Consumer confidence relatively higher in India, China in APAC: Survey

08 Jul '24

3 min read

Consumer confidence relatively higher in India, China in APAC: Survey

Pic: McKinsey's

Insights

Consumer confidence is higher in India and China than in Asia-Pacific' (APAC) more advanced economies, a McKinsey survey revealed.
Consumer sentiment appears less buoyant in advanced APAC economies than in Europe and the US.
While spending intentions for the coming quarter are positive in some APAC markets, they are predominantly negative in others.

Consumer confidence is higher in India and China than in Asia-Pacific’ (APAC) more advanced economies, which may result from the growing number of consumers ascending to the middle and upper classes, according to McKinsey’s latest ConsumerWise Survey.

Consumer optimism in China increased in the second quarter (Q2) this year, primarily fueled by younger generations, while confidence dipped in India ahead of the national election results. This decline was particularly pronounced among baby boomers, the survey revealed.

Consumer sentiment appears less buoyant in advanced APAC economies than in Europe and the United States. In Australia, economic activity has virtually stalled, and Japan’s economy contracted in the second quarter, primarily because of the repercussions of the Noto earthquake in early 2024 and slowing economic growth.

Consumers in leading APAC markets have turned more cautious and thoughtful since the beginning of this year and a growing number of consumers are trading down to save money, although many are also inclined to selectively splurge, it found.

While South Korea’s economy expanded faster than anticipated, consumer confidence there has declined. However, there is a pronounced generational divide: Gen Xers and baby boomers are more pessimistic about the economy than millennials and Gen Zers.

While spending intentions for the coming quarter are positive in some APAC markets, they are predominantly negative in others, an article on McKinsey website said.

In India, consumers consistently express net positive spending intent for both essential and semi-essential items.

In Japan and Australia, net spending intent is largely negative, except for a few essential categories. Consumers in these countries show the least inclination to spend on luxury and non-essential items. Overall spending intent remains negative across all categories in South Korea.

Consumer demand is rising for the seamless integration of physical and digital retail offerings, or a so-called phygital experience. According to the survey, consumers are using a broader range of channels than ever before to purchase groceries and other goods, with South Korea, China and India showing particularly high levels of omni-channel engagement.

In these countries, more than half of consumers expect to use multiple channels for shopping across all categories.

Despite economic uncertainty promoting increased saving, APAC consumers are increasingly willing to spend more in select categories. Between 60 and 80 per cent of consumers in India and China are increasing their spending overall.

APAC consumers are actively adapting their shopping habits; for example, switching brands, trying new digital shopping methods and opting for private-label brands.

Across the region, more than 60 per cent of consumers say the primary motivation for switching brands or retailers is the pursuit of better value. Quality and novelty also play crucial roles in influencing consumer behaviour.

The shift has been particularly significant in China in Q2 2024: 86 per cent of consumers have altered their shopping behaviour in search of greater value, an increase of seven percentage points from the previous quarter.

In contrast, consumers in Japan are changing their behaviour at a slower pace, demonstrating greater brand loyalty and a preference for familiar shopping channels.

Fibre2Fashion News Desk (DS)

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