20 November 2008
One-third of Singaporeans (33%) have started feeling the onslaught of the economic downturn, even before the government‘s announcement that the Lion City is mired in a technical recession. This was revealed in the latest Nielsen Global Consumer Confidence survey, conducted in the midst of the global financial crisis.
A twice-yearly study, the Nielsen Global Consumer Confidence polled 26,202 consumers in 52 countries from 23 Sept to 6 Oct 2008 about their confidence levels and economic outlook since the last survey in May 2008. The study includes 500 Internet users of all ages in Singapore.
As the latest survey reveals, global consumer confidence took a further beating, dropping from 88 to 84. Singapore has not been spared, as its consumer confidence index fell a further 10 points to an all-time low of 92. Exactly one year ago, consumer confidence in Singapore was at its peak of 114. Singapore now ranks 14th on the global list in terms of overall consumer sentiment and the 8th in Asia Pacific.
“For global consumers, the last 12 months have been challenging and turbulent – Singapore is no exception with an economy that is closely intertwined with the world’s demand,” said Ms Vicky Santos, Executive Director, The Nielsen Company Singapore.
On a more positive note, Singapore currently has one of the lowest proportions of consumers who think that the domestic economy is already in recession (33%). Among these consumers, however, only one-fifth (22%) expect the recession to end within the next 12 months. “With several growth catalysts such as the opening of the Integrated Resorts, the Youth Olympic Games, and the recently announced MotoGP in the pipeline, the situation is not currently deemed to be so grim in Singapore,” added Ms Santos.
Spending is likely to remain tight over the upcoming Christmas season for many, with close to half (48%) of consumers globally and nearly half Singaporeans (45%) describing the state of their personal finances as not so good/bad – a clear indication that extravagant spending sprees aren’t on the cards in the near future. Moreover, seven out of 10 Singaporeans (68%) are assuming a cautious stance towards spending at this time.
To stay within their budgets, Singaporeans are eyeing spending less on clothing (58%), saving on gas and electricity (58%), cutting down on out-of-home entertainment (50%), switching to cheaper grocery brands (48%), and delaying upgrade of tech gadgets (47%) as means to cope under the challenging economic climate.
Compared to previous downturns, the turmoil this time round is likely to have a serious impact on lifestyle and cultural factors in many parts of the world. In fact, consumers have already started changing their daily spending patterns and lifestyle behavior a year ago. “At the end of 2007, the USA was already entrenched in the sub-prime crisis and consumers around the world were grappling with falling property prices in tandem with rising food and fuel prices and volatility in local stock markets. These events had already forced consumers to make changes to their lifestyle and right now they are simply intensifying these changes and cutbacks as they shift gear into serious credit crunch mode,” Ms Santos observed.
"Staying In has become the new Going Out for a new breed of credit crunch consumers,” said Ms Santos. “And while restaurants and bars may already be feeling the pinch, the “stay-in” trend is providing new marketing opportunities for innovative at-home entertainment options as well as at-home food and beverage products, along with premium and prepared food ranges specifically aimed at home entertaining”.
When queried on how they will spend any spare cash after covering essential living expenses, a high majority (70%) said they will put it into their savings nest. However, most Singaporeans are avid travelers who enjoy their customary annual overseas trip. Even as they switch to their cost-saving mode, spending on holidays/vacation still ranked second on their list if they have extra cash to spend. In this time of economic volatility, cautious investors have also decided to put their investment plans on hold, as seen by the decline in intention (7 percentage points) by Singaporeans to put their money in stocks/mutual funds.
“However, even during economic slowdowns it’s important to remember that there are opportunities for savvy marketers, and brand investment during a downturn has never been more important to drive and secure brand loyalty for better days ahead,” said Ms Santos. “Companies that continue to invest in their brands and products and stay constantly engaged with their target market will come out of this downturn as winners. Consumers will remember the companies and products which best understood their changing needs and demands during a slowdown.”
THE NIELSEN GLOBAL CONSUMER CONFIDENCE SURVEY – OCTOBER 2008
Although consumer confidence declined across all global regions in the last five months, Latin America remained the most optimistic region, with a regional Consumer Confidence Index average of 96.8, followed by EMEA at 88.5 and Asia Pacific at 85.1. Consumer confidence in North America fell 2 points to 83 while Europe fell five Index points to 77. The global Nielsen Consumer Confidence average fell four Index points from 88 to 84 points.
Despite a drop of eight points in the past five months, India (114) and Denmark (112) came out on top of global Consumer Confidence rankings this month, while South Korea, which saw its stock market close at its lowest since October 2005 recently, languished at the bottom of Consumer Confidence rankings at 36 points, a loss of 14 points in the last five months.
Singapore, Chile, Ireland and Latvia recorded further double-digit declines in Consumer Confidence for the second time this year –a clear reflection of the global nature of this economic slowdown.
The only nations which recorded marginal increases in consumer confidence were Brazil (4 points), Philippines (3 points) and New Zealand, China, Venezuela, Thailand and South Africa gained one point compared to five months ago.
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About The Nielsen Global Online Consumer Survey
The Nielsen Global Online Consumer Survey, conducted by Nielsen Customized Research, was conducted from Sept 22 – October 6th 2008 among 26,202 internet users in 52 markets from Europe, Asia Pacific, North America and the Middle East. The largest half-yearly survey of its kind, the Nielsen Global Online Consumer Confidence and Opinion Survey provides insight into current confidence levels, spending habits/intentions and the major concerns of consumers across the globe. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend.
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