After remaining flat for two successive quarters in 2011, online consumer confidence in South Africa increased by two points to 80 in the first quarter of 2012. But challenging economic conditions and the rising cost of living expenses has led to online consumers polled, opting to settle debt and put spare cash into savings.
There just isn't enough positive news to inspire confidence among global online consumers in the first quarter with South Africa being the most pessimistic country in the Middle East, Africa, Pakistan (MEAP) Region with 80 points against a regional average of 97 points. Saudi Arabia is the most optimistic country in the region with 119 points. The global average is 94 points but regional differences do prevail. Asia Pacific being the most optimistic region with 103 index points and Europe the most pessimistic with 72 points.
While consumer confidence levels rose 2 points in Q1'2012, it remains 8 points down when compared to a year ago trend. "There simply hasn't been enough consistent and positive news to sustain the euphoria consumers felt during 2010 and the first quarter of 2011, said Dwight Watson, Managing Director South and Sub-Saharan Africa. "Confidence in Q1'2012 increased in 38 out of 56 markets, fell in 16 and remained flat in two." Job Prospects Bleak
"South African online consumers are no longer as upbeat about job prospects in Q1. Negative sentiment towards job prospects increased 3 percentage points, with 53 percent believing that job prospects are no longer so good in South Africa. This pessimism was at 45 percent when compared to a year-ago trend," said Watson. State of Personal Finances
Forty four percent (44%) of respondents indicated that the state of their personal finances was good, an increase of 5 percentage points when compared to quarter four 2011. However, when asked if this moment was a good time to buy the things most wanted and needed, more than 50 percent of online consumers believe it is not a good time.
A phenomenal 83 percent indicated that they have adjusted their spending habits once again. More than 60 percent of respondents have opted to save on household expenses, by cutting down on take-away meals (69%), trying to save on gas and electricity (66%), spending less on new clothes (61%) and cutting down on out-of-home entertainment (60%). Respondents also indicated that when economic conditions do improve, they will continue to try and save on gas and electricity (58%), cut down on take-away meals (51%), switch to cheaper grocery brands and cut down on telephone costs (34%) and cut down on out-of-home entertainment and spend less on new clothes (30%).
Cutting back in these areas are a top priority to cut costs and save, a trend that goes back to a year-ago as well as Q1 2011. Plans for Spare Cash
South African consumers currently believe that now is not a good time to buy the things they want and need such as luxury items. Consumers are once again opting to settle debt and put spare cash into savings. A phenomenal 30 percent have indicated that they do not have any spare cash at all, a trend that has continued and increased 3 percentage points from the previous quarter and a staggering 12 points year-on-year. Forty two percent have indicated that they will cut down on holidays/short breaks, an increase of 3 percentage points from Q4'2011. Consumers are also opting to delay the replacement of major household items (48%) and upgrading technology (44%).
The culture of saving spare cash is not unique to South Africa but is a trend pervading globally. Intended discretionary spending and saving increased in Q1 across all sectors reviewed. Half of consumers around the world plan to put spare cash into savings, up from 48 percent in Q4 2011. Thirty four percent intend to buy new clothes, up from 31 percent the previous quarter and 33 percent expect to spend spare cash on holidays and vacations-a rise of seven percentage points from Q4 2011. Planned spending on technology also increased, with 28 percent of global online consumers intending a purchase, up from 22 percent the previous quarter. Recessionary Mindset Continues
First quarter data revealed that 67 percent of consumers in South Africa believe that the country continues to be in an economic recession. Although down significantly by 6 percentage points from Q4 2011, negative sentiment remains high. More than half the respondents (56%) believe South Africa will still be in a recession in a year's time.
Fifty seven percent of consumers around the world believe their countries are in a recession. Regionally, online respondents who believed they were in a recession was on the decline in Asia-Pacific (44% compared to 53% previous quarter), North America (80% compared to 86%) and Europe (72% compared to 74% previous quarter) while a slightly growing number of respondents in Latin America (48% against 47%) believed they were in a recession. The Middle East/Africa region is up by one percentage point to 75 percent. Major Concerns for Online Consumers
The major concerns for online South African consumers in the first quarter of 2012 are debt, job security, state of the economy, crime, increasing food and fuel prices and utility bills. What will consumers do when economic conditions improve?
The latest Consumer Confidence Index results confirm that South African Consumers are clearly restrained by a lack of confidence. With a weak labor market and an unemployment rate of over 25 percent , consumers are concerned about job prospects and the economy. As a result, consumers have been approaching their spending with caution. About the Nielsen Global Survey
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted between February 10 and February 27, 2012 and polled more than 28,000 online consumers in 56 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10M online population for survey inclusion. The Nielsen Global Survey was established in 2005.About Nielsen
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit www.nielsen.com