Indian consumers and companies are surprisingly confident, putting the country on top even in the depths of a downturn.
Consumer confidence in India had fallen 11 points to 122, a strategist reported seven months ago, the lowest in the last five rounds of the Nielsen Global Consumer Confidence Survey. India had ceded its position of the most optimistic nation to Norway. Since then, Lehman Brothers, the 158-year-old investment bank, has collapsed and the Detroit carmakers have been gasping for money. Still worse, in end-November, 10 gun-and-grenade-totting terrorists killed 192 people across Mumbai, the nation’s financial capital.
Even as all these events sink in, India has topped the latest round of the Nielsen survey with 114 points, a massive 30 points above the global average of 84. But creditable though it may be, happy it is not. The global average itself has fallen four points since June. Norway has fallen from number one to number five, shedding 19 points. Denmark and Indonesia, which tied for the third place in the last survey, are second and third this time, but have fallen eight and 10 points, respectively.
In 43 of 52 markets, there has been a drop in consumer confidence when compared with the first half of 2008. Still, apparently Indians are not cowering in the face of the financial crisis. In fact, the country is bubbling with so much optimism that 51 per cent of those surveyed believe they will be out of the recession in 12 months.
At both Big Bazaar and ezone, there has been good growth of about 25 to 30 per cent on a same store basis. More expensive goods like LCD televisions and laptops are showing higher growth than their cheaper stable mates. But sales in November were less brisk.
LG Electronics’ believes the durable category has held on. They have not witnessed any pressure so far. In fact the festival period saw a growth of 40-50 per cent. All this is in conflict with the Index of Industrial Production, a prime indicator of the economy, which shows that consumer durable goods slipped about 3 per cent in December.
Slightly tempered in optimism, yet not completely lacking in it, is Maruti Suzuki India, which makes one of every two cars sold in the country. Its sales tumbled almost 25 per cent in November. There had been four distinct phases in 2008. April to June went okay; August to October saw some weakening. Then October was huge, with the highest ever retail sales. Then again November sales dropped only to again rise in December for Maruti cars.
The company got 44 per cent higher inquiries in Decem¬ber compared to the same period last year. People are willing to spend, but aren’t getting loans. With the government’s recent initiatives, it is expected reasonable wholesale sales as well.
Fast-moving consumer goods, or FMCG, players meanwhile are feeling more or less insulated from all this talk of downturn. Consumers are restraining spending on top-end durables and cars. In FMCG category, there was no drop seen.
India was the seventh most optimistic nation in terms of spending; this time, the country did not even make it to the list. On the contrary, Indians are eighth likeliest to put their money into savings, something that was not a priority six months ago. Understandably, even our investments in shares and mutual funds are down six points. Similarly, spending on retirement funds has dipped 2 points. Thus, it is safe to assume that when the final tally is in, Indian consumers have one eye on their wallets and the other scouting stores.