Consumer confidence index drops on macro-economic uncertainty
•Brand experts to brainstorm at summit
The volatile economic situation in the country appears to have caught up with the consumers, with findings showing sharp decline in consumers’ confidence and attendant negative effects on Fast-Moving Consumer Goods (FMCGs).
Nielsen Consumer Confidence Index survey of African countries, scheduled to be released later in the week, has estimated the first significant consumer confidence drop in Nigeria due to a weak macroeconomic environment, inflation, weakened consumer income, all of which impacted on the way consumers begin to feel about the future.
Indeed, the index showed that there is a decline in consumption of FMCG products, “as people will have to start reprioritizing on goods they spend their money.”
Specifically, the index showed that consumers are spending their money more on education, housing and having less disposable income to spend on branded items, except for alcoholic beverages and telecoms that made more sales in 2015.
In a related development, brand practitioners in the country are set to meet in Lagos at a one-day summit to brainstorm on the way out for “branding in a volatile economy”.
The brand platform lecture series, courtesy of Brandzone Consulting LLC, will focus on how branding, marketing and communications experts can reach today’s technologically savvy audiences, building deep consumer relationships and connect with the consumer to help their organisations break even.
Managing Director of Nielsen in the West African region, Lampe Omoyele, in a sneak preview of the report, explained that it was the first the Nigerian consumers would show a decline in confidence, noting that it is a “red flag” that should not be ignored.
The survey examines criteria like consumers’ perception about job outlook; tendency to spend money in the short term; where consumers will they spend their money in the future; will they spend or will they save?, as well as other criteria.
An analysis of the Nielsen Consumer Confidence Index showed that any figure over 100 points is considered as consumers having positive outlook. Anything below 100 shows a negative outlook. The lower below 100 it is, the more negative, and the more above 100, the more the positive outlook.
According to Omoyele, “when we started the survey in the first quarter of 2014, Nigeria was significantly above 100 (110 points). It steadily increased till third quarter of 2015 when it showed decline to 104 points.
“Whereas it is still higher than 100, it was a red flag for us. In the fourth quarter of 2015, it remains stable at 104. So, the second half of 2015 showed a decline compared to first half of the same year,” he said.
“They (consumers) were also concerned about the budget not being released on time, not having clarity about situation of things particularly with the elections coming. Yet confidence level still increased because people have hope. So, the second quarter showed improvement.
“At post-election, people are now expectant but they were not seeing the immediate fulfilment of hopes in the second half of the 2015.”
On consumers re-prioritising their expenditure profile, Omoyele said: “The alcoholic beverages by Nigerian Breweries (NB) were driven by value brands and a lot of Consolidated Breweries brands (acquired by NB) are value brands. So, when you have a situation where consumer confidence is reducing and access to money reducing, they will prioritise and spend only on value-for-money brand and that drove the alcoholic segment.
The other point with NB is that they have consistently engaged with their consumers.”
He said further that it was imperative for FMCG businesses to begin to hold market shares, to retain their consumers and do not reduce the quantity they are consuming.
Managing partner of Brandzone and convener Brand platform Lecture Series, Chizor Malize, said it was against this background that this year’s summit was aptly entitled: “Branding in a volatile economy”, to offer a clinical attempt at diagnosing and proffering solutions- from branding and marketing communication perspectives- to myriads of challenges facing the nation.
Malize observed that the Nigeria’s economy is at a crossroad, which thus portends a great danger to the continuous existence of numerous businesses and other professional service providers- of which the marketing communication industry is not exempted.