Consumers spending patterns in global economic slowdown

Investing in markets still remains one of the major priorities for Indians — 42 per cent choose to invest in shares and mutual funds, though the figure has dropped six percentage points in six months. The Chinese, however, continue to lead the charge here — 50 per cent still believe shares are the best place to invest — the figure has dropped a mere 2 percentage points from six months ago.
The economic slow down is likely to have a serious impact on lifestyle and the way of life in many parts of the world. Globally, the retail clothing sector may be among the hardest hit, as one in two global consumers say they will cut back on buying new clothes while 40 per cent of global consumers plan to delay mobile phone or laptop technology upgrades, also suggesting a tough 2009 for the personal technology sector.
In this environment, “staying in” has become the new “going out.” Almost half (47 per cent) of global consumers will cut back on out-of-home entertainment and one in three will switch to cheaper grocery brands. In the US, more than half are cutting down on out-of-home entertainment, and the changes going even farther in France, where consumers plan to cut back on their consumption of meat and wine, the mainstays of their cuisine and 37 per cent will also cut back on at-home entertainment, an integral part of the French lifestyle.
Globally, three in five (62 per cent) consumers described their state of personal finances as “not so good/bad” a clear indication that all these budget cutbacks and lifestyle changes are increasingly involuntary. According to the Nielsen survey, 25 per cent of French consumers said they had no spare cash after paying basic living expenses, up from 17 per cent in six months ago. One in five US consumers is in the same position, as are 28 per cent of Portuguese, and 21 per cent in the UK.
Of the consumers who do have spare cash left after paying basic expenses, cultural differences are stark in terms of how that money is spent. While 70 per cent of Russians and 47 per cent of Portuguese spend extra money on new clothes, 45 per cent of Brazilians and Swiss spend extra cash on entertaining outside the home, and 53 per cent of Chinese plan to direct extra cash into holidays and vacations.
One-fifth of global consumers reported that the economy is their number one concern, followed by food prices, except in the US, where fuel prices are even more of a concern than food prices. In the Asia Pacific, too, while the economy is the biggest concern (19 per cent), people appeared to be worried about the discrepancy between work-related demands and the quality of life, with work-life balance (13 per cent) being the second biggest concern.
With companies shutting down or downsizing significantly, job security (12 per cent) is the next biggest concern, followed by food prices in the fourth spot (11 per cent). In India, the economy and terrorism are the biggest concerns (both at 14 per cent), followed by work-life balance (13 per cent). Globally, increasing utility bills, fuel prices and debts appear to be bigger concerns than crime, terrorism, global warming and war.
While the world remains firmly trapped in a severe credit crisis, consumers in the world’s fastest-developing countries believe the global recession will be over within a year. Despite being affected by the current global conditions, consumers in large developing markets view their medium-to-long-term prospects as strong.
More consumers in India (51 per cent), Vietnam (45 per cent), China (34 per cent) and Russia (31 cent) expect the global recession to end within the next 12 months as compared with the other markets surveyed. One in two Indians believe the local economy will continue to show good growth, and that the global recession will have limited impact on their buoyant domestic market.