Consumers intensify their vow to 'save more, spend less'
Source: The Boston Consulting Group , Author: Posted by BI-ME staff
Posted: Wed May 16, 2012 5:36 pm

UAE. The vast majority of U.S. and European consumers say they are feeling insecure, anxious, and strapped for cash. Their concerns in many markets are higher than a year ago and the highest they've been in a decade, according to a new global survey by The Boston Consulting Group (BCG).

Among the key findings from BCG's eleventh annual Consumer Sentiment Survey, conducted in April and covering more than 15,000 consumers in 16 countries:

• Consumers blame the government for the crisis
• Feelings of financial insecurity are high and getting higher in most markets
• Pessimism about the speed of economic recovery is rampant
• One in four people, on average, in the U.S. and Europe is worried about losing his or her job
• Few believe their children will live a better life—except in China
• Values such as saving money and staying healthy have skyrocketed over the past two years, while the willingness to splurge for luxury has plunged
• China is a relative bright spot, with consumers feeling more optimistic about the future than their Western counterparts

“If you take the world from the perspective of the middle-class citizen in the U.S. and Western Europe, we are still lurching from crisis to crisis," said Michael J. Silverstein, a BCG senior partner and the author of influential books on consumer behavior, including  Trading Up, Treasure Hunt, and Women Want More."Americans, in particular, are anxious about their future, their jobs, and their lack of savings. ”

Respondents in Europe cited continuing turmoil and government failure to deal with root causes as major concerns. “But conditions vary from region to region,” explained Catherine Roche, a BCG partner who has overseen the survey for the past five years.

“Respondents in Germany and Switzerland were relatively positive about spending and least likely to change their behavior as a result of the crisis, whereas respondents in Greece, Italy, and Spain said they are being forced to change their spending habits drastically.”

It’s a different story in China, however. “Chinese consumers have optimism, energy, and ambition. They say their world will be bright over the next decade,” said Silverstein, a BCG Fellow who is coauthoring a book on emerging-market consumers, due out in the fall.

“China and India’s globalizing economies are paving the way for millions of formerly poor consumers to enter the middle class. Carefully designed luxury products that reflect rising status will take a disproportionate share of income.”

BCG singles out a number of strategies that will be key for competing in this new reality. These include:

• Build products with technical, functional, and emotional benefits. “Consumers will give up their hard-earned discretionary dollars for products that deliver. The roaring sales of iPhones are one of the best examples,” noted Silverstein.

• Anticipate a sentiment hangover. “Even as the worldwide recession slowly winds down, consumers whose trust and income growth are threatened will continue to spend very cautiously for some time to come,” predicted Roche, who helps direct BCG's Center for Customer and Consumer Insight.

The findings will be incorporated into future BCG publications at www.bcgperspectives.com.

Survey Methodology
BCG conducted its 11th annual Consumer Sentiment Survey in April of 2012. The survey was deployed in the following 16 countries: Australia, Brazil, Canada, China, India, Japan, Mexico, Russia, the U.S., and seven European nations—France, Germany, Greece, Italy, Spain, Switzerland, and the U.K. BCG reached out to at least 1,400 consumers in every country and up to 2,500 in India. More than 15,000 consumers responded in total.

About The Boston Consulting Group                                                                    The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep in¬sight into the dynamics of companies and markets with close collaboration at all levels of the client organization.

This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 77 offices in 42 countries.

BCG serves the Middle East from Abu Dhabi and Dubai. Our offices there, in conjunction with the BCG office in Casablanca, play a key role in serving clients in the rapidly developing Gulf region as well as Middle East North Africa (MENA).

To date BCG has successfully conducted assignments in the Middle East serving clients across a wide range of sectors, including government, financial services, energy, industrial goods, telecommunications, real estate, healthcare and private equity.

For more information, please visit http://www.bcg.com.

About bcgperspectives.com
Bcgperspectives.com is a new website—available on PC, mobile phone, and iPad—that features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management’s agenda. It also provides unprecedented access to BCG’s extensive archive of thought leadership stretching back almost 50 years to the days of Bruce Henderson, the firm’s founder and one of the architects of modern management consulting. All of our content—including videos, podcasts, commentaries, and reports—can be accessed via PC, mobile, iPad, Facebook, Twitter, and LinkedIn.

 

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