Consumer confidence in the Asia Pacific region gained six points year-on-year in the fourth quarter of 2010 to an index level of 97, according to the latest edition of The Nielsen Company’s Global Consumer Confidence Index. With this jump, Asia Pacific became the second-most confident region in the world at the end of 2010, just behind Latin America.
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.