It is an old truth that consumers ’willingness to buy predicts consumption trends for the next 6-12 months. How they value their job prospects and personal financial prospects is also important for understanding customer sentiment. One regular indicator of this is the Nielsen Consumer Confidence Index, which is conducted quarterly with thousands of respondents.
According to the latest report for the last quarter of 2016, the general consumer confidence index in Europe stands at 81 points, but we are also witnessing a strong dispersion in our region. In Central and Eastern Europe, the Czech Republic leads the list with 103 points (+4), followed by Poland with a slight decrease (-3) and 88 points. Romania also fell (-2) to stand at 85 points, while Slovakia rose by one point to 82 points. The Bulgarians are down 75 points, followed by Croatia with 69 points (-4).
In Hungary, the Hungarian consumer confidence index is unchanged over the period: 64 points, similar to the third quarter results, stabilizing the results of over sixty points in the second half of 2015. Behind us, with 62 points, Slovenia is the regional army driver.
Personal financial prospects fundamentally influence consumer behavior. When asked “What do you think your personal financial situation will be like in the next 12 months?”, Czechs are the most optimistic: 61 percent said they think their financial situation is good or excellent. Exactly a quarter of Hungarians agree with this statement (25%), which is an increase of one percentage point compared to the previous quarter.
34% of European respondents questioned the time as excellent or good when asked how good the time was to buy the things they needed. The Czechs and Romanians have been more positive than the European average. Hungarian consumers’ willingness to buy also declined somewhat: during the survey period, 19% of respondents said that the period was good or excellent for buying what they needed in the next 12 months. This is 4 percent lower than in the third quarter.
In addition, Nielsen asks about other spending habits in addition to housing and living costs. The question about the use of the remaining money has been answered by an average of 36% of Europeans, saving the remaining amount. Thirty-four out of a hundred buy new clothes, while a third (33%) spend their money on vacation. Poles love to have fun, with 31% being the busiest nation in the region. On the other hand, the Slovaks (after saving) have the remaining money to beautify their homes, 37% of them invest in it. Hungarian customs are completely different: if you have money left, a little over a quarter (26%) of Hungarians will beautify their home, 25% of respondents will set it aside for savings, followed by debt settlement with 23%. About a third (31%) of those surveyed said they never had money left over (19% on average in Europe).
Hungarians buy more than once and occasionally spend less
Changes in retail market dynamics and purchasing habits in 2016 outline new trends. We are more optimistic compared to the previous year, and this is also reflected in spending. In terms of value, retail sales in Hungary increased by 4.5 percent in the last quarter of 2016 compared to the same period of the previous year in the food and chemical market measured by Nielsen. This is well below the European quarterly average of 1.8%.
Shopping habits are also taking shape: the proportion of those who have a tight financial framework for the purchase of household and chemical goods and are strictly adhering to a pre-compiled shopping list is declining. The trend is positive: while 73% of consumers had a tight budget in 2014, it fell to 53% in 2015 and 38% in 2016. This is also reflected in Nielsen’s Consumer Confidence Index, which states that our compatriots are no longer most afraid of indebtedness (currently the third leading concern).
Optimism is also reflected in the rearrangement of shopping preferences: the orderliness of the store and the pleasant environment are becoming increasingly important to customers.
(Published in the Food Journal)