(Source: Inside Reatil Philippines | 24 February 2017)
While consumer confidence in the Philippines, Thailand and Vietnam is strong, this is not so much the case in Singapore and Malaysia, according to a new Nielsen survey.
Its Global Survey of Consumer Confidence and Spending Intentions shows the Philippines confidence index rose from 119 to 132 last year, the highest increase in the Southeast Asian markets studied.
Thailand came in second with a five-point increase to 110, followed by Vietnam with a three-point increment. Consumer confidence levels above and below a baseline of 100 respectively indicate degrees of optimism and pessimism. Malaysia and Singapore were exceptions in Southeast Asia, with confidence levels below the baseline.
Confidence indicators studied include immediate spending intention, confidence in local job prospects and sentiment about personal finances. Across the region, all three indicators showed increases from the beginning of the year.
Local conditions and festive periods in the last quarter boosted scored in markets that performed well, says Nielsen Philippines MD Stuart Jamieson. He is also responsible for emerging markets in Southeast Asia.
Vietnam and the Philippines had robust GDP growth of 6.7 and 6.6 per cent respectively in the last quarter of last year. In terms of specific confidence indicators, the Philippines had the highest increase in spending intention across the region (up eight points to 60 per cent) and job optimism (15 points up to 87 per cent). It had a five-point increase in optimism about personal finance, to 86 per cent.
Jamieson says the strong performance in all three indicators by the Philippines can be explained by its economy’s reliance on consumption rather than government spending. Sales of consumer goods grew at a rate of 7.8 per cent last year compared to 2015.
“The continued bullishness of consumers is good news for retailers and packaged-goods manufacturers because people are more willing to spend – and that means half of the battle is won,” says Jamieson.
However, optimistic consumers are a challenge for brands, which need to work harder to engage them, he says. “Now they are optimistic and are willing to spend, they are more open to experimenting or trying new or aspirational products. That means they would start looking at trying new brands or upgrading their lifestyle.”
Jamieson says brands should think about their communication strategies in the Philippines. “Today’s consumers in the Philippines are young, with the median age being 23 years old. They are highly optimistic, digitally connected and aspirational. As a brand, how can your message be relevant to this new breed of consumers?”
Meanwhile, the positive growth in Thailand’s consumer confidence in the fourth quarter can be explained by the tax deduction policy introduced by the government at the end of last year, says Nielsen Thailand MD Somwalee Limrachtamorn. He says the growth for the quarter, however, was lower than the same period in 2015 because of the death of the Thai king in October.
Somwalee says businesses and brands should focus on target marketing. “While household debt is high, Thai people are still able to afford premium products if their positioning, branding, benefits and values are strong.”