Neilsen’s survey reveals more Australian consumer concerns
The results of Neilsen’s latest Global Online Consumer Confidence Survey (released 27 July 2011) reveal that increases in costs of living are undermining the confidence of Australian consumers. Australian consumer concerns coincide with the uncertainties common to countries that faired worse than Australia during the 2008 Global Financial Crisis (GFC).
The increasing price of food was consumers’ top global concern, for the second quarter in a row:
• Nearly one-fifth of consumers have no spare cash, higher than at any point during the GFC of 2009
• For the first-time since 2009, consumers are focused on reducing every aspect of household expenditure
• Nearly half of all households are saving any spare cash, but this is being eroded by the onslaught of rising utility and food prices, according to a statement released by Neilsen.
Higher prices triggering Australia consumer caution
“Australian households are being hit hard with unrelenting price increases across the board. Consumers were aware that from 1 July, households would be hit by one of the biggest rises in the cost of living in decades – utility bills – with electricity, water and gas prices all increasing,” said Chris Percy, the managing director – Pacific, Nielsen Consumer Group.
“The January floods, which restricted supplies of fruit and vegetables, have had lingering effects on produce costs, causing food prices to rise. Belt-tightening is the norm for many households as price increases across multiple sectors continue to erode many family budgets.
“Economically, Australia is currently a polarised nation facing falling asset prices, high levels of government debt, growing inflation and rising interest rates, yet it is a country with low unemployment (4.9%), a booming resources sector and one of the strongest currencies in the world. It’s no surprise that consumers continue to be cautious in their borrowing and spending under such opposing fiscal conditions,” said Percy.
Dwindling spare cash and extra debt worries
17 per cent of Australian consumers said they have no spare cash after paying essential living expenses, says Neilsen. This is a rise of six percentage points on the previous quarter, and the highest percentage recorded in the Asia Pacific region after New Zealand (18%).
“34 per cent of Australian consumers said they are looking to settle personal debt after putting any spare cash into savings (45%). Just over a quarter of Australian consumers (27%) believe we are in a recession, which is an increase of seven percentage points versus the previous quarter”, says Neilsen.
“As disposable income continues to shrink, so do Australian consumers’ perceptions of the state of their personal finances over the next twelve months. One-third of consumers thought that their financial position was ‘not in great shape’, an increase of seven percentage points on the prior quarter, and comparable to GFC levels.”
“The percentage of consumers who believed that it was a bad time to buy things they want and need over the next twelve months also increased five percentage points to 13 per cent, higher than in any quarter of 2009.”
Cost cutting actions
The survey results reveal that, for the first time since 2009, consumers are actively looking at ways to reduce household expenditure in an effort to preserve household income.
“Saving on gas and electricity (68%), cutting down on out-of-home entertainment (67%) and spending less on new clothes (65%) were the top three actions taken by consumers in order to save on household expenditure compared to this time last year,” said Neilsen.
The greatest percentage point increases were in cutting down on or buying cheaper brands of alcohol (33%) and cutting down on in-home entertainment (27%), each rising nine percentage points. Cutting down on out-of-home entertainment (64%), switching to cheaper grocery brands (62%) and cutting down on telephone expenses (46%) recorded eight, seven and seven percentage point increases, respectively.
“We haven’t seen this level of commitment to reducing household expenditure since the GFC began in late 2008. As pressure on family budgets continues to mount, worried consumers are constantly looking at ways to save on household expenses. This quarter has seen consumers cut back on everything, from alcohol expenditure/consumption to telephone expenses and from in- and out-of-home entertainment to buying to cheaper grocery brands,” said Percy.
“Restraint on household expenditure has become the norm for many Australian households and consumers have indicated that these cost cutting actions are set to continue even when economic conditions do improve.”
The Neilsen global survey was conducted between 20 May and 7 June, 2011 and polled more than 31,000 internet consumers in 56 countries. The Neilsen Global Online Survey was established in 2005.
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