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.

“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.

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.

“Although consumers are still not shopping as frequently, we are seeing a turnaround in spending as shoppers spend more money per trip,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company. “There continues to be the emergence of optimism worldwide, and this upward trend in spending across four leading economies is further evidence that the ‘green shoots’ of economic recovery are finally breaking through. We expect to see even more forward momentum as we look to the second half of 2009.”

Noteworthy Trends

• Scores of six out of 10 GDP countries remained flat from the previous month and no country declined for the first time in four months, hopeful signs that the global economy is stabilizing as consumer confidence cautiously begins to turn up.
• The United States’ score saw a strong rebound from declines in March, up to a 2 (growth of 1% to 4%) from a 5 (as much as 4% decline). The lift is further evidence that the U.S. consumer market may have bottomed out and we will start to see modest gains in spending going forward. (Seasonality is partially a factor due to Easter falling in March last year and April this year.) While consumers are spending more money per shopping trip, they are still shopping cautiously, shifting to value channels like Target and Costco, and to private label store brands.
• India held steady, while China strengthened its score considerably, moving to a 1 (up to 5% growth) from a 3 (flat growth), a result of a massive stimulus and strong dollar and unit sales growth. This is a particularly hopeful sign given that China and India are best positioned, as the world’s leading economies, to be the leaders in a global recovery, based on export and domestic goods demand.
• Canada continued to show moderate levels of consumer spending growth, with a score of 1 (up to 5%), up from 2 (growth of 1% to 4%). Data this month shows that Canadian shoppers are spending more money per trip, possibly a result of retailers running more promotional sales to entice shoppers to stock up on goods.
• Western Europe remains in a neutral position, not showing significant fluctuations in consumer activity. Despite rising unemployment, the vast majority of consumers have regular income, which means that many are saving more.

Download the latest Nielsen Economic Current.

Download the Nielsen Economic Current media release.

“Global consumer spending is still moderate from last month and confidence in the economy remains low,” said James Russo, Vice President Global Consumer Insights for The Nielsen Company. “While there is growing optimism worldwide in an economic recovery, U.S. and China consumers remain the most cautious as they continue to shift towards purchasing store brands and cut back on discretionary spending, such as entertainment outside of the home and other personal luxury items.”

Nielsen’s scorecard ranks national economic performance on a scale of 1 to 5, with 1 representing very strong growth (over 5%).

According to this month’s scorecard, seven out of 10 GDP countries remained flat from the previous month. India continues to be the only country that scored a 1 in March 2009, while Canada once again scored a 2 (growth between 1% and 4%). Spain jumped from a 5 to a 3 as consumers spent more per trip and shopped more frequently than in February. China slipped from a 1 to a 3, while the U.S. dropped from a 4 to a 5, the only country to rank as a 5.

Download Nielsen’s latest 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.

Todd Hale, James Russo, Jonathan Banks and Jean-Jacques Vandenheede, The Nielsen Company

SUMMARY: Are consumers shopping more often? Spending less? Buying more store brands? Shifting channels? How are retailers responding? The Nielsen Economic Current tracks trends in 11 linchpin countries, indexes financial health and predicts growth trends on critical measures including GDP, consumer spending, inflation, market value and volume indices.

According to the Nielsen Economic Current (NEC), we can expect a global slowdown in 2009 gross domestic product to a lackluster 0.4%, with significant declines in North America and Western Europe. Post-recovery, NEC predicts that an ailing economy will recuperate below potential, only to plateau at a level below past rebounds. Fortunately, the fast-moving consumer packaged goods industry is holding its own, with price increases offsetting negative volume trends and private label benefiting from frugal shoppers.

The monthly Nielsen Economic Current provides global, regional and country-focused insights into consumer and retail trends around the world, including topics such as: market index volume expressed in units and country currency; retail channel shifting; shopping frequency and spending; and overall consumer confidence. NEC leverages the vast Nielsen warehouse of global data about tens of thousands of products bought by consumers in almost every nation on earth. The NEC was developed in partnership with UBS, one of the worlds leading financial firms.

The influential eleven

To construct this current economic overview, Nielsen tapped into its unparalleled database of consumer packaged goods transactions across relevant channels and added data from a carefully selected set of eleven bellwether countries whose economies serve as leading indicators of economic trends: United States, Canada, France, Germany, United Kingdom, Italy, Spain, Brazil, Russia, India and China.

A proprietary global economic index ranked by country for each category facilitates growth comparisons and enables managers to shift office conversations from gloom and doom scenarios to opportunity identification based on consumer confidence measures and shopping patterns.

Global umbrella

At the most macro level, the December 2008 NEC Global Top-Line summary noted a slowdown in global unit sales as the recessionary impact intensified. Conversely, dollar sales growth proved more resilient, in excess of 5%, as commodity prices drove value sales. Inflation levels are expected to continue to fall, with deflation now becoming another concern in some countries.

Thrifty consumers around the world are stocking up on store brands to stretch available funds. Another indicator of penny-pinching behavior is the continued shift toward value channels that reliably deliver savings. Despite the consumer hunger for bargains, most retailers have not dialed-up in-store promotions in response to this demonstrated need.

Perhaps prompted by higher than average gas prices, shoppers are bundling trips and shopping less frequently than in the past. While the number of trips may be dwindling, the register rings are increasing, although the ticket size is beginning to show some signs of weakness.

Overall, the Nielsen Global Consumer Confidence ranking is very negative, plummeting to recessionary levels and expected to remain in the cellar for the near future. Only 9/52 (3/11) countries record a positive confidence index whilst  44/52 (9/11) scored lower in October than in April.

Cross comparisons
On a country-by-country comparative basis, the news varies widely. On the Nielsen Market Index/Volume, a measure of unit sales changes, four countries reported negative results in the -1% to -4% range (United States, Canada, France, Italy), five countries recorded virtually no change (Germany, United Kingdom, Spain, Brazil, Russia), and two countries outperformed their peers with better than 5% growth (India, China).

Shifting the view from volume to value or currency, the results were much more positive, with nine of 11 countries experiencing growth, five countries exceeding 5% and four countries in the 1% to 4% range. Only Germany and Brazil ended up with no-growth scenarios.

Regional insights
Aggregating from individual countries to regions, the NEC summarizes findings into two helpful categories: what you need to know, and what to do now that you know it. The BRIC ( Brazil, Russia, India and China) regional summary for December notes that Brazil is an outlier in the group with low volume growth and low inflation, where consumer confidence is on the rise from a low baseline.

Conversely, India’s results indicate waning consumer confidence dropping from a high baseline, perhaps associated with an inflationary trend that peaked at 13% in August. Anticipated GDP growth will be modest for the region, with the exception of China and India, which could see increases in the 6% range.

Management directives
Against that background, the NEC suggests that marketers plan for the long term by investing to shore up brand and banner equity and spending to gain a deeper understanding of consumer motivation. Given ever-tightening budget constraints, the need for efficient, precisely targeted marketing becomes even more pronounced.

A bold move that can pay dividends under these market conditions would be to launch new products with a demonstrated ability to meet a consumer need, deliver on the concept promise and enter the market with appropriate marketing support. It’s a chance to grab share of mind and wallet while competitors sit on the sidelines.

• Market Index volume, in terms of unit and country currency change
• Retail channel shifting
• Shopping frequency and spending trends
• Overall consumer confidence

“Nielsen collects and analyzes data on tens of thousands of products around the world. As we were thinking of new ways to leverage this valuable resource, we thought it would be useful to summarize this information and create a monthly snapshot of consumer and retail trends across the globe. We expect that the Nielsen Economic Current will provide our clients and others with another valuable tool for evaluating these trends at both a macro- and microeconomic level,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen.

In addition to global and regional components, the Economic Current will follow trends in eleven countries representing over 70 percent of Global GDP.  Countries were chosen based on their importance to the overall global economy as well as countries where Nielsen captures a broad set of consumer, retail and media content. The countries which the Economic Current will track on an individual basis are:

• United States
• Canada
• France
• Germany
• United Kingdom
• Italy
• Spain
• Brazil
• Russia
• India
• China

Over the course of the next week, Nielsen Wire will feature brief summaries on key sections of the latest edition of the Economic Current. In the months ahead, new editions of the Economic Current will be supplemented with podcasts by senior executives and analysts who will provide further insight on global consumer trends.

For the complete report, click here.