Discretionary spending’s and savings are on the upswing
Consumer confidence in urban India jumped six points in the first quarter of 2014 to an index score of 121— the highest optimism level since the fourth quarter of 2012, according to findings from Nielsen, a leading global provider of information and insights into what consumers watch and buy.
India retains its position as the second-most-optimistic country in Nielsen’s survey. Indonesia leads the global index with 124 points, and the Philippines is in third place with 116 points.
Sixty-eight percent of urban respondents in India feel that the country is going through a recessionary phase, and within this more than half (54%) say the country will be out of this recessionary phase over the next 12 months.
“Consumers are reconciled to the negative economic conditions and despite the challenge of inflation are hoping for a better fiscal year. They are optimistic that overall sentiment and investment will pick up gradually. Also in evidence is the positive impact of the recently received bonus and increments, in good time for the summer holiday season,” said Piyush Mathur, president, Nielsen India Region. “Recovering after a slump in confidence levels, the index now matches what we saw in the fourth quarter of 2012. The key difference is the indication of discretionary spends through the year with this quarter looking the strongest “, he added.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns, and spending intentions among more than 30,000 respondents with Internet access [Refer Note 1] in 60 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. In the latest round of the survey, conducted February 17 – March 7, 2014, consumer confidence increased in 60 percent of markets measured by Nielsen, up from 43 percent the previous quarter (Q4 2013). Globally consumer confidence returned to pre-recession levels with an index of 96 in the first quarter of 2014, the highest score since Q1 2007.
Discretionary Spending & Savings
More than half (54%) of online respondents polled indicated that this is a good time to buy things they want and need. The intention of online respondents investing spare cash in savings is up by six percentage points to 68 percent from last quarter (62% in Q4 2013). Nearly half of those polled (49%) are looking to invest in new technology products and buy new clothes (49%). More than a third (32%) indicated they would invest in a retirement fund, a 9 percentage-point increase from last quarter (23% in Q4 2013). And 36 percent intend to invest in the stock market and in mutual funds, up from 29 percent last quarter.
Four out of five (81%) respondents have changed their spending habits to save on expenses this quarter, a five-point increase over last quarter (76%). The changes include saving on gas and electricity (59%), spending less on new clothes (53%) and cutting down on holidays and short breaks (45%). Forty-four percent expect to sustain savings on gas and electricity even when the country is out of the recessionary phase.
“Overall discretionary spending is higher than the last four quarters, and there is a renewed focus on savings for the long term. With the summer holiday season coming up, urban consumers in the country will be exploring activities and technology that will seek to entertain families leading to a higher spending intent in the quarter,” said Mathur. “Consumers are also anticipating the outcome of the elections, and the impact will reflect in subsequent months.”
Job Prospects, Concerns
Nearly three-fourths (74%) of respondents in India are optimistic about job prospects over the next 12 months, and the sentiment is up by 4 percentage points from the last quarter. Seventy-six percent indicated that the state of personal finances was good or excellent in Q1 2014, up from 72 percent in the last quarter.
The top concerns continue to be job security (22%) and the state of the economy (15%). One in 10 (12%) indicated health is the second-biggest concern; striking a work-life balance is a cause of concern to 10 percent of those polled; and increasing food prices was a concern for 9 percent.
About the Nielsen Global Survey
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Feb. 17 – March 7, 2014, and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users, is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60-percent Internet penetration or 10M online population for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA, and Diemen, the Netherlands. For more information, visit www.nielsen.com.
[Note 1] – While an online survey methodology allows for tremendous scale and global reach, it provides a perspective on the habits of existing Internet users, not total populations. In developing markets where online penetration has not reached majority potential, audiences may be younger and more affluent than the general population of that country. Additionally, survey responses are based on claimed behavior, rather than actual metered data.