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www.livemint.com
18.07.2012
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http://www.livemint.com/2012/07/17120134/India-slips-in-Nielsen-consume.html?d=2
India slips in Nielsen consumer survey first time in nine quarters
Fall sharper than the global confidence level decline as rising prices, slowing growth, weak
rupee take their toll.
Mumbai/New Delhi: India lost its top ranking on Nielsen’s consumer confidence rankings for the first
time in nine quarters, dislodged by Indonesia, as rising prices, slowing growth and a weak rupee took
their toll.
Indonesia’s consumer confidence index rose 2
points to 120, while that of India fell 4 points to
119 in the latest Nielsen Global Online Survey that
covered 56 countries in the April-June period.
“The drop from the top position for India, after
nine quarters, indicates a growing anxiousness
amongst Indian consumers today, in relation to
the job prospects and spending habits,” said
Piyush Mathur, president, Nielsen India.
Ahmed Raza
Khan/Mint
With rainfall in the
June-September
monsoon so far
deficient and a
central bank
focused on reining
in inflation,
confidence isn’t
likely to revive
unless economic
indicators change
dramatically.
India has been toppled from its top position in Nielsen’s consumer confidence survey for the first
time in more than two years. Nielsen India’s Piyush Mathur talks about some key findings.
Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and
pessimism, respectively. A high measure bodes well for retailers and manufacturers as it shows the
propensity of consumers to spend.
The fall in India was sharper than the global confidence level decline, which was down two points in
the June quarter to 99, driven by global uncertainties and the euro crisis.
Nielsen’s survey reveals that job security (21%) and the state of the economy (12%) continue to be
the biggest concerns for Indian respondents. The level of optimism regarding job prospects has
fallen to 77% from 84% in the March quarter and by 9 percentage points from the same period last
year.
Globally, Indian online consumers, followed by online consumers in the Philippines (71%) and
Malaysia (70%), are the most optimistic about their job prospects in the next 12 months. Wellbeing
of parents (9%) and increasing fuel prices (8%) are two other areas of worry for them.
Ahmed Raza Khan/Mint
Further, over half (53%) of the online respondents said
they believe India was going through an economic
recession in the June quarter. “Rising inflation and fuel
prices, which are a direct hit on the consumer’s wallet,
combined with a comparatively low GDP growth and
devaluation of the rupee, have taken a toll on consumer
confidence,” said Mathur.
Gaurav Gupta, senior director, Deloitte Touche
Tohmatsu India Pvt. Ltd, said, “There is a perception in
the market about the Indian economy not doing too
well and that could further go down.” The impact of this
will be felt on discretionary spends which include travel,
clothes, cars, consumer durables and eating out, he
said.
For instance, the Rs. 52,000 crore consumer durables
category (TV sets, refrigerators, washing machines and
the like) has seen a sharp drop—from 14.2% in 2010-11
to 2.5% in the fiscal ended March, according to data
compiled by Centre for Monitoring Indian Economy
(CMIE) Pvt. Ltd, an independent economic think tank
headquartered in Mumbai, and the Federation of Indian
Chambers of Commerce and Industry (Ficci).
“Negative global influences, high inflation along with high taxation of close to 24-28% have caused
the entertainment spends of consumers to decline,” said Kamlesh Barot, president, Federation of
Hotel and Restaurant Associations of India.
“Consumers are sensitive to inflation and increasing prices,” agreed Amit Jatia, vice- chairman,
Hardcastle Restaurants Pvt. Ltd, the franchisee for McDonalds in the west and south, who has
noticed a drop in footfalls at the value restaurant chain.
A drop in discretionary spends and the subsequent build-up of inventory has also caused retailers
such as India’s largest listed one by revenue, Pantaloon Retail (India) Ltd, Shoppers Stop Ltd and
brands such as Zara, FcUK, Vero Moda, Mango and Aldo to start their end of season sales in the first
week of July rather than the more traditional mid-August.
“What we are seeing is more focus on value for money products and offers coming out at this point
such as more options for financing of goods,” said Jessie Paul, chief executive officer, Paul Writer, a
marketing advisory firm based out of Bangalore.
However, spending on non-discretionary items or essentials such as groceries remain robust. “In our
stores which have been open for longer, we have grown at 20% in the year-to-date,” said Vineet
Kapila, president for the RPG Group-owned Spencer’s Retail Ltd. Food and groceries account for
close to 80% of the retailer’s overall revenue.
However, with below-average monsoons so far this year, there are concerns that the rural
consumption which accounts for 35-40% of the Rs. 1.6 trillion consumer packaged goods market,
could see some impact since a good monsoon puts more money in the hands of the farmers.
“If this trend continues, (rains getting delayed), the festive season might not look too good either for
consumer companies,” said Gupta of Deloitte.
Nielsen’s Mathur did offer a silver lining, though. He said: “Despite the slowdown, though, the
nominal growth rates are still the envy of the developing world, given the size and scale of the
market.”
The survey was conducted 4-21 May and polled more than 28,000 consumers in the Asia-Pacific,
Europe, Latin America, the Middle East, Africa and North America. In India, the sample size for the
survey was 500 consumers.