Overall, Canadians were more confident than their neighbors to the south, with more positive outlooks regarding job prospects, the state of their personal finances and their willingness to spend.  With respect to jobs, 46 percent of Canadians say that local prospects will be “good” or “excellent” over the next 12 months, compared to just 28 percent in the U.S.  More than half (55%) feel that the state of their personal finances will be “good” or “excellent,” up three points since July and compared to 51 percent of Americans who said the same.  More than two-fifths of Canadians feel it is a good time to buy the things they want and need, compared to 33 percent of Americans. All of that said, a strong majority (82%) of Canadians feel that the country is still in a recession, despite the fact that the Bank of Canada announced that the recession was over.  Nine in ten Americans said that they felt their country was still in a recession.

In a sign that the consumer’s obsession with all things economic and recession is starting to recede, Canadians are once again showing concern with other issues such as work-life balance and health.  But despite these positive signs, Canadians remain cautious about spending.  Paying off debt is the top use for spare cash (with 39% saying that is their priority) followed by socking away money into savings (26%).  When they are spending, holidays and vacations is the top category (26%) with out-of-home entertainment (23%) and home improvements (20%) rounding out the top three.  Canadian men indicated that they are more likely to spend on outside entertainment and new technology, while responsible Canadian women are focused on paying off debt.

Read the full report.

Sentiment = Sales
“A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery — the tide has turned,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “In this economic climate, sentiment is closely correlated to actual sales. For example, in Australia, consumer confidence was up 11 points in the third quarter, and strong economic conditions prompted the Reserve Bank of Australia to raise rates, becoming the first G20 country to do so. Correspondingly, we have seen sales increase 2 percent in each of the last two months in defined fast moving consumer goods (FMCG) categories while online sentiment (buzz) regarding the recession is at the lowest levels since we began tracking that dynamic in January 2009.”

• Read additional insights on global spending trends in the Nielsen Economic Current

Majority of countries show gains
Consumer confidence rose in 45 out of the 52 countries compared to six months ago (Ukraine and Saudi Arabia were added in the latest round of the survey).  In April, the Index hit its lowest point of 77 index points, but as massive stimulus plans began to take effect around the world during the second quarter, consumer confidence slowly began to recover.

Key Highlights

• Consumers in India, Indonesia and Norway topped the confidence index, while the most pessimistic consumers were in Latvia and Japan.
• Hong Kong posted the largest consumer confidence increase in the third quarter compared to Q2, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points).
• Among other BRIC nations, consumer confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter.
• Consumer confidence fell in only two countries in the third quarter: Spain (-4) and Japan (-2).
• Australia and New Zealand also posted double-digit increases during the last quarter, while Europe’s two largest economies, France and Germany, posted the highest increases in the Eurozone, up 7 and 5 points, respectively.

Nielsen’s global consumer confidence in October rebounded to almost the same level as the first half of 2008 before the very worst of the financial crisis hit global markets. “The survey shows how much the pace of economic recovery has accelerated in the last six months, especially in Brazil and some Asian markets,” said Russo.  “Nielsen consumer, retail and media data also shows a trend of consumers shifting gears from recessionary into recovery mode.”

The Nielsen Global Consumer Confidence Index tracks consumer confidence, major concerns and spending habits among more than 30,500 Internet users in 54 countries. The latest round of the survey was conducted between 28 September and 16 October 2009.

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

Jane Crossan,Vice President, Practice Leader, Financial Services, The Nielsen Company

For the past six months we’ve seen and heard about the recovery of the U.S. market: the DOW has ticked up and the Fed chair has said the recession is “likely over.” But ultimately, the consumer will determine when our economy is back on track when you consider that consumer spending accounts for roughly 70 percent of U.S. economic activity. Until the consumer starts spending again, the recovery is likely to be slow and it may feel like we’re in a weak economy for some time. To get a closer look at the consumer’s financial outlook and their going-forward intent,  Nielsen Claritas surveyed more than 2,500 consumers, including 500 households that saw their personal financial institution impacted by a takeover or acquisition. What we found was that while the intensity of the economic panic had subsided since 2008, concerns persist and new habits in spending and saving are solidifying.

The new frugality
Similar to what we’re seeing with the outlook to the upcoming holiday season, the majority of consumers are saying this is just not the time to buy. When posed with a very simple fill-in-the-blank prompt: “At this moment, the time to buy the things you want and need is…” the panel responded heavily with “not so good.” Combine that with those who said the timing was downright “bad,” and you’re looking at 71% of respondents telling us they are no position to buy right now.

These responses underscore the consumer confidence index which began to drop in May and continued to drop through much of the summer. Even back-to-school shopping was lackluster despite a slight rise in that sector in August. The prevailing mood could likely be summed up by one respondent who noted bluntly: “I will not be making any large-item purchases for a long while.”

Spending and saving less
Between pulling back on spending and working to consolidate debt, the average consumer is getting squeezed.

In the past six months…

• One third say they have used credit less while…
• Only 13% say they have used credit more
• Consumers indicate they have controlled spending by using cash, debit and check as methods of payment
• 27% say they have saved less vs…
• 22% who say they have been able to save more
• 16% say they contributed less to retirement over the last 6 months

Even when conditions improve in the future, consumers are viewing the use of credit cautiously, with 30% saying they’ll use credit less. Savings will also continue to be a struggle as only 19% say they will be able to save more even when the economic storm clears.

The middle still feeling the pressure
In October 2008, concern about the economy was felt equally across the board, regardless of household net worth. Now, however, the higher net worth households seem to be faring better with their extreme concern almost cut in half. The two highest net worth brackets showed a noticeable drop in extreme concern compared to the lower three brackets, perhaps because homeowners with higher equity are less affected by recent drops in home values.

What’s interesting is the comparable concern in the middle and lower two brackets.  In fact, the middle bracket (those with a $100-249K net worth) expressed the highest amount of concern in 2008  and 2009, evidence that this is not a “poor man’s recession.” If anything, those in the middle are feeling the most pressure. These mid-net worth households  are likely comprised of  recent first home buyers who traded up at the peak of the market, or took equity out of their homes to fund other lifestyle choices.

Adding to that middle-class worry are growing concerns about personal finance matters at the heart of the American dream.

More than one third of consumers continue to be concerned about their mortgage or home value – not surprising given that recent data shows that one in eight mortgages is delinquent or in foreclosure – and the median sales price of existing home sales is down 16.8% over this time last year according to an Economic Snapshot at the time the survey was fielded. But the greatest concerns are around investments – specifically retirement portfolios as total family wealth has decreased since its peak in June 2007.

So while there may be less panic about the economy in general, these personal factors underscore what we’re hearing: the recovery for the consumer will be a longer, and more personal road back.

With the nation seemingly emerging from recession, American consumers remain skittish about spending their money during this upcoming holiday season according to new research from The Nielsen Company.  Households continue to focus on “essential gift giving” such as staple consumables, candy, beverage/alcohol and entertaining at home, and 86 percent said that they expect to spend the same or less this year than last — with a 7 percent increase in those indicating they would spend less.  Overall, Nielsen is projecting that holiday sales will rise 0.03 percent this year, accounting for $90 billion in dollar sales.

“Given everything the consumer has absorbed over the past 12 to 18 months, the fact that we expect this coming holiday season to be flat in dollars can be viewed as a modest positive,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “Americans have undergone a fundamental change in how they spend their money, and the days of stretching finances to make purchases not deemed as necessary are over, at least for the time being.  That said, our research has shown that consumers are looking forward to loosening their purse strings a bit, but only once they feel more confident about the state of the economy and their personal financial situation.”

Update: James Russo Discusses Holiday Spending on CNBC

Other key findings from the research include:

• Traditional items such as apparel, toys and technology will be most popular categories, albeit at restrained levels and primarily sold in “value” channels.
• Products aligned with at-home entertainment such as cookware, kitchen items, bed and bath accessories and alcoholic beverages will do well.
• Gift cards are one category where consumers plan to spend more this holiday season, followed by toys and apparel.
• Value retailers such as dollar stores, online, discounters and club stores will attract the lion’s share of holiday spending as consumers minimize trips and search for the best values, while office supply, pet stores, home improvement and drug retailers are likely to feel the brunt of the economic slowdown.
• Some 20 percent of households said that they had no plans whatsoever to entertain at home or away from home during the holidays.
• Spending cut-backs are being driven by all income groups.

So how can retailers make the most of this season? They need to recognize that U.S. consumers are, first and foremost, seeking value and will start their holiday shopping well before Thanksgiving.  They should also reach out to their best customers and make them feel special and give them a reason to shop at their outlet during the season and into 2010.   Successful retailing has always been about delivering the right product at the right price and in the right place.  The difference now is effectively mining and communicating to the right consumer as an active participant in driving growth.

“There are hot spots of a recovery,” commented James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “However, until the labor market stabilizes and returns to growth in the U.S, spending will continue to be restrained.”

Nielsen Economic Current Key Indicators
Country	Trend	Jun-09	Jul-09
Brazil		2	2
Canada		3	3
China		2	2
France		3	3
Germany		3	3
Hong Kong		2	2
India		1	1
Italy		3	4
Spain		3	3
Taiwan		4	3
United Kingdom		2	2
United States		3	3
Source: The Nielsen Company 1=Very Strong Growth >/= +5%; 2 = Growth between +1 and +4%; 3 =Neutral Between -1 and +1%; 4 =Negative between -1 and -4%; 5 = Very Negative

As expected, the strongest growth continues to come from the emerging economies of Brazil, China, Hong Kong and India – although all remained unchanged from the previous month. While Taiwan is the only country that showed a measurable gain this month, it essentially remained flat as it was the only country that declined last month. Of note in Brazil, interest rates and unemployment rates are falling with the expansion of industrial activity, and there are signs of recovery in food product categories and non-basic product categories. In Hong Kong, previous growth in household categories due to the H1N1 “swine flu” virus has been slowing, but baby products continue to be the most lucrative category demonstrating the fastest growth.

In North America, Canada continues to outpace the U.S. as evidenced by gains in dollar sales and promotional activity, while in the U.S., frequency of shopper trips and transaction size continued to slow despite aggressive price reductions as consumers remained cautious about the outlook.

Western Europe also remains mired in a prolonged period of sluggishness. However, promotional activity appears to be having a positive effect on sales with the exception of Italy, the only country showing a significant decline this month, where coincidentally, promotional activity also dropped. France saw continued growth in value channels, while unit and dollar sales in Germany remained moderate, and in the UK, there was improvement in volume sales and premium store brands.

Download the latest Nielsen Economic Current.

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.

Watch the presentation [29 minutes]

 The freefall of the economy may be coming to an end, but new rules are in play:

• There has been a fundamental shift in consumer spending patterns, as restraint has become the new mantra. Over the next 18 months to two years, consumers will make critical decisions about discretionary spending, saving, or paying down debt, which will have long-term bottom line implications.
• Increased consolidation has meant a shift from an emphasis on pricing and assortment of retailers to a merchandising advantage based on value, branding and store equity.
• Brand offers that are strong — whether store brands or national/manufacturer brands — win at the expense of secondary, under-invested brands.
• But this is not a zero-sum game.  When strong manufacturer brands meet strong retail brands, and the focus is on the consumer, this strategy always wins.   
• To engage the new consumer, players need to reach across three screens: TV, online and mobile. Ads across multiple media win consistently against ads in a single medium.
• Social networks belong in the marketers’ playbook: Consumers trust recommendations from friends far more than any form of engagement. “What you learn and how you interact with this digitally powered consumer is truly an amazing phenomenon,” Calhoun concluded. “All of us have to embrace it in ways we never conceived before.”

“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.

The economic downturn continues to put stress on consumers, resulting in accelerating changes in basic purchasing patterns. An important part of the overall equation for consumers is the relationship between price and value. As consumers develop new value systems, how should manufacturers and retailers view and manage the other side of the equation-price?

If your business models and pricing strategies pre-date recent changes in the economy and consumer behavior, you could be headed for trouble. Perhaps now more than ever, pricing can serve as marketing’s most powerful lever to drive performance. We all realize we’re dealing with unprecedented circumstances, and need to act, but what are the guiding principles for successful price planning? These Six Keys for Successful Price Planning provide a roadmap for marketers to navigate through our new pricing environment.

Download the complete Price Planning whitepaper.