or” buzz”, in the UK mentioning the word “recession” dropped around 60 percent between late March and late June this year. “People’s obsession with the recession has switched to how to live and spend more moderately in a new economic era,” said Banks.

Italian consumers have also become more optimistic, showing a strong gain of 7 Index points – their highest Nielsen Consumer Confidence Index since the second half of 2007. “Our survey supports recent Italian government figures which indicate that consumer confidence is returning to the Italian economy. In the last three months, Italian consumers’ concern for job security and the economy fell by 4 percentage points respectively, while average supermarket prices fell 0.2 percent in June 2009, indicating that consumers are less concerned about rising food bills than they were two years ago,” said Banks. The rise in consumer confidence in Italy has also been positively impacted by the government’s stimulus policies and the significant decline of negative economic coverage in the media. Online discussions mentioning the word “recession” have decreased by 35 percent this year according to Nielsen.

Globally, job security and the economy remained consumers’ top two concerns in life but even the level of these concerns has abated in the last three months and recorded declines of two and four index points respectively.

A Link Between Buzz And Spending

For the latest Economic Current, Nielsen tracked online discussions about the economy and found that since mid-March 2009, recession buzz has dropped 47 percent in the U.S., UK, Germany, Italy, Spain, Australia and New Zealand.

“Globally, Nielsen is tracking online discussions related to the recession and when the recovery may emerge. While discussions about the recovery are still quite low, we have seen that the public is talking less about the recession — often dramatically less,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company.

“In the U.S., we found that recession discussions have dropped since hitting a peak in January.  There appears to be a strong correlation between what consumers are saying in discussion groups and their subsequent actual purchase behavior.  From the end of 2008 to March 2009, when recession discussions were highest, we found that sales actually declined by 2.3 percent.  From mid-March to early June, as recession chats dropped, we found that sales actually showed a modest increase,” continued Russo.  “This is an important dynamic as we look to signs of a sustained recovery, and Nielsen will be at the forefront of this research.”

Noteworthy Highlights

• After showing some positive movement in April, U.S. consumers pulled back on shopping and how much they spent per trip. Meanwhile, the shift to value channels such as supercenters, club and dollar stores continued, as did the move to private label store brands.
• Canadians are slightly more optimistic than their southern neighbors. While they aren’t shopping any more frequently than before, they are spending more per trip. But like Americans, Canadians are also turning to private label store brands and value channels.
• Western Europe remained in a neutral position. Some countries’ consumers shifted to value channels and store brands, but they generally reduced the frequency of their shopping trips and spent no more, or in some cases, less than in previous months.
• Brazilians were the most positive of the lot, with consumers shopping more frequently.

Download the latest Nielsen Economic Current.

“Consumers worldwide appear to be in a holding pattern and we see evidence that consumer spending might be positioned to turn around,” said James Russo, Vice President Global Consumer Insights at Nielsen.  “There is no doubt that conditions remain tough for global consumers, with continuing widespread areas of weakness, but levels of decline seem to be moderating.”

The Economic Current ranks national economic performance on a scale of one to five, with one representing very strong growth (over 5%). India and China continue to be the only countries that scored a one in February, while Canada and Russia scored twos (growth between 1% and 4%). The U.S. continues to score a four.

Watch James Russo discuss saving rates and additional findings of the Nielsen Economic Current.

Additional findings include:

• Consumers in most countries are spending more per shopping trip, but cutting back on discretionary spending, such as entertainment outside of the home, buying new clothes and switching to cheaper grocery brands.
• There are noticeable shifts to value channels such as discount stores that provide high-volume, low-profit offers, even in Brazil, Russia, India and China.
• Consumers are purchasing more store brands, especially in Spain, Germany and Canada.

“There are a lot of similarities among consumer spending globally. No matter the border, consumers are reigning in their spending. In this volatile market, retailers and manufacturers need to know how to maximize their public exposure and understand the needs of consumers at a granular level to survive,” said Jonathan Banks, Business Insight Director for Nielsen in Europe.

Download the latest Economic Current.

Download the full press release.

“Social networking has become a fundamental part of the global online experience,” commented John Burbank, CEO of Nielsen Online. “While two-thirds of the global online population already accesses member community sites, their vigorous adoption and the migration of time show no signs of slowing.”

More Time For Community

Time spent on social network sites is also expanding: Across the globe in 2008 activity in ‘Member Communities’ accounted for one in every 15 online minutes – now it accounts for one in every 11. In Brazil the average is one of every four minutes and in UK it’s one in every six minutes.

Not Just For The Young

While social networks started out among the younger audience, they’ve become more mainstream
with the passage of time. Not surprisingly the audience has become broader and older. This shift has primarily been driven by Facebook whose greatest growth has come from people aged 35-49 years of age (+24.1 million). From December 2007 through December 2008, Facebook added almost twice as many 50-64 year old visitors (+13.6 million) than it has added under 18 year old visitors (+7.3 million).

Mobile On The Move

As Mixi in Japan shows, the increasing popularity of social networks has resulted in increasing demand to access them on the move. Mobile is a natural fit for social networks, as consumers are used to connecting with friends via mobile calls and text. UK mobile web users have the greatest propensity to visit a social network through their handset with 23% of them (2 million people) doing so, compared to 19% in the US (10.6 million people). The numbers of people doing so are a big increase on last year – 249% in the UK and 156% in the US.

For additional trend data and insights, download the full report of Nielsen’s Global Faces and Networked Places.

While 53% of those surveyed by Nielsen think their country has hit a prolonged recession that will last more than 12 months, 18% of consumers, concentrated in a handful of emerging markets, like India, Vietnam, China, and Russia, told Nielsen they expect their countries to be out of recession within the next 12 months.

In contrast, consumers in Japan, Germany, Argentina, Mexico, Turkey, Italy, Taiwan, the U.S., and Spain were the least optimistic about the prospects for quick economic recovery.

Nielsen surveyed 28,663 Internet users in 52 markets across Europe, Asia Pacific, the Americas, and the Middle East between September 22 and October 6, 2008, as part of its Global Online Consumer Survey.

The survey’s results reveal that global consumer confidence fell to a new low this month, dropping from an index of 88 in May 2008 – previously the lowest index on record – to 84 in October, according to Nielsen.  Only Brazil, the Philippines, New Zealand, China, Thailand, South Africa, and Hungary showed improved consumer confidence, compared with May 2008.

Not surprisingly, consumers worldwide are adopting new strategies to reduce discretionary spending and shore up household finances.
 
On average, 49% of global consumers plan to spend less on new clothing, as well as gas and electricity, according to Nielsen. 

Meanwhile, 47% report reducing out-of-home entertainment, 40% say they’ll delay upgrading to new PCs and mobile phones, and 39% will cut down on take-away meals from restaurants. 

Even necessities, like groceries, are on the chopping block — 36% of global consumers report switching to cheaper grocery brands in order to reduce their expenses.

Overall, consumers in Australia, New Zealand, Germany, the U.K., Turkey, the U.S., Colombia, and Argentina plan to make the most changes in their spending habits, as they search for ways to weather the current economic turmoil.

View the full press release.

Read a related press release on consumer confidence in Hong Kong and Great Britain.

Read coverage of Nielsen’s findings by Sky News and in the Shanghai Daily, the Business Standard (India), Forbes, the Financial Times, The China Post, the Thanh Nien Daily, and the Malaysia Star.

Learn more about global consumer confidence levels in the December 2008 issue of Nielsen’s “Consumer Insight” online newsletter.

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Welcome Back to the Live Commercial.
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Private Label: What’s Really Driving Growth?
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Brazil – A Happy Place to Live.
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During the first week of competition, an average of 930,000 fans per day, from ten countries in Europe, Asia, and the Americas, visited Beijing2008.cn, the official Website of the Beijing Games, according to Nielsen.  On several days during that period, traffic to the site exceeded one million unique visitors.

Within China, traffic to Beijing2008.cn, averaged 1.5 million unique browsers per day during the period, according to ChinaRank, Nielsen’s China-based Internet traffic measurement partner.

In the U.S., daily traffic to the video section of NBC’s Olympics site averaged more than 1.5 million unique visitors from home and work, according to Nielsen.  During the same period in Brazil, traffic to the Olympics video section of Terra averaged 119,000 unique visitors from home.  NBC and Terra are both Olympics broadcast partners.

Meanwhile, in China, more than one-quarter of China’s estimated 250 million Internet users viewed Olympics-related online content on a daily basis, according to ChinaRank.  

In all, during the first week of the Games, Chinese Internet users viewed more than 4.6 billion Olympics-related Web pages. 

View the full press release.

Read coverage of Nielsen’s findings in The New York Times and The Hollywood Reporter.