Premiumization and innovation are keys to sustainable business growth
HONG KONG, Sept. 21, 2018 /PRNewswire/ -- Hong Kong continues to present strong growth opportunities for consumer-centric businesses despite a moderate drop in the consumer confidence index from 107 in the first quarter to 105 in the second quarter this year as a result of economic uncertainties, according to the Conference Board® Global Consumer Confidence Survey conducted in collaboration with Nielsen.
The quarterly survey serves as an indicator of consumer sentiment, measuring consumer perceptions about local job prospects, personal finances and spending intentions, covering more than 32,000 respondents across 64 markets. Global consumer confidence dropped slightly by two points in the second quarter of 2018 to 104 points, returning to a level last seen in the second quarter of 2017. Overall consumer confidence remained strong, albeit recording its first decline in two and a half years.
Drivers of Consumer Confidence in Hong Kong
In Hong Kong, the consumer confidence index remained strong at 105 points despite a slight drop of two points from the first quarter of 2018. The drop was mainly attributed to consumers' decreasing readiness to spend in light of uncertain economic conditions. However, consumer confidence towards job prospects remained strong at 59% (Q1 2018: 60%) and once again reflected the wider macro-economic environment where the overall unemployment rate remains at an all-time low of 2.8%.
"Overall retail performance registered impressive growth of 12.8% in Q2. Spending from mainland visitors supported the overall momentum leading to a rebounding in sales of both luxury as well as non-luxury categories. With stable inflation and consumer confidence, we expect this momentum to continue in Q3 but at a relatively stable pace," said Michael Lee, Managing Director, Nielsen Hong Kong and Macau.
How Hong Kong Consumers Channel Their Spare Cash
There has been an increase in the consumer price index of 2.7% as of June 2018 compared with a year ago, an increasing number (+4%) of Hong Kong consumers in the second quarter indicated they will invest their spare cash into savings (72%) after covering essential expenses. Moreover, the 5% drop in the Hang Seng Index in the second quarter of 2018 compared to the previous quarter has resulted in reduced sentiment (-1%) to invest in shares / stocks / mutual funds (41%). Consumers also reduced discretionary spending on items such as vacations (29%) and out-of-home entertainment (37%) though overall purchase intention remained strong.
Hong Kong Consumers' Major Concerns
According to the survey, Hong Kong respondents cited the economy (28%) and health (27%) as their major concern in the next six months. A respective 17% of consumers considered political stability and work/life balance as major concerns in the next six months.
"Although the business environment in the second quarter of 2018 has been positive, Hong Kong's economy is expected to be affected by instability in the global economy. It is therefore important for retailers and brand owners to put more effort into product premiumization and innovation. To succeed in the era of customer experience, understanding consumer needs and leveraging the technological advancement to enhance customers' shopping experience is crucial in order to maximize business return," Lee added.
Consumer Confidence in Asia-Pacific remained high at 112 points, despite a decline of three points from the previous quarter. Within Asia Pacific, 11 of the 14 countries showed a decline except Malaysia, Australia and Indonesia. However, China (113), India (124), Indonesia (127), Malaysia (117), Philippines (127) and Vietnam (120) are in the top-10 of countries with the highest levels of consumer confidence globally.
Please click here to view the attachment.
ABOUT THE CONFERENCE BOARD® GLOBAL CONSUMER CONFIDENCE SURVEY
The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. It was conducted in May 2018 and polled more than 32,000 online consumers in 64 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample includes internet users who agreed to participate in this survey and has quotas based on age and gender for each country. It is weighted to be representative of internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of +/-0.6% at the global level. This survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. The Conference Board uses a minimum reporting standard of 60% internet penetration or an online population of 10 million for survey inclusion.
The Nielsen China Consumer Confidence Index is sourced from a separate survey conducted by Nielsen China, which is based on a mixed methodology survey of more than 2,400 respondents in China. The Global Consumer Confidence Survey was established in 2005.
ABOUT NIELSEN
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen's Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content -- video, audio and text -- is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry's only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90% of the world's population. For more information, visit http://www.nielsen.com.
ABOUT THE CONFERENCE BOARD
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. Winner of the Consensus Economics 2016 Forecast Accuracy Award (U.S.), The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
