Indian consumers positive despite lingering uncertainty

While political uncertainty and economic slowdown are making consumers wary, a recent study by market research firm Nielsen reveals that India continues to be the second most optimistic country. It has recorded its highest confidence level since Q4 of calendar year 2012. The study states that India's

consumer confidence level increased six points in the first quarter of the current calendar year (January-March) with a score of 121, trailing only Indonesia, the most upbeat country for more than a year with 124 points. Nearly 68 percent of urban respondents in India feel the country is going through a recessionary phase, and within this, 54 percent say the country will be out of it in the next 12 months.

Shoots

of hope

Nielsen India President Piyush Mathur points out that accepting the current negative economic conditions and high inflation, Indian consumers are positive and hopeful about the times ahead. While the apparel retail industry has been reeling under pressure due to low consumer sentiment across India, this research should spring some hope for them.

The survey states that three-fourths (74 percent) of respondents in India are optimistic about job prospects over the next 12 months and sentiment is up by 4 percentage points from the last quarter. More than half (54 percent) of online respondents said it was a good time to buy things they want and need. On the other hand, the intention of online respondents to invest spare cash in savings is up by six percentage points to 68 percent from last quarter. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

About half the respondents said that they are looking to invest in new technology products and buy new clothes. About a third (32 percent) indicated they would invest in a retirement fund, a nine percentage-point increase from last quarter. Further, 36 percent said they planned to invest in the stock market and in mutual funds, up from 29 percent in last quarter.

Optimism to bring in stability

With the ongoing Parliament elections, people are hoping for a stable government at the Centre, which would also mean consistency in policies coupled with a boost in investment across sectors. Experts opine that rise in investment will improve customer sentiment since it will create new job opportunities leading to a rise in per capita income and increased customer spending.

Retail stores have seen 5 percent of flat sales and low footfalls during the last quarter on the back of extended discount season. Even now, brands and retailers are forced to offer schemes and discounts to keep the till ringing. The focus is shifting towards Tier-II cities that are showcasing upbeat momentum over metros. Experts feel that if a stable government is elected then the overall sentiment would witness a positive upswing.

Indonesia leads the global index with 124 points and the Philippines is third with 116. India had been the world's most optimistic market for nine consecutive quarters until the April-June 2012 period, when it ceded the title to Indonesia. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access in 60 countries.

In the latest round of the survey, conducted in the February 17 to March 7 period, consumer confidence increased in 60 percent of the markets measured by Nielsen, up from 43 percent in the preceding quarter.