UAE shoppers in a need of a confidence boost

FOR the first time in 2010, consumer confidence in the UAE dropped 4 points to 97 points in the fourth quarter of 2010 from the third quarter of 2010, placing it in the top 15 of the Global Consumer Confidence Index. UAE’s ranking fell out of the top ten most optimistic nations after being in top 10 consecutively for the last three quarters of 2010, , according to the latest edition of the Nielsen research research released early this month.

Nielsen’s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions amongst approximately 29,000 online consumers in 52 countries throughout the Middle East, Asia Pacific, Europe, Latin America and North America.The index provides a single indicator of consumer sentiment towards the current economic situation as well as intentions and expectations for the future. Levels above a baseline of 100 indicate degrees of optimism.

“The UAE’s drop in ranking from the top 10 can be attributed to the fact that quarter four witnessed 14 countries end the year with a consumer confidence index of 100 points or greater as compared to the 11 countries who hit the 100+ index mark one year ago. With UAE consumer’s sentiments having more or less remained the same throughout 2010, our comparative ranking now places us in the15th position globally,” said Sevil Ermin, managing director, UAE, The Nielsen Company.

The Nielsen survey was conducted between November 10 and December 1, 2010 and polled over 29,000 consumers in 52 countries about their confidence levels and economic outlook. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%.

Global consumers ended 2010 more pessimistic than at the start of last year as hope for a global economic recovery evaporated at the end of the year with confidence levels falling in 25 out of 52 countries surveyed in the fourth quarter. Widespread concern for unemployment, job creation, rising food and utility costs gave consumers a harsh reality check and eradicated any expectation of sustained economic recovery.

“The overall results reveal that consumers in emerging markets are more confident compared to developed economies. Nine of the global top 10 optimistic nations were emerging markets,” Ms Ermin explained.

Consumers holding their breath

Although concerns about job security in the UAE have declined from last quarter (25% in Q4 compared to 29% in Q3), this still remains the main concern for UAE consumers. Consumer perceptions of local job prospects have also declined this quarter to 50% saying they were good or excellent compared to 54% in the third quarter.

“Having weathered the worst of the storm with the Dubai debt crisis in the last quarter of 2009, which was followed by a quick resurgence in optimism, UAE consumers are now holding their breath for a significant positive indicator,” added Ms Ermin.

The state of the economy continues to be a major concern for UAE consumers despite its decline in the past few waves (18% in Q4 vs. 21% in Q3 2010). Other concerns showing a rise amongst UAE consumers include children’s education and welfare, and increasing utility bills, food, and fuel prices. Interestingly, the UAE featured in the top ten of countries where some consumers (7%) had no major concerns over the next six months.

In the UAE, 69% of consumers still think that they are in a recession, with only one third of them believing the country will come out of recession in the coming year. TVans Old Skool Grise