“While these results are encouraging, consumers in most parts of the world remain cautious about spending their money, and are increasingly moving to value channels.  At the same time, retailers are selling more on promotion.  It’s likely these trends will continue until economic recovery has solidly taken root,” said James Russo, Vice President, Global Consumer Insight at The Nielsen Company.

Nielsen Economic Current Key Indicators
Country	Trend	Aug-09	Sep-09
Brazil		1	1
Canada		2	2
China		2	2
France		3	2
Germany		3	4
Hong Kong		2	2
India		1	1
Italy		3	3
Spain		3	3
Taiwan		3	1
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

Country by Country Highlights

• U.S. – Consumers continue to be skittish about the recovery and their willingness to spend money.  Store brands, value channels and buying on promotion all showed growth as manufacturers continued to step up incentives and deals.
• Canada – Volume and value sales grew in September 2009, with strong growth in the number of retailers selling on promotion.  Unit sales rebounded as price increases stabilized at 2 percent.
• France – Volume and values sales showed some growth, but with confidence dropping in the September survey, French shoppers actually reduced their shopping frequency.
• Germany – Volume sales remained neutral, while value sales recorded a small decline.  Germans continue to watch their Euros as their confidence in the economy has dipped.
• U.K. – Volume sales improved, and premium brands returned to growth.  Consumers were taking advantage of the strong promotions on offer, shopping more frequently and spending more per trip – despite slightly decreased consumer confidence.
• Italy – Italian consumers cut back the frequency of their shopping trips, but spent more per trip, taking advantage of retailer promotions and switching to store brands.  Volume was up, but value sales were down.
• Spain – Spaniards remained neutral in their spending habits, but did start shopping more frequently for the first time in nine months.
• Brazil – All indicators show that Brazil has returned to levels prior to the global economic crisis.  Volume and value sales were up, and shoppers were feeling confident: shopping frequency and spend per trip both increased.
• India – Volume and value sales indicators each posted better than 5 percent growth, and Indians are feeling very optimistic about the economy and finances.
• China – While retail sales were relatively flat, growth is now apparent in modern trade outlets, which may be the first sign of fast moving consumer goods sales recovery.
• Taiwan – Volume and value sales increased solidly for the first time in nine months.
• Hong Kong – Increased consumer confidence has driven growth of volume and value sales.

The Buzz
In an analysis of blog buzz in seven countries, Nielsen found that online discussions about the global recession have leveled off as consumers have accepted the “new normal.” At the same time, however, mentions of recovery have not gained traction, and actually declined in the most recent week reviewed.

“It seems as if people are accepting the new reality of an ever present recession, which through our analysis of online buzz illustrates that despite a dip in recession discussions in the spring, that they have now leveled off but not subsided completed. Perhaps it is not on the front burner for all consumers as it was in 2008 thru mid 2009, but definitely still on the back burner where it continues to impact consumer decisions,” concluded Russo.

• Download the Nielsen Economic Current.

While this growth is impressive, seven countries still recorded declines in ad spending in the second quarter of 2009, including South Korea (-17%) and Taiwan (-16%).

“Although declines in advertising activity were still evident across free to air TV, newspapers and magazines in a number of markets, there were clear signs of a reversal of contracting activity.    In the more dynamic markets of China and India, both of which saw sharp cutbacks in advertising activity in the first quarter, advertising bounced back strongly with double digit growth over the same quarter in 2008,” said Richard Basil-Jones, Managing Director, Asia Pacific at Nielsen.  “Positive economic signs across the region suggest that the recovery to pre-financial crisis advertising activity may occur earlier than industry observers had forecast at the beginning of the year.”

On a year-to-year basis, ad spend was up 9 percent, reaching an estimated $112 billion (US).  Television was the only main media to record growth (10%), while newspapers and magazines showed modest declines (-1% and -3%, respectively).

Value has become a main focus for Asian shoppers, partly driven by the economic situation and partly as a result of increased retailer activity focused around price and promotions. According to Nielsen’s Asia Pacific Retail and Shopper Trends 2009 Report, more than 70 percent of shoppers claim to have become more price sensitive compared to last year. The effect: shoppers are more inclined to buy only what they need, spending their money on essentials rather than on treats or what they now consider ‘nice-to-haves’. They’re also consciously trying to cut down on the quantity purchased and are actively seeking out products on promotion.

Over the course of 2008 in Asia, grocery markets continued to show volume growth, led by India (+9%), China (+9%) and Vietnam (+18%), with only Taiwan (-7%) experiencing a decline in sales. Value sales increased by double figures in many markets on the back of high inflation for key food categories. But with inflation falling in all markets, we have seen value growth drop sharply in 2009, although overall volume growth in many markets has held up reasonably well with shoppers not cutting back significantly on grocery categories.

Traditional trade continues to lose share

As expected, the traditional counter service trade continued to lose share in Asia, with overall share of trade dropping another percentage point to 47 percent in 2008. At the same time, the absolute number of traditional grocery stores in the region grew by one percent to over 12.3 million stores. In most developed countries, traditional store numbers fell by five percentage points or more. In Korea, where traditional store numbers dropped by nine percentage points, the share of trade decreased from 15.9 to 13.9 percent, while in Taiwan the traditional trade now accounts for just over six percent of sales, having lost 1.5 percent share in the last 12 months.

The retail landscape looks very different in Southeast and South Asia, however, where traditional store numbers actually grew year on year, and even though share of total grocery sales continues to decline slowly, the majority of shoppers in all markets continue to shop at this trade channel. The traditional channel continues to meets shoppers’ needs for everyday convenience, personal service and affordability – being able to buy the smallest sizes and quantities.

Growth of small modern trade outlets

Globally, many large retailers such as Wal-Mart, Tesco and Carrefour have embraced a multi-format strategy that includes the development of smaller neighborhood stores. Similar growth in small modern trade outlets is also being seen across Asia, with mini-markets/small supermarket store numbers increasing by 17 percent in 2008 to over 100,000 stores.

Indonesia has led the way over the last 10 years and in 2008 more than 1,500 new stores opened, taking the total to over 10,500. These stores now account for more than 16 percent of total packaged grocery sales. Shoppers in Indonesia are continuing to embrace the convenient location, relatively good service and acceptably low prices offered at mini-markets.

Retailers in China are also investing in this store format, with store numbers growing by 22 percent in 2008 to more than 70,000 stores, accounting for more than three-quarters of all modern self-service outlets.

In South Korea we are also seeing the leading Hypermarket operators expanding into small supermarket formats, or ‘Super Supermarkets’ as they are known in South Korea. Samsung Tesco is now operating over 150 SSM Homeplus Express stores and E-mart is planning to open 30 or 40 small, 300 square meter E-Mart Everyday stores. The expansion of these large chains into the small store arena has led to concerns regarding competition with small store owners, and the South Korean government is considering introducing a bill to regulate the opening of small supermarkets.

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.

“Even under current financial pressures, the Nielsen China Outbound Travel Monitor shows that the Chinese travel market continues to boom and is likely to grow further.  The interest lies not only among the experienced traveler, but also among novice travelers.  This should serve as a boost of confidence to the travel industry,” said Dr. Grace Pan, Head of Travel and Leisure Research with Nielsen China.

Short haul trips, such as those to Hong Kong (the most mentioned place to visit), Macau or Taiwan, were the most popular, with more than 60 percent of travelers intending to visit those destinations.  Thanks to a recent agreement that allows Mainland Chinese to travel to Taiwan in groups, Taiwan showed the greatest increase in interest.  In 2007, just three percent of respondents said they planned to visit Taiwan.

“Historic ties with Taiwan – a destination that has not been an option for many years – make it a destination of much interest to Mainland Chinese, and we expect to see tremendous growth potential for travel to Taiwan in the years to come,” said Dr. Pan.

Top Planned Destination Countries

* Note: multiple answers allowed

The top 10 advertising categories account for almost 80 percent of total ad spending, with the largest category, pharmaceuticals and health products, increasing 2 percent.  Categories showing the strongest growth were business/industrial/agriculture (50%), clothing & accessories (45%) and foods (32%).  No category showed a decline, although telecommunications recorded no growth on a year-to-year basis.

The top 10 products advertised represented 9.3 percent of all main media ad spending in 2008.  Olay was the top advertiser, with a spend 43 percent higher than the next largest spender, KFC.

Hong Kong also showed solid growth in ad spend in 2008, up 10 percent from 2007, although growth came to almost a standstill in the fourth quarter as the economic downturn took hold.  Newspapers still accounted for the highest share of ad spending – 34 percent – followed by TV at 30 percent.  Meanwhile, radio enjoyed the highest growth, up 54 percent from the previous year, though it still accounted for just 5 percent of ad spending.

The leading category of advertiser in terms of spend was retail, which recorded an 11 percent increase for the year.  Toiletries showed the most impressive growth at 20 percent, while property posted the largest decline at -16 percent.    The lead advertiser in 2008 was Bit Sau Jim Beauty Centre – Slimming, finishing the year 30 percent ahead of second-ranked Park N Shop.

Meanwhile, the advertising environment in Taiwan was a bit gloomier, recording a 7 percent decrease in spending on a year-to-year basis and the second largest decline of the 12 countries Nielsen measures.  The first half of the year saw no growth, while the second half recorded quarterly declines (-6.8% in Q3 and -16.9% in Q4).

The top ad category in spending terms was architecture, which posted a 17 percent decline for the year.  Only two categories recorded growth: foodstuffs (6%) and computers & accessories (5%). The leading advertiser was Tsann Kuen Trans-Nation Group, a consumer electronics retailer, followed by Elife Mall.

Main media, defined by Nielsen as free to air TV, newspapers and magazines, increased 13 percent in 2008, while all other media (radio, outdoor, pay TV, cinema and other) posted an 8 percent increase for the year.

In 2008, three markets recorded declines in ad spend versus 2007, while another posted no growth:

• Taiwan (-11%)
• South Korea (-8%)
• Thailand (-4%)
• New Zealand (0%)

Meanwhile, five countries showed solid double-digit growth:

• India (29%)
• Indonesia (19%)
• China (17%)
• Malaysia (12%)
• Philippines (11%)

Other key findings from Nielsen’s research:

• A total of US$115.2 billion was spent on advertising in the twelve markets monitored.
• A total of US$108.4 billion was spent on “Main Media” advertising, with television comprising 70 percent of expenditures.
• Television ad spend grew 15 percent. Only three countries recorded declines in TV ad spend, while five countries posted solid double-digit growth in this category.
• Although Americans are being deluged with stories of newspapers closing, cutting back and filing for bankruptcy, the medium recorded 9 percent growth, with declines in four countries.
• Magazine ad spends, while still comparatively small, increased 10 percent, with India leading the way.
• Radio dominated “all other media” with a 47 percent share of spend and a 12 percent increase for the year.

Over the next few days, Nielsen Wire will dig deeper into the numbers for Australia and New Zealand, East Asia, Southeast Asia and India.

62 percent of Taiwan’s grocery shoppers claim to have become more price-sensitive, while among females over 35 and low income households, that number rises to 75 percent.  One store, Post Exchange, has capitalized on this trend with its low price strategy. As a result, 17 percent of all Taiwanese shoppers spend the majority of their grocery dollars at the chain.

Brand loyalty for some categories has suffered: more than 60 percent of consumers would buy an alternative brand of biscuit, snacks, shampoos and laundry detergents if their usual brands were out of stock.  That said, vitamins and face care products seem to engender the highest levels of brand loyalty, with high levels of consumers saying that they would wait until their brand was available or locate it at another retailer.

Read the full press release about Taiwanese consumer trends here.

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.

Strong advertising growth in the Asia-Pacific region (+7.6% over Q2 2007) drove the increase, according to data released in Nielsen’s latest Global AdView Pulse report.

Ad spending trends worldwide showed significant variations — with overall advertising declines recorded in North America (-1%) and Europe (-3%).

In North America, U.S. ad spending was down by approximately 6%, compared with the same period last year, while ad spending in Canada grew slightly (+1.7%).

In Europe, the drop in ad spending affected all industry sectors and all media — except radio, which rose by almost 1% during the second quarter of this year.

In Asia Pacific, all four major media types (TV, magazines, newspapers, and radio) grew over Q2 2007, despite the detrimental effects of the May 2008 earthquake in China’s Sichuan Province, the Japanese recession, and general softening of the economy.  Of the twelve Asia-Pacific countries Nielsen tracks, only Japan, South Korea, and Taiwan showed declines in second quarter ad spending.

Globally, most industry sectors showed increased ad spending in Q2 2008, as compared with Q2 2007 spending.  The Automotive, Telecommunications, Financial, and Durables categories, which recorded decreased advertising investment in the second quarter of this year, were the only exceptions to that trend.

Among the mediums tracked by Nielsen – television, print, radio, outdoor, cinema, and Internet (where available) — TV showed growth (+3.8%), while all other media recorded ad spending declines.

Nielsen’s report is based on advertising data from 28 markets in Africa, Asia Pacific, Europe, and North America.

View the full press release.