Rediff India Abroad
 Rediff India Abroad Home  |  All the sections

Search:



The Web

India Abroad




Newsletters
Sign up today!

Article Tools
Email this article
Top emailed links
Print this article
Contact the editors
Discuss this article
Home > Business > Special


Consumer confidence: India leads the way, again

Meenakshi Radhakrishnan-Swami | February 21, 2006

India leads the way - again - in the latest round of the ACNielsen Consumer Confidence Survey. As consumers save and invest, fear is just a four-letter word.

For the past couple of years, Indian consumers have been right up there, showing the way to the rest of the Asia-Pacific region when it comes to consumer confidence.

And since The Strategist has been covering the twice-yearly ACNielsen Asia-Pacific Consumer Confidence and Opinions survey for a while now, we're running low on ideas. Still, we did manage to hit on a winner this time round as well.

As in the previous round - conducted in May 2005 - India doesn't lead just the 12-country Asia-Pacific study; it's ahead of the pack even in the 42-nation, 23,500 respondents-strong Global Consumer Confidence Survey by ACNielsen.

Across the globe, consumers' confidence is on the rise, whether it has to do with local job prospects, the state of their own finances or even with whether or not this is a good time to shop.

The Consumer Confidence Index was a new addition to the survey last time and it's grown from an average 92 points to 98, with two-thirds of the countries polled showing increases in confidence. India is off the charts at 132 points (up from 127).

How it was done

The ACNielsen Global Consumer Confidence Survey covers around 23,500 Internet users around the world every six months - representing a global online population of close to 1 billion consumers.

The survey has been gaining traction both internally and externally since it was launched as an Asia Pacific initiative more than four years ago, before "going global" at the end of 2004.

The survey now spans 42 countries across 15 time zones. In the Asia Pacific region, the countries surveyed are: Australia, New Zealand, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Singapore, Thailand, Taiwan and the Philippines.

Three questions are used to calculate the consumer conficence index. They relate to job prospects in the next 12 months; the state of the respondent's own personal finances in the next 12 months; and, based on the cost of things today and the respondent's own personal finances, whether or not it's a good time to buy things he wants and needs.

The scale of answers to all three questions are: Excellent, Good, Not so good and Bad. To calculate the index, each response was given values: Excellent (200), Good (133.3), Not so good (66.6) and Bad (0).

Using these values, the average of the three questions was taken for each respondent. The index for each country was calculated by taking the index average for each respondent in that country. An index value of 100 corresponds to an average halfway between 'Good' and 'Not so good'.

But then, that's true of most of the results. It's been a good year for most Indians and that's reflected in their outlook on the job market and their personal finances. A staggering 92 per cent of Indians are positive about their employment prospects over the next 12 months, while 87 per cent feel the same way about their financial situation.

Those are the highest scores across all countries not just in the region, but around the world as well. More Indians, too, think now is a good time to buy the things they want and need: 66 per cent, compared to the regional and global averages of 38 and 39 per cent. The only nation that's more willing to spend is Denmark, where 69 per cent feel it's the season to shop.

Leading the pessimists is Portugal, where the consumer confidence index is a woeful 60, compared to the global 98 and Europe's 95. The Portuguese think this is a lousy time for employment (92 per cent negative) and shopping (89 per cent negative).

And only the Japanese are ahead of them in rueing their personal financial state, with 79 per cent Japs thinking the coming year will be between "bad" and "not-so good" for their finances, compared to 74 per cent of the Portuguese who feel the same way.

How is consumer confidence across APac? The overall consumer confidence index for the region is up three points from last time, to 101. Next to India, New Zealand appears to be the most optimistic about the future; its index registered a four-point increase to 123.

The confidence index dropped for only three countries in the region. South Korea wasn't one of them, but the light at the end of the tunnel appears dimmest there; its index stood at just 62.

But then, the Koreans seem down at the mouth about most indicators of consumer confidence. Just one in four Koreans thinks the coming year will be good financially; a staggering 86 per cent think this is a bad time to shop; while 87 per cent expect little in terms of job prospects and security.

To spend or to save

That's a question confronting consumers across the world. And they all react differently. The growing consumer confidence doesn't always readily translate into a willingness to spend. Globally, 61 per cent of those polled said they would rather not shop and spend; that's just two percentage points below the figure for Asia-Pacific.

Still, internationally, after savings and debt repayment were taken care of, the priorities for spending were clear: it was time for fun. Out of home entertainment, new clothes and holidays topped the list, especially across European countries, where savings, in fact, came fourth on the list.

In stark contrast, Asia-Pacific consumers have an almost-unhealthy obsessions with saving. The top 10 countries for savings are all from Asia. And for over half the consumers in the Asia-Pacific region, the safest spot for spare cash appears to be the savings account.

It's a figure that hasn't changed much since the last survey: from 51 per cent, it's now up to 53 per cent. But the attraction of other spending avenues seems to be increasing as well. A quarter of all Asia-Pacific consumers now invest in stocks and mutual funds, up from 19 per cent last time round.

Over 12 per cent salt away a little in their retirement funds, while 35 per cent prefer to pay off debts and credit card bills. Out of home entertainment found fewer takers this time in APac; the preferences seem to have shifted to splurging on holidays and doing up the house.

Indian consumers' reactions are almost perfectly in sync with the region, with a few notable exceptions. Once they cover all their essential living expenses, Asians mainly choose to either put in savings or head off for some much-needed R&R.

Indians, on the other hands, head for the bourses.

Close to half of all Indian consumers polled admitted to dabbling in the stockmarket, investing in both shares and mutual funds; that's the highest across all countries. The averages for the world and the region: 14 per cent and 25 per cent, respectively.

Indian consumers also seem to have become more house-proud over the years. If they were to have money left over, 38 per cent said they would spend it on home improvements and decorating. That's higher than the regional and global averages (21 and 30 per cent, respectively), although still much lower Sweden: 55 per cent Swedes opted for doing up their homes with if they had an extra Krona or two.

Here come the super savers

Once you've covered all your essential living expenses, what do you like to spend your money on? If you're like most Indians in the ACNielsen Consumer Confidence Survey, you probably dump it straight into your savings account.

Or try your luck at the bourses. Or paint your walls, change the curtains and splurge on home improvements. That's not quite how the rest of the world reacts when confronted with a little spare cash.

Universally, everybody's first choice is the savings account. But for the rest, here's how it works. People in Europe and the US spend their extra money on out of home entertainment, new clothes and holidays; and then they pay off those tedious credit card bills that piled up while they were out having fun.

Rest and relaxation is top priority in Asia Pacific, where 36 per cent would prefer to blow up money on a great vacation. The top spender here is Thailand: 56 per cent Thais said they would use any spare cash to head off for a holiday. The figure for India: 37 per cent. This is probably a result of higher disposable income combined with the easy availability of dirt-cheap airline tickets.

Saving is all right, but not too many people seem interested in retirement funds. The average for the region is 12 per cent, and is the last item on the list of spendables. That's true for India as well, where 18 per cent may put money into a retirement fund, but it's still the lowest priority.

New technology, too, is no longer as high a priority as it used to be: 28 per cent of Apac respondents spend extra cash on new technology, compared with 32 per cent in India.

One possible explanation: typically respondents in this survey are early adopters of new technology; they probably already have most new gadgets.

It's the economy, stupid

Worries about the economy, health and employment continue to dog consumers across the world. The boom in the region notwithstanding, more than half the consumers in the Asia Pacific region fret about the state of the economy.

Job security is the next biggest concern (remember, 41 per cent weren't too optimistic about job prospects in the coming year) in the region, with 36 per cent citing it as an issue.

Peace is in, and just 3 per cent of consumers across the globe worry about war - none in India. Interestingly, a significant proportion of consumers say they have no worries: 10 per cent globally, 8 per cent in Apac and 17 per cent in India.

The mood is optimistic and going by current trends, the next round of the survey - around June-July 2006 - will still be about upbeat Indians.


Powered by

More Specials

Share your comments


Advertisement






Copyright 2006 Rediff.com India Limited. All Rights Reserved.