Mumbai: After eight quarters at the top, India in the June quarter surrendered the No.1 spot in Nielsen’s global consumer confidence index to Philippines, as costlier fuel, rising inflation and monsoon concerns depressed sentiment.
India slipped six index points to 128 in the second quarter from a high of 134 in the preceding quarter. The confidence score was behind Philippines at 132 points but higher than the global consumer confidence score of 98, according to the online survey conducted by Nielsen.
“The dip in index hints at caution for consumers in India, with the hardening of fuel prices, rising inflation and concerns around the monsoon. There is a tilt towards savings, versus discretionary spending, a softening in volume growth of the consumer goods baskets compared to last quarter and muted auto sales”, said Prasun Basu, president, South Asia, Nielsen. “However, the Indian consumer has remained quite optimistic over the last few quarters, and this may be just a temporary dip.”
One of the reasons for the caution is that nearly half of the respondents polled in India (49%) were still in the grip of recessionary sentiments, said the Nielsen Global Survey of Consumer Confidence and Spending Intentions. Additionally, job security and state of the economy continue to be the top two concerns for Indians. This quarter, work/life balance and global warming have also come in as the biggest concerns, followed by parent’s welfare and happiness, and health.
On spending, India continues to lead globally when it comes to spending intentions, as 65% urban Indians indicate it’s a good time to buy things they want and need over the next 12 months. However, this is yet to reflect in the sales of consumer packaged goods companies like Hindustan Unilever Ltd and Godrej Consumer products Ltd or even retailers like Shoppers Stop Ltd, which runs department store retail chain by the same name and hyper market chain HyperCity.
“Last year, the December quarter was slow and then quarter after that (March quarter) was worse than it and now, we have a flat June quarter. This is three consecutive quarters of overall slowdown for the sector,” said Vivek Gambhir, managing director, Godrej Consumer Products Ltd, while sharing industry performance. The maker of Cinthol soaps and Hit insecticides, however, is hopeful that this is the bottom and markets are likely to improve from September-October, provided August brings good rains.
As consumers continued to hold onto their purse strings, most retailers like Shoppers Stop had advanced their end of season sales to start early in the June quarter. However, the outlook for the remaining nine months is optimistic due to the anticipated recovery in consumer spending driven by Pay Commission and good monsoons. “Our like-to-like sales growth was 5.5% in the June quarter and for the balance nine months, we expect it to be higher at 8-9% as we go into the festive season; besides, there is the seventh pay commission and also news of good monsoons all of which are positive indicators for good consumption,” said Govind Shrikhande, managing director, Shoppers Stop.
Established in 2005, the Nielsen Consumer Confidence Index is filed quarterly in 63 countries to measure the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of real consumers around the world. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.