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.

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.

“These numbers confirm the acceptance and attractiveness of mail order. Indeed, one in two German respondents in the Nielsen European OTC survey said they had ordered medicines over the Internet in 2008,” said Bernd Wilhelm, Director of Pharma & Healthcare at Nielsen in Frankfurt.

“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.

Consumers in the Asia-Pacific region, for example, are more inclined to save than to splurge if they have spare money, while Russian consumers pump their extra cash into expanding their wardrobe, according to Nielsen.

Meanwhile, people in Nordic countries continue to spend money on travel and vacations, while Brazilians are happy to stay home.

Discretionary income has also become increasingly scarce in countries throughout Europe and North America, according to Nielsen.  One-fifth of those surveyed by Nielsen in Britain, Germany, and France — and a quarter of Americans — have eliminated spending money for pleasure, The Economist noted.

Still, some small luxuries have remained immune to the economic gloom: 80% of Americans are continuing to shell out $10-$12 per ticket to catch movies on the big screen, Nielsen found.

Mobile users who own multiple SIM cards are likely to spend more money on their mobile service, the findings also show. 

A French consumer who owns 3 SIM cards, for example, will spend 28% more, on average, than a consumer with a single SIM card.  Elsewhere in Europe, the numbers are even higher: +51% in Italy, +52% in the UK, +79% in Spain, and + 89% in Germany.

“The additional revenue brought to the operators by consumers who own multiple SIMs is significant,” Jean Littolff,  Director, Europe, Nielsen Mobile noted. “The more SIM cards you own, the more money you spend.”

Nielsen’s report is based on a quarterly survey of 42,000 European customers.

View the full press release.