Recession: Shifting Consumer Responses – September 2011
Welcome to the latest edition of Euromonitor International’s global consumer tracker designed to help you keep in touch with consumer responses to the recession all over the world and more crucially to map signs of recovery via shifting consumer purchasing behaviours and attitudes in 60 developed and developing countries as they emerge.
We explore the latest news within consumer themes including the newest thrift news, shifting consumer loyalty and downsizing and to what extent consumers are trading up or back to normal. This tracker includes stories on the coupon-clipping Spanish; Chinese appetite for luxury goods; and South Koreans opting for solo holidays.
THRIFT UPDATE/FRUGALISTA NEWS
With money tight, couponing becomes a craze in Spain
Hard-pressed Spanish consumers are turning to online coupons, and service businesses are increasingly viewing them as a vital marketing tool. According to one active user of Groupalia (a Groupon-like website offering coupons), she is addicted to coupons and never misses the chance to buy a new one: “I check my email for the latest offers first thing every morning. I usually buy the coupons for myself but sometimes purchase them to give as presents.” A university student who spends on average of US$90 on coupon offers every month says: “What I like the most is to discuss the latest bargains with friends.” However, a male coupon user complains most offers are aimed at women and the quality of the service is reduced, along with the price. The owner of Oxigeno, a chain of beauty shops in Madrid, says she collaborates with a number of coupon websites because “otherwise we would have to close down.” She says the only way to remain competitive is to reduce prices and that coupons are the best way of reaching a large number of consumers.
Renting out personal possessions has taken off in France, with websites such as e-loue (e-hire), Donnons.org and Co-recyclage leading the way in private transactions. The Memeburn website, which offers web-savvy insight and analysis, claims the sudden popularity of these websites is part of a new found acceptance of “pre-owned” goods by consumers affected by the economic downturn. Alexander Woog, founder of e-loue, explained that when French stock plummeted at the beginning of the month, the number of new and returning users to sites such as e-loue rose sharply, as did the number of people who were willing to hire out their goods. Examples of items up for rent include a MacBook Air for EU€60 per day, a Peugeot 206 and even a goat at an affordable EU€10 per day.
More Kiwi consumers shopping online overseas
More New Zealanders are now shopping online on overseas websites. A PricewaterhouseCoopers spokesman said the internet channel is changing the way New Zealanders shop: “The attraction of lower prices, convenience and broader product ranges is swelling the ranks of consumers choosing to shop online, both locally and on international websites.” Euromonitor International predicts that internet retailing value sales in New Zealand will expand by 10.1% in 2011, to US$286.1 million.
Hungarians who want stuff for free – try tryvertising
“Tryvertising” has reached Hungary. At Sample Central stores in Budapest, registered club members can take home and try a certain number of products. While they do not have to return the products, they cannot use the store again until they fill in an online questionnaire about them. The system is largely funded by companies willing to pay for having their products tested in this way. The list of participating companies includes Procter & Gamble, Avon, Nestlé, Nivea, Sara Lee, Unilever, Johnson & Johnson, Kraft and Reckitt Benckiser.
SHIFTING CONSUMER LOYALTY (TAKING IN LUXURY/ BRAND NOSTALGIA/PRIVATE LABEL GOODS)
Chinese big spenders shun local luxury retailers
There are growing claims in China that high-spending outbound tourism is hurting the country’s economy. However, for Beijing resident Luo Xinmiao, who calls herself a “brand addict,” shopping for luxury goods should only happen in their place of origin: “I don’t trust Burberry and Gucci in China,” she said. “I don’t visit most luxury shops in Beijing and Shanghai because I think many of their goods are now made in China. Plus they are much more expensive than in London,” she added.
Taiwanese retailers prepare for surge in Chinese shoppers
Many Taiwanese retailers are gearing-up for a surge in mainland visitors with a lot of money to spend. “I like sightseeing and sampling Taiwanese food, but I am really looking forward to going shopping in Taipei,” said Chinese businesswoman Jiang Guihong, carrying a US$1,700 Louis Vuitton bag as she browsed in a duty free store in the island’s capital. Shopping tours from mainland China have operated since 2008 but Taiwan’s recent decision to allow solo Chinese travellers to visit (the first 300 arrived in Taipei in June) has prompted retailers to invest. Affluent Chinese shoppers are fond of the island’s specialty coral, pearl and jade goods, as well as international designer products and luxury watches, which can be up to 20% cheaper in Taiwan due to lower taxes.
Kuwaiti fashion fans look beyond established brands to emerging designers
Some Kuwaiti fashionistas are becoming increasingly adventurous in their tastes, opting for up-and-coming designers instead of established brand names. “We all get bored of the big brands, especially when everyone is wearing the same bag,” according to Princess Muneera al-Sabah, who likes to accessorise her black abaya with trendy bags. The princess, who has a collection of more than 50 Hermès “Birkin” bags, adds: “For me, if an accessory is a beautiful creation and different to the usual brands we see, it will be the object of desire.”
In spite of sharp price rise, Jordanian demand for gold exceeds supply
According to the secretary of the Jordan Jewelers Association, demand for gold among Jordanian consumers remains extremely high, despite a sharp rise in its price on international markets. Demand outstripped supply during July, pushing up the price of 24-karat gold to JOD36.5/gram (US$51.40/gram) and, he said, many local consumers are buying gold “as a safe investment and as a hedge against economic uncertainty.”
ATTITUDES TO PLASTIC, OTHER FORMS OF CREDIT AND SAVING
Paying off debt a priority for many Canadians
According to a July survey on behalf of Canadian Imperial Bank of Commerce (CIBC), 72% of Canadians have some form of debt: mortgage, overdraft, credit card or personal loan. While 61% said they were making good progress towards repaying them, 42% felt their debts were weighing on their financial goals. “Managing debt is a top priority for Canadians in 2011,” CIBC executive Christina Kramer commented.
Australian Gen Y sobering up and saving
Australians, particularly those aged between 18-34 years, have tightened their belts in the past year, putting aside A$313 (US$328) a month on average, according to online bank ING Direct. Most are doing so in case their lifestyle changes or the economy deteriorates.
DOWNSIZING, TRADING UP OR BACK TO NORMAL?
Cheap and cheerful pharmacy chain tops with Chilean consumers
Dr. Simi is regarded as a provider of cheap medicines by most Mexicans and Argentineans. But in Chile, according to the Corporate Reputation Ranking 2011, published in August by local newspaper La Tercera, it’s the country’s most prestigious pharmaceutical chain, beating the likes of Farmacias Ahumada, another Mexican firm with a more high-status public image. “This is proof that Chilean consumers are changing,” commented the newspaper. It may well be an implicit condemnation of other pharmaceutical chains which allegedly colluded to raise prices last year: “Consumers have stopped being indulgent and are now mistrustful towards certain groups with particular interests,” the newspaper added. It concluded that “The Simi factor is here to stay.”
Hard times lead to diminished Irish expectations
During the Celtic Tiger years of easy credit and soaring asset values, many Irish consumers frequently traded in their car for the latest model and regularly remodeled their homes. However, their sights are now set much lower: According to a May survey conducted for the Irish food board, Bord Bía, the first thing 49% of consumers now want to do if their personal finances improve over the coming year is to “buy more expensive cuts of meat.” 45% said they would purchase indulgences or treats and 30% said they would buy organic products. When asked how their spending had changed over the previous year, 33% said it had decreased “a little,” while 24% responded it had decreased “a lot.” 30% said their spending was “about the same,” while a mere 12% reported an increase in spending.
THE GREEN BAROMETER OR ARE CONSUMERS FINANCIALLY FIT ENOUGH TO CARE?
Organic spa treatments for Thai rich and environmentally conscious
Organic spa products and treatments are becoming increasingly popular in Thailand. Consumers not only care about health, wellbeing and inner beauty, but they are also increasingly interested in environmental and social sustainability. In June 2011, the i.sawan Residential Spa & Club at Grand Hyatt Erawan Bangkok launched “Pure Organics” treatments with a range of Ecocert-certified organic skin products.
WHAT’S FOR DINNER?
Fusion food grows in popularity in the Philippines
Fusion food is emerging in the Philippines with dishes being created primarily by adventurous cooks and chefs trained abroad. The president of TravelTales Inc., which has been conducting food tours of culinary hotspots, such as Pampanga in Central Luzon, for several years, says that food blogs, social networks, and cheap airfares are all having an increased impact on Filipino cuisine.
Vietnamese consumers encouraged to substitute chicken for costly pork
With pork prices skyrocketing, housewives are being encouraged to use more chicken. The Animal Husbandry Department says the price of pork has risen by between 70% and 100% in less than a year. In contrast, chicken prices actually fell slightly during June 2011. The price hike has hit people’s pockets and had a significant impact on the dinner tables of millions of Vietnamese families, for whom pork is a favorite. According to Euromonitor International data, Vietnamese households consumed 1.8 million tonnes of pork but just 0.5 million tonnes of poultry in 2010.
TREATS THAT CONSUMERS CAN’T DO WITHOUT
Argentinean wives ask husbands for cosmetic surgery for their birthday
Cosmetic surgery is extremely popular in Argentina, with nearly 300,000 cosmetic procedures performed in the country during 2010, far more than in the UK or France, according to data from the preliminary report of the XIII International Congress of Medicine and Cosmetic Surgery. Newspapers La Nación and El Cronista have reported a growing number of wives are asking their husbands to pay for cosmetic procedures for them as birthday presents.
You’ll never take my smartphone, say Americans!
Smartphones are becoming an indispensable tool to a growing number of Americans. A July survey conducted by location-based technology company Telenav found 22% of respondents would stop brushing their teeth for a week, rather than surrendering their smartphones for the same length of time; 50% claimed they would give up such pleasures as coffee, chocolate or sports; and 10% would prefer to go without shoes. iPhone users were found to have a stronger attachment to their smartphones than those who owned Android or BlackBerry models.
Majority of young Kenyans now use mobile phones
A May study by Kenya-based research firm Consumer Insight into the mobile phone use of East Africans aged 7-24 years found Kenyan youth were the biggest spenders on airtime (ahead of Tanzanians and Ugandans), with a monthly outlay of US$38 million. The study also found 49% of young Kenyans used their mobile phones to access the internet and 64% of them owned sim cards. Throughout the region, cost was found to be a barrier to mobile phone ownership for just 20% of respondents.
Russian electronic evolution
Internet usage is exploding in Russia; Euromonitor International has the number of Russians online up from 59.7 million in 2009 to 70.5 million (out of a population of 142 million) by the end of 2011. Alongside the internet boom, electronic publishing is pursuing Russia’s large and avid readership. “Russia has very little physical distribution of books. There are no nationwide chains like Barnes & Noble or Waterstone’s,” Simon Dunlop, founder of the digital download company Bookmate.ru told the Daily Telegraph’s Russia Now supplement. With classic writers such as Alexander Pushkin still firm favourites beside detective novels, there is a large reservoir of consumers to be satisfied.
Internet users in Russia: 2005-2010
Croatians cool down with fruit-flavoured beers
Fruit-flavoured beers such as Karlovacko are proving a big hit in Croatia this summer, taking a 5-10% share of the beer market, according to local industry sources. It’s predicted that once the hype is over, fruit flavoured beer sales will stabilise at around 7% of the overall beer market.
Lithuania tops the Baltic Beer Index
The Baltic Beer Index, based on a survey conducted by the SKDS research company during spring 2011, measures people’s love of beer, how often they drink it and in which situations they prefer it. Lithuania scored 55.5 points overall, well ahead of both Estonia (51.6 points) and Latvia (49.9 points). The percentage of people who said they drank beer at least twice a week was highest in Lithuania at 38.1%, compared with 29.6% in Estonia and 22.5% in Latvia. 35.6% of Lithuanians listed beer as their favorite drink, compared with 26.4% of Estonians and 28.6% of Latvians.
THE LATEST FROM THE CONSUMER COCOON (THE HOME/ENTERTAINMENT HUB)
Brits wired for The Wire
According to UK newspaper The Sun, the most popular TV series to rent out is US series “The Wire”. It beat “Modern Family” and “The Killing” in the Lovefilm survey, reported in mid-August. The number of people hiring boxed sets is up 20% over the last five years.
Number of Brazilian households with pay TV jumps
According to trade body the Brazilian Association of TV Subscriptions (ABTA), 12.5 million Brazilian households will have pay TV by the end of 2011, a 27.5% increase on the previous year. The sector expects to earn revenue of US$9.6 billion and reach 40 million viewers during 2011, doubling its income in five years. ABTA also forecasts 4.3 million Brazilian households will access the internet via cable by the end of 2011, up from 3.7 million at the end of 2010.
Colombians spend more on entertainment
A July study by local market research company Raddar has found that Colombians are spending more on home entertainment products. According to Raddar president, this is partly because “many received a summer bonus that has been used to buy products like Blu-Ray players, Nintendo Wii video games consoles and flat-screen TVs.” Favourable exchange rates and better access to credit are also driving demand. The study found that spending on consumer electronics rose by 13% year-on-year during the month. According to Euromonitor International data, the Colombian consumer electronics market was worth US$5.5 billion in 2010.
THE TRAVEL BUG?
More foreigners visiting Poland for medical treatment and spa visits
According to the Polish Association of Medical Tourism, the size of the Polish medical tourism market is expected to grow by around 20% during 2011, to US$276 million. Polish spas are also receiving a growing number of foreigners. According to industry experts, this growth is mainly due to rising healthcare costs and lengthening public healthcare waiting lists in other countries.
Bring on the Bulgarian holiday homes
The country has returned to the top ten of an overseas property portal for the first time in three years. Some 3% of all enquires were directed at Bulgarian property, according to the report from TheMoveChannel.com. “As the Euro debt crisis continues, people are looking for bargain investments and holiday homes at low cost. Bulgaria’s real estate sales have been improving all year, with buyers attracted by exceptionally low prices for winter property, so it’s no surprise that interest has increased,” said director Dan Johnson.
A Mexican twist on experience tourism
A new tour along the border between Mexico and the USA promises participants will “live the experience of being an illegal immigrant.” Tourists usually begin their journey with a long walk through the dessert, before they get “mugged” by “drug traffickers” and hire “coyotes” (guides) to escort them to the border. Finally, they are chased and arrested by the “American Border Patrol.” The day ends back at the camp with a meal. “It is becoming highly popular, not only among wealthy Mexicans but also with people from everywhere in Latin America and even Americans,” explained one of the tour guides during a TV interview. “On an average day, we receive between 100 and 200 people, but there are days where 600 tourists arrive,” she added.
A third of South Korean office workers like holidaying alone
In a June survey of 825 office workers conducted by online recruitment website Career, 34% of respondents said they liked to go on vacation with their family, but almost as many (32%) said they enjoyed holidaying alone. Asked why they wanted to go solo, 46% said they preferred to enjoy leisure time alone, rather than spend their vacation in overcrowded resorts with other people. Other reasons were avoiding the high cost of travelling with others or the difficulty of matching their schedules with those of friends or family.
Home-grown doctors not good enough for Indonesians?
According to former Indonesian vice president Jusuf Kalla, around 10% of the Indonesian population, some 20 million people, prefer to go to Singapore and Malaysia for medical treatment than to receive it domestically. Kalla added that “These consumers want the best service available and the most accurate diagnosis. Money does not matter to them.”
Romanian holidaymakers intend staying closer to home this year
According to a May survey commissioned by Romanian news agency Agerpres, 49% of Romanians intend to holiday at home this year, up 2% from last year, while 42% intended to go abroad. The most popular destinations for those intending to go abroad were Greece (22%), Spain (15%), Italy (14%), Bulgaria (9%) and Turkey (7%). In general, interest in travelling to Western Europe has declined, as consumers seek cheaper options.
Orthodox brethren lend a helping hand (August 2011)
Daily Kathimerini journalist Stavros Tzimas believes that a drop in local hotel prices, in addition to “a feeling of solidarity towards their beleaguered Greek brethren,” has seen the number of visitors to Greece from Russia and Serbia surge this summer, with the most popular destination the country’s northern coast. According to Grigoris Tasios, president of the Halkidiki Hoteliers’ Association, package holidays are between 10% and 15% cheaper this year.