“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.

Consumers in Asia Pacific were generally more optimistic about their job prospects and outlook on the economy compared with their counterparts elsewhere in the world. Despite this confidence, they are becoming more cautious and value-conscious when it comes to spending.

“The good news is that consumers in Asia Pacific are still spending even though they are more cautious in the face of inflationary pressures. Accordingly, we see more value-seeking behavior as consumers look to stretch their money, particularly when it comes to paying for household essentials,” said Karthik Rao, Managing Director, Consumer Research and Innovation for Nielsen in Asia Pacific, Middle East and Africa.

More value-conscious consumers
“With inflation already on the rise in most parts of Asia Pacific, consumers will naturally look to alternatives for both essentials and discretionary spending, and this trend presents opportunities for retailers and manufacturers alike,” added Rao.

In Q4 2010, 79 percent of consumers surveyed in Asia Pacific said they saved on household expenses by changing spending habits (up from 61% quarter-on-quarter). The top three areas targeted were out-of-home entertainment, new clothes and utility bills.

Consumers also appeared to be slightly more cautious when it comes to spending, with 34 percent indicating that the next twelve months would be an excellent or good time to buy the things they want and need (down from 38% quarter-on-quarter).

Saving remains a top priority for those with spare cash in Asia Pacific
After paying for essential living expenses, Asia Pacific consumers are the least cash-strapped in the world. While the number of consumers with no spare cash grew in most parts of the world during the fourth quarter (currently 31% in North America, 20% in Europe and 15% in Latin America), there was no change in Asia Pacific, where just 5 percent or respondents said they had no spare cash.

Putting aside spare cash for savings remains the top priority for Asia Pacific consumers (59% indicated they would do so). After savings, Asia Pacific consumers are most likely to spend spare cash on holidays/vacations (40% from 41% in Q3 2010), new clothes (38% vs. 40% in Q3 2010), investing in stocks and mutual funds (38% vs. 37% in Q3 2010) and out-of-home entertainment (37% vs. 39% in Q3 2010).

“Although the proportion of consumers who put spare cash into savings has declined slightly, the high levels of savers in Asia is an indication that consumers in the region are still generally cautious when it comes to spending their cash,” Rao said.

Consumers in Asia Pacific more upbeat about economic recovery and job prospects
Reflecting uncertainties about inflation in the region as well as the continuing global concerns about unemployment and the economic recovery, consumers in Asia Pacific turned slightly less optimistic about the economy and their job prospects. Compared to consumers in North America and Europe, however, they were much more upbeat.

• Fewer than half (41%) of consumers in Asia Pacific believe their countries are still in recession compared to 84 percent  in North America and 69 percent in Europe. When it comes to the next twelve months, Asia Pacific consumers’ outlook is not much different than their peers in North America and Europe: 47 percent of Asia Pacific consumers believe the recession will last for another year (up from 42% in Q3 2010), while 54 percent North America and 56 percent Europe believe the same.
• More than half (55%) of Asia Pacific consumers believe that their job prospects in the next twelve months would be excellent or good. Consumers in North America and Europe are far less optimistic – only 29 percent and 28 percent respectively were as positive.

To compile its quarterly consumer confidence index, Nielsen polled approximately 29,000 consumers (more than 10,000 in Asia Pacific) in 52 countries about their outlook on jobs, the economy and readiness to spend.

“Global consumers ended 2010 more pessimistic than at the start of last year. As the immediate economic and financial reality remained fragile and with the lack of positive indicators throughout 2010 consumers were given a harsh reality check that full recovery is still a long way off,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of The Nielsen Company. “The lingering impact of the great recession is further evidence of a new normal.”

The Nielsen Global Consumer Confidence Index at the end of 2010 remained unchanged from the previous quarter at 90 and finished the year two index points below the start of the year. Global consumer confidence in 2010 peaked in Q2 at 93 index points. Latin America was the world’s most optimistic region at 100 points (+6 points year on year), followed by Asia Pacific at 97 points (+6 points year-on-year). North America ended 2010 at 83 index points, (-2 year on year) and Europe was the world’s most pessimistic region at 78 index points (+2 year-on-year).

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Recessionary Woes Live On
“Global consumers – especially in the West, are bracing themselves for another year of flat to sluggish growth in 2011,” said Dr. Bala. “Job creation and employment numbers have fallen below expectation and even though many countries are officially out of recession, many consumers are still living – and expect to continue living – a cautious recessionary lifestyle which is restricting domestic spend and demand. Going forward, rising prices in several emerging markets such as China and India have to potential to dent consumer confidence and spending, especially if their respective governments decide to expand policy actions to combat higher inflation.”

Forty-five percent of North Americans still expect the recession to last for another year, compared with 39 percent of Europeans and 19 percent of Asia Pacific consumers. “The U.S. jobless rate remains at the heart of the issue for Americans,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “While the jobless rate dipped a meager 0.3 points in December to 9.4 percent – its lowest level in 19 months – it has topped nine percent for 20 months straight, which is the longest streak on record.” U.S. Consumer confidence in Q4 2010 held steady from last quarter at 81points, just one index point away from its lowest level on record in first half of 2009.

No Spare Cash
In the last six months of 2010, the number of consumers with no discretionary income rose from 22 percent to 31 percent in North America, from 16 percent to 20 percent in Europe and from 10 percent to 15 percent in Latin America. “Consumers in all regions are feeling the financial squeeze more than any other time during the global recession. In addition to concern for global and national economic issues, consumers are also struggling with rising daily costs such as food, utilities, petrol and transport prices. In Q4 2010, consumers found themselves with less disposable income than at any other time and the number of cash-strapped consumers globally peaked for two consecutive quarters at 14 percent – the highest number on record,” said Russo.

What to Watch
“Consumers have weathered the worst of the storm, but the pragmatic behavior prevalent in 2010 will continue into 2011 as headwinds to growth persist,” said Russo. “Coping strategies will represent a combination of essential and discretionary spending, where the focus will be saving on gas and utilities, reducing spend on grocery, take-out, clothing and entertainment expenses. For emerging countries, consumers are focused more on discretionary strategies, such as reducing phone costs and spending less take away meals. For developed markets, basic and essential strategies like reducing grocery spend will dominate.”

For more, download the complete report: Nielsen Global Consumer Confidence Index.

• Consumer confidence declined in 19 of 53 global markets.
• One in four North Americans and one in five Europeans have no discretionary income.
• Rising food prices are a top concern for one in four Asians.
• Increasing utility prices are Europeans’ biggest concern.
• Recovery is back on track in North-West Europe, while the recessionary mindset lives on in Southern Europe.
• Nine of the top 10 most confident nations hail from the Asia Pacific region.

After an upbeat start to the year with two consecutive quarters of increased optimism, global consumer confidence fell three points in September to an Index of 90, according to the latest edition of the Nielsen Global Consumer Confidence Index.  Consumer Confidence Index levels above and below a baseline of 100 indicate degrees of optimism and pessimism.  The 90 Index mark reflects that consumers around the world are largely pessimistic about job prospects, personal finances and their ability to buy the things they want and need over the next year.

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While positive sentiment drove confidence levels up in the first half of this year, consumer confidence declined in 19 of 53 global markets in the third quarter.

“There simply hasn’t been enough consistent and positive news to sustain the positive outlook and momentum that consumers showed at the start of this year”, said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of The Nielsen Company. “The reversal of global consumer confidence in the third quarter highlights the fragility and uncertainty of the current global economy, its ongoing vulnerability to macroeconomic shocks and, finally, the divergence in the pace of recovery among international markets and regions.”

For many consumers, spending on non-essential goods has become more restrained this year compared to the height of the global recession two years ago. Discretionary income reached an all time low for many consumers in the third quarter, with 27 percent of Americans, 19 percent of Europeans, 17 percent of Middle Easterners/Africans and 16 percent of Latin Americans left with no spare cash after paying essential living expenses.

Nielsen’s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among more than 26,000 Internet users in 53 countries.  In the latest round of the survey conducted between September 3 and September 21, 2010, consumer confidence in most markets showed continued spending restraint.  More than half (56 percent) of global consumers believe they are currently in recession and 48 percent do not believe they will be out of a recession in the next 12 months.

“While slipping back into a full blown global recession is unlikely, in the last few months consumers have accepted that there are no quick fixes to the persistent economic issues of unemployment and government budgetary woes that continue to dampen and constrain economic revival,” said Rick Kash, CEO of The Cambridge Group and co-author of How Companies Win, a new book written with Nielsen CEO David Calhoun. “Tapping into consumers’ need states to understand latent demand has never been more important.”

Rising Concerns

In addition to economic issues, many consumers in Asia and Europe are grappling with additional concerns such as rising food and utility prices, which are squeezing already constrained family budgets. In Europe, increasing utility bills replaced the economy as the number one concern over the next six months and in Asia Pacific, one in five consumers are most concerned about rising food prices — an increase of 13 points over the second quarter of 2010.

The economy remains the number one concern for more than one in four North Americans (27 percent) and worries about health jumped five percentage points. Health is now the number one concern for 10 percent of respondents in North America. Among Latin American consumers, consumers ranked work/life balance, job security, debt, crime and children’s education ahead of the economy as the number one concern.

Download the Nielsen Global Consumer Confidence report for a country-by-country analysis and region-level review.

With an index score of 98, Canada beats the global average by 11 points and bests its southern neighbor by 16 points.  In fact, Canada is one of only two countries in the top ten outside of Asia (the other being Brazil).

“Over the past six months, Canadian consumers have stopped talking about recession and changed the conversation to recovery,” said Carman Allison, Marketing and Communications Director, Nielsen Canada.  “We’re more optimistic about our job prospects and personal finances, and are ready to open our wallets and put the recession behind us.”

So how has this renewed confidence manifest itself?  Canadians are more likely to pay off debt (39% vs. 31% globally) and much less likely to save or invest in the markets (27% vs. 49% globally).  Interestingly, the high level of confidence contrasts with the fact that 70 percent of Canadians still believe that their economy was in recession, despite the fact that the Bank of Canada declared it technically over last summer.  But 40 percent believe that Canada will be out of recession in 2010.

Concerns remain.  The top three issues were increasing utility bills, personal debt and the economy.  Canadians – and Americans – are much more worried about debt than the rest of the world (13% compared to just 7% globally).

“Even while showing faith that we are in recovery mode, Canadians are planning to retain some frugal habits. Economists expect this to be a slow recovery, so consumers will continue to seek value and look for ways to stretch their shopping dollars in the near term and perhaps even longer into the future,” concluded Allison.

Download the report on Canadian Consumer Confidence.

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

• 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.

According to the 2008 Nielsen Global Consumer Confidence Index, Russia is well ahead of the global average of 88, with an index of 105 for the first half of 2008 — up three points over levels in the first half of 2007.

The Russian market, though still in the early stages of development, already has the largest number of retail stores (264,373) in East and Central Europe, Lepp notes.  The number of hyper/supermarkets in Russia also grew by leaps and bounds in 2007 (+67% over 2006), while the percentage of shoppers who purchase fresh food in open markets — traditionally popular in Russia — fell in 2008.

Meanwhile, urban Russians are devoting more time to working and studying and less time to cooking meals at home.  According to Nielsen, “meal makers” are the fastest growing food categories in Russia (+47% volume over 2007).  Sales of snacks, chocolate bars, single-serve yogurts, and other “on the run” products are also on the rise in Russia.

Read the full article.

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