This year’s survey shows three main overarching themes spanning the eight survey countries:
1) growth in the digital economy from online retail leading to an increase in online education;
2) the adoption of healthier lifestyles and increased environmental awareness; and
3) a level of pent-up demand for discretionary purchases. With vaccines rolling out globally, forward looking sentiment indicators suggest an improvement in both confidence and income expectations, particularly in Asia. India and China top the Credit Suisse Emerging Consumer Scorecard.
Key Themes by Surveyed Country
India: Optimistic about personal finances with a growing appetite for large discretionary purchases and higher consumption growth. Consumer digital adoption is rising rapidly, particularly in banking, shopping and entertainment.
China: The rise of e-grocery, the growing popularity of online games and the increased acceptance of online education services. Other trends include increasing health consciousness, an increase in the purchase of sportswear and cosmetics demand.
Indonesia: While consumers expect to have higher incomes, there is hesitancy toward larger discretionary purchases. That said, there is pent-up demand for fashion apparel. Digital adoption has also accelerated.
Thailand: Weak consumption environment and cautious consumer outlook, but an increase in purchase intentions due to pent-up demand. Growth in online activity and environmental considerations taken into account when spending.
Turkey: Increased consumer confidence with strong prospects for wellbeing, hygiene and e-commerce. Consumers inclined to spend more for a better quality of life since the pandemic.
Brazil: Improvement in income and a change in consumption patterns, including an increase in spending on beer and take-away meals. Timing and scope of the economy’s re-opening are highly uncertain.
Mexico: Increasing digital economy driven by mobile, food and online grocery delivery. Intention to buy consumer discretionary items, but households expect income to return slowly.
The survey reveals that many of the behavioral changes observed through the pandemic have accelerated trends that were already in play rather than ones that will swiftly reverse. In most categories, it is again the young, urban and wealthy demographic that is driving consumer growth and preferences in emerging markets.
Environmental Concerns & Sustainable Consumption: Environmental concerns have been rising steadily and consumers in developing countries appear more at risk than those in developed regions because of the impact of extreme heat, flooding and droughts on their daily lives. On a global level, the survey provided strong evidence that environmental concerns do influence emerging markets consumer spending behavior, but equally, that income levels do not matter significantly in relation to environmental concerns.
There is a higher-income bias toward changing spending behavior due to environmental concerns in six of the eight countries surveyed; however, the difference with consumers on lower income levels is relatively small. Consumers in India, Thailand and China appear to be influenced most, whereas Russian consumers appear less affected by environmental issues with close to 50% saying that their spending is not influenced at all.
The perception appears to be that the ‘environmental agenda’ is driven more by younger consumers than by their parents. When reviewing the survey results by age group, however, there is a lack of significant evidence for this view as consumers aged 46 and older are influenced almost equally by environmental considerations as consumers aged 18–29.
Change in Consumption: While the survey showed that there is considerable support to address the issue of single-use plastics, there is also a significant share of consumers (around 40% or more in most countries) who are becoming increasingly concerned about gasoline and diesel-powered cars.
The survey results clearly show that consumers have started to eat healthier food and that younger consumers on the whole have increased their spending on sports items since the start of the pandemic. This combination does suggest that emerging markets consumers in most countries, particularly China, Indonesia and Turkey, have adopted a greater focus on a more sustainable and healthy lifestyles.
Digital Consumers: The survey suggests that, as economies re-open and ‘normalize,’ it is highly likely that several aspects of life that have become more digitalized will remain so, notably when it comes to communication, shopping, entertainment, healthcare and education.
E-commerce saw tremendous growth in 2020 with online sales up by 80% versus 2019. Improving technology, logistics and payment systems have allowed billions of consumers to ‘shop’ anytime and from anywhere, rather than go shopping physically. Most survey participants in all countries (except for Russia) increased the amount of grocery shopping online due to the pandemic with older consumers in Asia keener to shift to the internet to buy their groceries compared to other emerging economies.
The pandemic drove Ed-Tech to become a more prominent feature of education worldwide. The survey shows that the majority of consumers increased their use of online education with Indonesia, Mexico and Turkey being notable consumers. Looking ahead, the trend looks set to increase further, especially in Asia – China, India and Thailand.
Optimism Improving Supported by Rising Incomes & High Savings Ratios: Changing in consumer spending habits may be supported via greater savings. 2020 saw a sharp rise in savings ratios due to a closure of spending avenues. With incomes now expected to recover and economies re-opening, a net third of respondents see their personal finances improving in the first half of 2021, with the major Asian economies leading the way. There is a degree of pent up demand for discretionary goods and services, if not necessarily major big ticket purchases.
Richard Kersley, Head of Research Product, Securities Research at Credit Suisse said: “Following an unprecedented year disrupted by the global pandemic, our survey shows the global lockdowns appear to have expedited nascent structural trends, which seem unlikely to reverse with the decline of COVID-19. Nevertheless, we believe the emerging consumer is still on track to play a key role in tomorrow’s world. In our view, the pandemic has delayed, but not derailed the growth-rebalancing act between developed and emerging markets. Key structural factors such as young and dynamic demographics, higher urbanization and the rise of a growing consumer middle-class will support higher growth in emerging economies. However, it will probably take a few years before emerging countries revert to their pre-pandemic growth trends.”
Arnab Mitra, Head of India Consumer Securities Research at Credit Suisse said: “We are witnessing a broad based acceleration in consumption growth across categories in India, marking a recovery from a significant slowdown in 2018 and 2019. The survey data corroborates this as it shows a significant turnaround in optimism about personal finances. In the 2021 survey, 60% of respondents expected personal finances to improve in the next six months, which is the highest proportion recorded in a decade. The sentiment is stronger among urban consumers, although even rural has seen an improvement but to a lesser extent. The sentiment is stronger among urban consumers, although even rural has seen an improvement but to a lesser extent. This improved sentiment is leading to a surge in propensity for large ticket purchases, which according to the survey is at the highest level in a decade. A key highlight of the survey related to consumer behavior changes post COVID-19 is the leapfrogging of digital adoption by consumers across banking, shopping, entertainment, education and gaming.”
Credit Suisse again partnered with global market research firm Nielsen to conduct the Emerging Consumer Survey, which comprises more than 14,000 respondents. Unlike previous editions of this survey, the polling was all conducted online and therefore care needs to be undertaken when making comparisons with the results from previous surveys, which employed face to face interviews. The survey focuses on the eight countries of Brazil, China, India, Indonesia, Mexico, Russia, Thailand and Turkey, representing 3.7 billion people and USD 15.42 trillion of final consumption. The data and analysis is proprietary to Credit Suisse.