Magazines Archives - 2009 February

Global downturn dictating consumer choices
Story 7 - News

COSMETIC products and soda are the first to go as consumers the world over tighten their expenses in light of anxieties over the global economic uncertainties, according to UK consumerinsights
company Synovate. Its survey on 11,500 respondents in 18 markets across Asia, Europe and the Americas last November discovered that 27% of consumers claimed to be spending less on cosmetics, albeit more than in other consumer categories, while 26% had cut back on soft drinks and 25% on alcoholic beverage.

Explaining the findings, Mike Sherman, Synovate’s global director of knowledge management and insight, said consumers were likely to have made compromises across categories in terms
of quantity, quality or both. “For example, consumers may ... [prefer] ownbrand groceries so they can still treat themselves to personal items,” he stated.

And consumers who allow themselves little luxuries like perfume or music might scrimp on other categories, while those whose cultural inclinations veer towards imbibing alcoholic beverage
might go for cheaper brands.

“I suspect the story behind these numbers is that people are choosing to drink cheaper rather than drink less. The mistake would be to assume that everyone will respond in the same way,”
Sherman cautioned.

There is also a growing preference for generic products, according to the survey, which covered Malaysia, Hong Kong, Taiwan, Canada, the US, Mexico Brazil, the UK, Belgium, Bulgaria, Denmark,
France, Greece, the Netherlands, Romania, Russia, Serbia and Turkey.

“In general, more people have already switched to cheaper brands than [those] still planning to do so. However, there is still a significant number of people planning to switch, and room to manoeuvre for marketers,” the research firm maintained.

Based on its data, 18% of consumers have already switched to cheaper brands for canned goods, while 10% — mostly in Malaysia and Mexico — were planning to. The majority (58%) claimed
they would stay with their brands.

“There are more changes in brand leadership in a downturn than in good times. Clearly, there are good opportu-nities for generic or cheaper brands; and for the most expensive brands, it is a time to build on loyalty to protect, maintain and build on position,” Sherman noted.

Synovate’s findings on private labels dovetailed with The Nielsen Company’s survey results for Singapore showing such labels gaining popularity, with middle- to high-income households
switching to cheaper alternatives in the wake of recession in the city-state. Nielsen saw overall growth in housebrand penetration, spend levels and purchase frequency between June and November 2008. “House-brand penetration stood at 91%, with over nine in 10 households having purchased at least one house-brand item during the period tracked. Not only did households increase their purchase frequency, they also spent more on house brands during this six-month period,” it stated.

This proves that house brands are no longer confined to the country’s lower-income segment, said Ooi Pin Pin, retailer services associate director of The Nielsen Company Singapore.

“Households with the highest combined income of above S$6,000 (US$3,970) registered the biggest jump of 46% to make up 28% of house-brand buyers. In fact, middle-class households with a
combined income of above S$4,000 each account for 49% of total house-brand consumers,” she noted.

Nielsen found the staple and paper categories the most sought-after housebrand items while of the 80 grocery categories tracked by the company, rice, bread and cooking oil emerged the top three in demand.

“While house brands tend to compete on price, retailers should take heed of consumers’ receptiveness to move beyond this value proposition, and focus on quality and innovation to grow
the assortment and market share of their in-house products,” Ooi asserted, adding that there are opportunities to expand into other categories such as food and health items as seen in mature
house-brand markets.

“It is evident that house brands have shed their generic and inferior image of yesteryear as consumers search for the bargains that best meet their needs in these tough times,” she added.

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