“While Europe’s challenging economic conditions in the second half of 2011 bought renewed vulnerability and fragility to consumers and financial markets globally, some of the most positive news last quarter came from the world’s two largest economies—the U.S. and China—where confidence rebounded to Q1 2011 levels,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “Buoyant domestic consumption also maintained confidence levels in the large emerging economies of India, Indonesia and Brazil. However, slowing GDP growth within emerging economies and inflationary pressures would suggest some degree of caution for the year ahead.”

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 Internet consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Personal finances are improved, but spending is still restrained

More than half (52%) of global online consumers described their personal finances for 2012 as excellent/good, up from 50 percent in Q3 2011, but 65 percent indicated it is not a good time to buy, up one percent from the previous quarter.

“Overall, consumer discretionary spending will remain restrained and cautious in the first half of 2012,” said Dr. Bala. “Despite consumers becoming more confident about their personal finances for the year ahead, there is still a reluctance to spend, especially in the West; rising tensions in the Middle East and their impact on gasoline prices could further compound global consumer concerns and spending plans,” added Dr. Bala.

Consumer concern for the economy increased as a top fear among 18 percent of global respondents—an increase of six points from last quarter, which resulted in nearly two-thirds (64%) of consumers around the world indicating they believe they are in a recession, up from 62 percent last quarter. A growing number of online respondents in Asia Pacific (53%), Europe (74%), Middle East/Africa (74%) and Latin America (47%) indicated they believe they are in a recession. And while 86 percent of North Americans feel they are in a recession, it was the only region to report an improvement from 88 percent in third quarter.

• For more detail and insight, download Nielsen’s Q4 2011 Consumer Confidence report.

Thirteen of the 21 countries have seen volumes decreasing with only Belgium, Norway and Turkey posting healthy volume growths. Growth is still generated in the main by price inflation: UK, Finland, Hungary, Denmark, Portugal, Sweden, Czech Republic and Italy completely rely on price to produce any growth.

For more country-by-country insight and a look at consumer confidence, download Nielsen’s European Growth Reporter Q3 2011.

The growth rates of disposable resources in rural Russia are impressive. Even considering inflation rates of 8.8 percent (both in 2009 and 2010), real disposable resources of rural households grew by about 10 percent since 2008. Rural Russia is transforming. And this has awakened the interest of marketers looking for expansion opportunities.

Signs of Growth
If the maturity of telecommunication infrastructure is one of the key growth indicators for market development today, Russia’s rising Internet and mobile phone penetration rates show positive signs. Since 2009, the number of Internet users in Russia increased 30 percent, according to the International Telecommunications Union.

And while the highest Internet penetration of users is still found in urban Russia, development of Internet usage in rural Russia is growing rapidly. Growth rates in rural households are almost twice as high as in urban homes, which can be attributed to the recent deep transformations in rural Russia.

A Changing Retail Landscape

Retail infrastructure in rural and urban Russia differs considerably—an important factor when considering marketing and distribution strategies. There are almost twice as many retail outlets in urban Russia than there are in rural regions. And while the majority of retail stores in rural Russia are introduced as minimarkets and food stores of traditional trade, an interesting dynamic is emerging as growth rates of modern trade formats in rural Russia are high and they sometimes even surpass modern trade development in urban Russia.

In 2011, two of the biggest retail chains announced plans for further expansion in small communities. Expanding the modern trade universe in rural Russia will offer tremendous potential for FMCG-businesses to establish positions in the rural market.

And while the establishment of a strong market position in the rural landscape can be challenging due to logistical distribution difficulties, rural Russia is not an isolated part of the market. Market concentration levels in rural Russia, as well as the main market players for the majority of categories analyzed by Nielsen, are generally similar to the urban market, indicating that rural Russia is aligned with—not separate from—urban Russia.

The Battle for Shelf Space
Most retail outlets in rural areas are traditional stores and the sales area is typically limited, which makes the distribution of goods a battle for shelf space. To succeed, a deeper understanding of rural consumer demand is necessary.

Given the restricted shelf space in rural Russia, an increase in the number of brands and SKUs in retail outlets is limited. Increasing share in rural areas is mainly possible through product range streamlining and replacing brands and SKUs with new ones that are in higher demand. It is becoming increasingly important to better understand how rural and urban consumer choice differs. A comparison of the top 10 SKUs in urban and rural Russia suggests at first glance that consumer choice does not differ much.

On average seven out of the top 10 SKUs are the same in rural and urban Russia. However, the penetration of brand leaders in the urban market is significantly lower in rural Russia. This disparity between the demand of rural consumers and the supply of rural Russia generates a potential for those manufacturers who are able to enter the market with the product range that can satisfy the unmet demand of rural consumers.

“Fair” Price
As the average disposable resources of rural households per household member are only about 60 percent of those in urban households, rural consumers are price sensitive. However, a shopper in a rural store actually pays from one to 11 percent more than they would in an urban store. More challenges for direct distribution, a longer supply chain and higher transportation costs drive prices up in rural stores.

First-in Advantages
In the days of high competition, being proactive is one of the main secrets to success. The first to seize new opportunities will likely also be the first to profit the most. Rural Russia is no doubt a challenging market to satisfy, but it is also big and changing. And change always offers new opportunities to those who can see the latent and emerging demand and are proactive enough to satisfy it first.

With the face of the United States changing, the attitudes and behaviors of women from all backgrounds is increasingly important. Hispanics are now the fastest growing ethnic group, a trend that has tremendous ramifications on media, retail and manufacturers now and in the years ahead. Optimism was highest among African American and Hispanic women, especially when it came to how they viewed the opportunities they have had compared with those of their mothers.

The optimism does not stop with the women of today: they are extremely positive about the outlook for the women of tomorrow – their daughters – and expect them to have more opportunities available to them than they themselves have now.

Media and Mobile
Despite the stereotype that men are the primary users of media and technology, American women are heavy users of technology – even if they aren’t early adopters. Women of all ethnicities use media in similar ways, with one key exception: smartphones. Just 33 percent of Caucasian women have a smartphone in their household, compared to penetration rates in the 60s for women of other ethnicities.

For more insights, download Women of Tomorrow: U.S. Multicultural Insights.

On the flip side, when budgets are reduced by 10 percent, discretionary spend—especially in the areas of ‘apparel’ (-21%) and dining out’ (-18%)—are reduced. Consumers also indicated a spending cut back on ‘electronics and appliances’ (-14%). “If the global economic climate worsens, these three sectors appear to be particularly vulnerable,” continued Dr. Bala.

In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10 percent. “The asymmetry with expansion suggests that while respondents would like to preserve or add to their savings and investments, they also recognize that they may be bumping up against harder economic realities,” said Dr. Bala.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.

“Third quarter was volatile and challenging for global economies and financial markets amid stagnant U.S. unemployment figures and a worsening euro zone debt crisis,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “A recessionary mindset is growing among consumers as more than half say they are currently in a recession—up four percentage points from last quarter and seven points from the start of the year. The result is continued spending restraint for discretionary expenses, which is expected to continue into the next year.”

The survey tracks consumer confidence, major concerns and spending intentions among consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. U.S. consumer confidence dropped one point to an index of 77. Consumer confidence also fell by one point last quarter in China from 105 to 104 and one point in Germany, Europe’s largest economy.

Economic and job security concerns mount
In the latest round of the survey, conducted between August 30 and September 16, 2011, the economy re-emerged as the top concern among 18 percent of online consumers around the globe. The economy last topped concerns in Q4 2010, before it was replaced by worries over increasing food prices in the first half of this year. Job security follows close behind for 14 percent of consumers, rising five percentage points from three months ago. Managing a work/life balance, increasing food prices and concerns about health round out the top five most stressful issues for respondents.

“Driven by a stalled job market and uncertainty about the future course of the global economy, concerns over job security and other economic risks rise to new heights in the third quarter in many parts of the world,” said Dr. Bala. In North America, one-in-three are concerned about the economy—up seven points from second quarter and more than one-in-10 (12%) are worried about job security—an increase of five points from three months ago.

In Latin America, concerns over job security (15%) and crime (12%) took a slight edge over the economy (11%). In Middle East/Africa, while job security retained the top spot in this region, the quarter-on-quarter increase is noteworthy—jumping nine points to 20 percent up from 11 percent in second quarter. In Asia Pacific, the economy (18%) and job security (15%) rose eight and seven points, respectively.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.

Australia’s resilience in the midst of global economic uncertainty is envied by many of the world’s developed nations. Nonetheless, Australian consumers are increasingly apprehensive about the impact of the world financial situation on their own economy and personal finances. With consumer confidence sliding in the most recent quarter to its lowest level since the global financial crisis of 2009 to an interim index of 97 in August, shoppers are changing the way they spend their money, what they spend it on and where they make their purchases.

The legacy of the global financial crisis has provided many lessons for Australian consumers, and the change in consumer shopping behavior is shaping a rapidly evolving retail landscape.

State of the Nation
Australia is one of the few countries that emerged from the 2008-2009 recession relatively unscathed. With nearly full employment, one might expect Australian consumers to be confident in comparison to other nations. But there are a number of factors darkening Australians’ outlook: some analysts expect higher unemployment, which increased in July. In that same month, inflation went up 0.3 percent to 3.6 percent, causing the prices of basic necessities to increase. Likewise, utility rates are higher, there is uncertainty about the carbon tax and its likely effects on the average household, and massive market fluctuations caused by economic jitters in the U.S. and Europe have made investors nervous. Finally, natural disasters in neighboring New Zealand and Japan have taken their toll. These factors have Australian consumers acting with an almost recessionary mindset, exhibited by a renewed desire to save for the long term and to cut household budgets.

These conditions have resulted in a number of new shopping trends:

• The average number of store visits is down (with the exception of online visits) and shoppers may visit four or more stores to fill their shopping needs in search of discounts.
• Shoppers are increasingly looking for value, and the major supermarkets are attracting more and more shoppers with promotions, at the expense of convenience stores, independent supermarkets and specialty outlets.
• Shoppers are buying more private label goods.

What’s a retailer to do?

Private label is one area where retailers can differentiate themselves. Nearly two-thirds (64%) of Australian households already think that private label products are as good as name brands, and the overall spend on private label goods accounts for nearly a quarter (24.6%) of the total money spent at grocery stores in the most recent quarter—up from 23.1 percent in the same period a year ago. This growth has been driven by lower prices and improved, consistent quality, resulting in volume growth from all shopper demographic groups.

Nielsen’s latest Retail Barometer survey indicates that the success of a retailer in volatile economic periods is not just measured on the best product and price offerings, but the extent to which retailers can leverage their existing trading relationships with suppliers, and how well they can execute their strategies in driving efficiencies and balancing promotions, leading to increased footfall and profits.

Despite a constantly shifting retail landscape, one thing is certain: retailers and suppliers must adapt to the changing habits of Australian shoppers who are becoming increasingly skittish about their country’s economy. According to Nielsen’s latest quarterly global consumer confidence survey, Aussies have indicated that even when economic conditions do improve they will continue to be frugal. This means that getting the right value proposition is of paramount importance – those retailers and suppliers that understand how consumers are feeling and adjust their strategies accordingly should be well positioned to capitalize on these trends.

Nielsen recently released a comprehensive study about the spending and media habits of women across 21 developed and emerging countries. At the Nielsen Consumer 360 conference in Frankfurt Germany, new findings about the women of Germany were revealed.

Plateau of Hope
While the majority of German women believe they have more opportunities than their mothers did, there is plateau of hope when it comes to expectations for their daughter’s future. Less than one-third of German women believe their daughters will have more opportunities to travel (29%), to buy the things they want (32%) and need (30%), to define their career (38%), or to pay off debt (20%).

Spending Patterns
One in three (31%) German women expect they will achieve positive income growth over the next five years. This is more than in France where only one in four women believes the same, but less than the average of women across other developed countries (55%). “However, German women long for things that allow for ‘me time’; that create comfort in their lives,” explains Sarah Auer. “To fulfill their need states, women need breathing space amidst the different roles they fulfill throughout their lives.” German women would therefore spend any income gain primarily on holidays (70%), clothes (59%), food (52%) and savings (47%). Only one in five (22%) said they would spend extra money on their children’s education.

These percentages contrast sharply with women across other developed countries – especially when it comes to holiday spending: 58 percent of developed women agreed that they would spend additional income on holidays, but 53 percent would instead buy clothes and 55 percent would save the money.

“Less than 10 percent of all food purchase decisions are decided by men,” explains Sarah Auer from Nielsen. “The point is the ‘feminization of money’, with women of today and tomorrow ready to exert their economic power – and not only in traditional areas of female spending.” German women exert more control over spending in typically male-dominated industries when compared to the global average for other developed women. Seventeen percent of German women make decisions on personal electronics spending – double the average among women in other developed counties (9%) – 14 percent on cars and home electronics (compared with 6% and 9% respectively), 19 percent on insurance (compared with 13%) and 22 percent on family finances (compared with 15%).

What Women Trust
By far, German women trust recommendations from people they know (72%) more than any other source of information. Consumer opinions posted online (55%) and editorial content such as newspaper articles (38%) round out the top three most trustworthy sources, which is consistent with the average for other developed women around the world. German women are more reticent to trust text ads on mobile phones (42%), ads on mobile devices (38%) and ads on social networks (36%), which is also in sync with the global average.

Advertisers, however, who offer real value exchange above and beyond traditional sell-to messaging, can generate exceptions. Here the key is to understand womens’ different needs, tailor messaging and where necessary adapt strategies to appeal to this discerning and highly influential population segment.

When it comes to the most important attributes when deciding what stores to shop in, German women place “good value” highest when shopping for items across all industry sectors: food, beverages, apparel, home/personal electronics Rx and cars.

Across Generations, Women are Connected
From daughters to mothers to grandmothers, women around the world are connected in many ways when it comes to shopping decisions and entertainment choices. However, there are also some unique differences that marketers need to be aware of when communicating with them. Women make more use of the telephone and send more text messages than men, also using the Internet more intensively with longer spent per web page. While younger generations are typically more impulsive and heavy media users, older generations are frequently the most habitual relying more on recommendation for purchasing decisions. As technology usage continues to expand and become more accessible, the generation gap is closing.

To read more about women of tomorrow around the world, download the full report, Women of Tomorrow.

While South Africans were the most pessimistic in Nielsen’s Middle East, Africa and Pakistan region, the decline in confidence was hardly unique. Global online confidence declined for the first time in six quarters as economic recovery hit a stumbling block and recessionary jitters again reverberated around the world. Consumer confidence in the U.S. fell to its lowest level on record in the second quarter

Roughly two-thirds (66%) of South African survey respondents said that they believed that their country was in a recession. They are also no longer as upbeat about their job prospects; with half believing that employment opportunities were not good – a 3 percent rise from the same period a year ago. Almost half (46%) felt negatively about the state of their personal finances, a 2 point rise from Q1, and 83 percent said that they had adjusted their spending habits to save on household expenses, an 18 percent increase from the previous quarter. Almost a quarter (24%) said they have no spare cash.

The major concerns for South Africans in Q2 2011 are no different from the previous two quarters: increasing food and fuel prices, rising cost of utility bills, job security, debt, the economy and crime. “Rising food prices are taking its toll on consumers worldwide as more and more households are spending a higher proportion of their disposable income to put food on the table, and South Africa is not exempt from this trend,” said Diane Johnstone, Managing Director, Nielsen Southern Africa. “South Africans may have weathered the worst of the storm, but the frugal behavior prevalent in 2010 will continue into 2011 as headwinds to growth persist. As disposable income continues to shrink, consumers are constantly re-adjusting their spending patterns to save on household expenses by cutting-back on non-essential, luxury items and activities.

Retail Landscape
The retail sector was affected by these changing consumer patterns, posting slowing growth in 2010 with majors outgrowing non-majors. Overall sales of fast-moving consumer goods (FMCG) grew 3.3 percent in 2010 compared to last year. By contrast, growth in 2009 was up 14.6 percent from 2008. Price increases accounted for about half of the growth in 2010 compared to almost 82 percent in 2009.

Inflation has been on the rise since the start of the 2010, but while many countries are experiencing skyrocketing prices for basic goods, South Africa has seen some deflation among several staples categories such as rice, corn meal, flour, margarine and tuna. All of this is good news for consumers, who are highly price-driven. Meanwhile, prices for fresh milk, ready-to-eat meals, instant coffee, carbonated soft drinks and sugar all rose. Nonetheless, retailers are increasingly optimistic that volume growth will be promising in 2011.

So where are consumers spending their money if not on food? A review of consumer spending trends over the period 2000 to 2010 shows that of discretionary disposable income, the average consumer spent three percent more on out-of-home entertainment (from 35% in 2000 to 38% in 2010). Meanwhile, communications, which encompasses cellphones, Internet and cable/satellite TV, almost doubled during the decade, from 11 percent of spending in 2000 to 21 percent in 2010.

Modern trade has continued to expand, and now accounts for more than 62 percent of all FMCG trade in South Africa. Nielsen has noted a consistent annual shift of one to two percent of trade moving from traditional channels to modern trade. Branded retailers, such as Shoprite and Pick n Pay, continued to grow at the expense of smaller, independent retailers, which are also being squeezed by wholesalers. Shoppers at branded outlets not only visit them more, but also spend more per trip. Nonetheless,independent retailers continue to have the highest level of market penetration.

While most categories saw overall value and volume declines in the first quarter compared to a year ago, one category stood out for growth on both measures: dry groceries. Comparing trends from Q1 2010 to Q1 2011 tells a slightly different story, however, with several categories (toiletries, dry groceries, perishables and household goods) recording solid growth in both value and volume. Key gainers over the past year include ready-to-eat meals, canned pilchards, instant coffee and toilet tissue. Much of the growth was driven from middle income consumers.

South African retail brands, or private label, currently make up about 11 percent of the market (excluding fresh food), the highest among developing markets, but still below developed markets. Overall share has remained stable, but value-oriented South Africans have taken to retail brands in a number of categories including chicken (38% of category) and dishwashing liquid (36% of category). Most notably, consumers from the higher income levels have turned to retail brands with some enthusiasm, and 60 percent of the retail brand market value comes from these shoppers. Nevertheless, there remains room for significant growth with middle income consumers, provided retailers know what drives the performance of private label brands.

Aside from brick-and-mortar shops, online commerce has taken off in South Africa. Fully 71 percent of the six million Internet users in the country are online shoppers.

Challenges for Retailers
Promotions are a boon to budget-conscious consumers, but present a number of challenges for retailers to overcome. For instance, reaching the consumer is difficult, particularly in a country as diverse as South Africa, where profiles can vary by a few kilometers. National retailers need to manage overall shopper engagement while remaining locally relevant and focused. Meanwhile, competition in the food category is intense, as grocers – branded and independent – are fighting for a larger share of sales. Ready-to-eat meals and in-store solutions are gaining popularity, while liquor, pharmacy, food courts and hardware all continue to grow at a faster pace than the center store.

After a year of solid economic growth, Filipino consumers entered 2011 on a high note: GDP in 2010 grew at the fastest rate in 34 years, unemployment declined and inflation rates were under control. But that optimism was dampened by higher prices for fuel and food during the first quarter of the year. While consumer sentiment has started looking up again, consumers in the country are likely to take a closer look at how they spend their money.

With 85 percent of the Philippines’ households falling into the lower income bracket, rising costs for life’s basic necessities have hit hard. Meanwhile, external shocks such as the natural disasters in Japan also dented consumer confidence at the beginning of the year. Despite these concerns, Filipino consumers continued to spend, with sales of fast-moving consumer goods (FMCGs) posting a nine percent increase during the first two months of 2011 compared to the same period last year. While this growth is tempered compared to 2010, these figures are good news for the country as private consumption accounts for 70-80 percent of GDP.

Three Trends Driving Purchasing Behavior

Three emerging trends are playing a role in driving category growth:

• Consumers are gravitating toward “healthy” products
  Filipinos are increasingly trying to stay healthy. As part of this trend they are consuming products that are perceived to be good for you. Products perceived to be healthy are seeing sales grow because they have successfully created “need” states that help protect against such conditions as colon cancer or osteoporosis. High-quality, healthy products will appeal to a clear segment of the market.

• Sachets equal success
  With consumers increasingly focused on value, some FMCG makers have taken to packaging their products in low unit packs and sachets that require a lower cash outlay. The success of powdered beverages and fabric conditioners packaged in such sizes are testament to the popularity of products in sachet-sizes. Innovations in sachets such as multi-chamber sachets and upsized versions are likely to continue to drive the market as these enable cash-strapped consumers to continue enjoying their favorite brands at lower price points. Manufacturers should take caution, though, as offering sachets and low unit packs may result in a “downsize” in the value of the transactions. Manufacturers must also remember that consumers still expect the product to deliver on its brand promise, even at lower price points.

• Convenience is king: Workers, particularly those in the business process outsourcing industry in Philippines, can work odd hours and often have very little time to rest. As a result, ready-to-drink, all-in-one and multi-benefit products that are “instant” and “quick” continue to stir the market. All-in-one products make cooking easier for the time-stressed homemaker and these products have enjoyed solid growth. The strong sales of microwave and instant meals, as well as ready to eat/drink products, are also indications that the convenience trend is here to stay.

The Philippines continues to be a solid market for growth, although the path to success in 2011 may be slightly rockier as consumers take a closer look at where and how they spend their Pesos. Increasingly, marketers with a keen pulse on the evolving needs and innovations that deliver relevant benefits will increase their chances of success.