By Rana Yehia
Nielsen, a leading global provider of information and insights, recently released the global report on Consumer Confidence Index for the first quarter (Q1) of 2015.
Egypt’s Consumer Confidence stayed consistent scoring 90, the same as Q4 of 2014. This comes after a nine point increase in the last half of the year 2014.
“The jump in Egypt’s consumer confidence in the last two quarters of 2014 opened up possibilities of what could happen in the market,” said Tamer El-Araby, managing director for North Africa & the Levant.
“The next best thing to an increase in the confidence score is for it to remain stable. Moreover, the fact that the score is the highest it’s been in over two years is definitely a positive sign for the future,” El-Araby added.
The report tackles three main questions for consumer confidence, regarding personal finances, job opportunities and investments.
The report shows that over Q1 of 2015, there has been an increase in the perception of local job prospects over the next few months. There was also a decline in the points for power of investment, consequently neutralising the score to remain the same as last quarter.
The first quarter showed a fluctuation in choosing products due to political turbulences and terrorism over 2014. According to the report, 67% of consumers are optimistic about the political changes while 56% fear terrorism. The statistics also show that 53% have no confidence in their personal financial situation, and only 51% consume basic needs such as food.
Due to an increase in prices, the rate of buying basic needs such as food remained constant, while the rate of buying unnecessary products such as juices, snacks and certain cleaning products has decreased.
However, March’s Economic Summit has contributed to elevating the rates of consumer expectations in finding jobs by four points and the power of investments by one, whereas the confidence in personal finances has decreased by four.
As for expectations for the next quarter, there are two main issues that may impact the indicators, including the month of Ramadan and the application of value added tax.
Consumption increases significantly before and during Ramadan, a month before Ramadan, the rate of sales in Hyper and Super markets increase by 40%, compared to 2% in small and traditional markets, while during Ramadan sales increase by 81% in hyper and super markets and 21% in traditional markets.
The report also noted that consumers prefer discounts, and use the promotional sales system. Discounts have vastly expanded over last year such as BIM that reached 115 branch all over the country and Kazyon market that reached 46 branches.
As for value added tax, it might reduce the consumption as the prices will increase, but Nielsen expects the increase of consumption in Ramadan will make the rates in the next quarter stable at 90 or show a slight decrease.