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Can there be growth in a seemingly unstable environment?

Markets and Finances | 10-09-2014
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By Tamer ElAraby, Managing Director, Nielsen Egypt & Levant

Yes, if you know what to look for.

No one can deny the profoundness of the events of January 2011 in Egypt, the most significant point, after the turning over of a many-years old regime, is in the fact it all happened so quickly. There was a whole new Egypt in less than twenty days.

The mark of the Revolution still prevails; it seems that every quarter there is a whole new Egypt.
Nielsen conducts a global quarterly study widely known as the Consumer Confidence Index (CCI), a survey that spans over 60 countries looking into consumers’ opinion on three key matters; job prospects, the state of personal finances and if it’s a good time to invest.

In Egypt, the confidence index pattern is that there is no pattern; there is no constant rise or constant decline, the status changes every quarter. In Q2, 2014 the Index score for Egypt was 81, a six point drop from the last quarter. Earlier in the first quarter, the index witnessed an 11 point increase from the quarter prior.

Business norms dictate that a ‘stable environment’ is essential for business growth; I respectfully disagree.

Opportunity lies within the challenge; to conquer challenges companies must innovate – and innovation increases brand equity.

About the Egyptian Consumer in Q2 2014

Besides the three key questions, the CCI report also explores consumers’ concerns and intentions of spending.

Terrorism and Job Security rated as the top key concerns this quarter, with equal standing. The lack of job security coupled with the continued increase in prices is naturally resulting in a decline in confidence in the state of personal finances (5% decline).

Economic Recession: for how long?

Economic stability comes about as the third key concern– one that is shared across the region as a whole. 88% of the respondents believe that Egypt’s economy is currently in recession.

However, when asked whether or not they believe conditions will improve over in the next 12 months, the majority did not opt for either a yes or no answer: 39% of the respondents said they did not know.

After all, the country as a whole has been through some intense high points and low points, it seems that consumers are no longer able to see ahead. This is likely another factor that brought about the decline in confidence this quarter.

Bringing back the confidence

Normally, one looks to the country’s government to provide more job opportunities and stabilize pricing in order to boost confidence.

There is an important role, however, that private sector companies can play in order to bring back the confidence in the market.

Having an understanding of what the consumer chooses to do with his/her money can provide some insight into the matter.

The majority of those who do feel that they have some money left over after covering essential costs firstly opted to save the money. This is a natural reaction to the general sense of insecurity when it comes to personal finances and job security.

For companies to gain further customer loyalty and possibly attract new customers, they should ask the following questions:

- What can we do to help the consumer save money?
- Moreover, what can we do to give the consumer a sense of extra value for the money spent / invested in our products?

This is a straightforward opportunity for banks to diversify their savings products according to the different needs; but this is also an opportunity for companies in other fields to think outside the box.

The next most voted item to spend money on was apparel, closely followed by out-of-home entertainment.

While the rate for spending on apparel stayed constant, it declined 6% for out-of-home entertainment. This serves both as an indicator that out-of-home entertainment service providers that new solutions need to be found in order to make up for this loss, and it is an explicit opportunity for product providers of in-home-entertainment. The answer probably lies in the questions asked earlier about value-for-money and savings.
Innovation comes in being one step ahead of the consumer. The Egyptian consumers require companies to be limber in order to keep up with them, and win.

More information:

In conjunction with the second-quarter index release, Nielsen is unveiling a new interactive data visualization tool based on nine years of historical global consumer confidence data, which spans 60 countries and represents a global online population of some 2 billion consumers. The Nielsen Global Consumer Confidence Trend Tracker allows users to select a variety of different data points related to consumer economic sentiment to create dynamic visualizations by region, country, issue, and time period.

For more information and to purchase the full report, click here.

 

Tagged:  CONSUMER
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