The Pakistani consumer is losing hope. Job uncertainty and fear of freezing wages / lowering wages amid rising cost of living have overwhelmed the millions of people in the country. The changing behavior of the consumer has shaken the market. The trend has not spared even in high-end fashion brands and restaurants.
Read: Inflation jumps 11.4pc in September
But the latest consumer confidence survey of the State Bank of Pakistan (SBP) projects a different trend. It indicates a modest improvement in the feelings of the home.
However, most marketing professionals, business leaders and merchant representatives question the results of the SBP survey. They cite anecdotal evidence nervously to show that collective depression is worsening and that, at the moment, it seems that the steady decline in consumer confidence will not stop.
According to the recent SBP survey report, consumer confidence increased to 44.2 index points in September from 43.3 two months ago.
The Consumer Confidence Survey (CCS) is the telephone survey of 1,600 randomly selected households across the country. The disclaimer on the SBP website says that these surveys reflect the opinions of households and should not be considered the opinions of SBP.
The last CCS, however, won a mention in the most recent monetary policy statement. It was called "indicative of (a) a modestly better economic outlook of the public."
“The will of notably resilient Pakistani consumers seems to be weakening. People who returned to stunned bazaars after bloody terrorist attacks are applying restrictions. They are not frequenting markets with the same spirit as before. The increase in inflation and unemployment have reduced the real disposable income. The final blow is crushed by a bleak future economic outlook, ”a market observer said by phone from Lahore.
The SBP survey shows that household feelings are improving, but anecdotal evidence suggests otherwise
Some time ago, the CEO of Unilever Pakistan, Shazia Syed, in an exclusive interaction with Dawn He mentioned that the consumer market was under stress.
"People are rebalancing their monthly spending, they indicate our sales data. Instead of storing kitchen and hygiene products for a month, people now prefer to buy for a week, switching from large packages to smaller ones and from more expensive brands to more cheap In extreme cases, they opt for the cheapest varieties without name tags, ”he said during the conversation.
“We know this because this is our business. We deal with multiple fast-moving consumer products and their sales numbers are grouped and analyzed regularly to create an appropriate strategy, ”he said.
"Chaos is not a ladder that anyone can climb," said another frustrated representative of a national trade agency. “Pakistanis have great lifestyle aspirations, but without money it is still a private wish list with no relevance to the market. Affordability translates the desire for effective market demand. The government seems too absorbed in increasing income to worry about people or their needs. The approach can make the country leave the pan in the fire, ”he warned.
The CEO of LXY Global, Yousuf Jamshed, confirmed that the fall in the market is pronouncing every day. “Companies have fallen dramatically. Companies are behind their sales goals last year. On average, the food business has been reduced by 20 percent and fashion and lifestyle up to 30 percent. People are closing their points of sale. This is generating negative vibrations in business circles and will increase unemployment, ”he said in his opinions sent by email about the evolution of the situation.
Another active marketing guru in informed investor circles Dawn that multiple large western fashion brands are in the process of liquidating their operations in Pakistan. “The changes in the rate system have made the business of foreign brands unfeasible. The drop in sales volumes and higher tariffs have reduced margins. Leaving a big market like Pakistan is not easy, but it seems inevitable. This is not going to fit well with potential foreign investors, "he said.
Some businessmen considered that the projected scenario was too pessimistic. For example, it is said that the prepared frozen food business is expanding at an accelerated rate despite everything. The CEO of PK Meat and Food Company, Saqib Butt, did not notice the general contraction in the market.
“There are seasonal variations, but there is a double-digit growth in the segment of processed foods annually. People are increasing and there is a regular influx of new players, "he said.
"Chaos is not a ladder that anyone can climb," said the representative of a national trade agency
He believes that society accepted the change and returned to pre-election normality. “For some time, consumers were reluctant. But now they are back. Otherwise, large local department chains such as Imtiaz and Chase Up would not have been expanding their networks, entering second-tier cities like Gujranwala, Faisalabad and Multan, "he said. He also mentioned that foreign retail chains such as Spar enter the country.
When faced with these facts, a tycoon said there is room for companies that like to operate anonymously while remaining under the tax radar or enjoying the support of the right sectors to protect their business interests.
Aamir Abbasi, a Pakistani marketing professional based in the United Kingdom, blamed the media for damaging the feelings of consumers and businesses. "It's not just social networks. The mainstream media also distort the facts and tend to exaggerate the negatives. A good number of journalists are politically aligned and their analyzes have a political inclination. They like to project scenarios of the end of the world," He said in a comment sent by email.
Faisal Siddiqi, CMC's director of operations, sent his comments in writing: “Personally, I feel that consumer behavior is changing more than waning. They have more options, less time and are sensitive to packaging, which often takes priority over other things. In a slowdown, disposable income falls, reducing total purchase (power). However, I will not attribute it to the decrease in customer confidence, but to the ability to spend. "
“Pakistani consumers seem to have spoken. Discarding it as white noise is not an answer.
The government must pay attention, ”an analyst concluded.
Published in Dawn, The Business and Finance Weekly, October 7, 2019
Source: https://www.dawn.com/news/1509349/is-consumer-confidence-waxing-or-waning