Seventy-seven percent of Hong Kong consumers are spending the same on necessities while 54% continue to spend on luxury items despite the economic downturn, according to a global survey by leading market research firm Synovate.
Interestingly, when asked whether they are worried about the economy, 58% of consumers say they are, but they just can't stop spending.
Synovate surveyed more than 17,300 people across 26 markets and found that people are regaining their positive outlook on the economy, becoming more optimistic for themselves and their country's economy.
Spending as usual
This latest survey shows that, while not many people are spending more in the downturn, the majority is maintaining their usual habits. Hong Kong consumers are spending the same on categories such as staple food items (86%), hot beverages like coffee and tea (68%), dairy products (66%), cosmetics (58%), and healthcare products (53%).
Brendan Shair, Managing Director of Synovate in Hong Kong comments:
"The economic climate is surely not as good as last year. However, on any regular day when you go to the markets and some of the shops, it is still buzzing with people. This reflects in the high percentage of people saying they have maintained the same spending levels when it comes to necessities (77%) and luxuries (54%). This is good news for many companies."
Hong Kong consumers' overall monetary habits have not changed much either.
"After SARS and the previous Asian financial crisis, people in Hong Kong understand the importance of saving for a rainy day. It is not a surprise to see that across the 26 markets surveyed, people in Hong Kong are one of the highest groups (60%) to indicate their saving patterns did not change.
"And likely because of their habits of saving and still having money in their pockets, consumers also admit they are checking prices of food items less often. Over half of those surveyed said they are behaving in the same way as they were six months ago."
It's not as bad as we think
What is the impact of the economic downturn to Hong Kong consumers? Findings show it is not as bad as we think. Hong Kong fared better compared to its closer neighbours in the region.
Sixty-eight percent of people in Hong Kong say they are earning the same amount as six months ago, with 24% indicating they are earning less.
Earning levels in Korea (54% earn the same, 30% earn less), Japan (44% earn the same, 44% earn less), and Taiwan (40% earn the same, 43% earn less) seem to be more affected by the downturn.
When asked about impulse buying, 55% of Hong Kong consumers say they are shopping as usual.
Furthermore, 61% say they have not changed a major life decision, such as getting married, having a child, or changing jobs, due to the current economic situation.
View on Hong Kong's economy
Many projections have been made on whether Hong Kong's economy is starting to improve or will continue to go down.
We asked respondents their view on this, and 48% believe the economy is going downhill and will get worse before it gets better, with more females (49%) agreeing to this than males (45%).
Thirty-three percent believe the economy is in a bad patch but will quickly get better.
In November 2008, 25% of people across the globe said that they find the economy boring and don't pay much attention.
In May 2009, it was up to 29%.
The highest agreement came from Hong Kong.
"Fifty-four percent of people in Hong Kong find the economy boring and don't pay much attention. This really shows that people in the city are bombarded with news on the economy, and negative ones, every day and they are getting tired of it. Over time, people would wonder whether the economy is really as bad as it is projected. From the low of the Hang Seng Index at 10,676 points, to its peak at 23,369, we currently stand at around 20,000 points. Are we still in a financial crisis which echoes in the news everyday?" says Shair.
Recommendations for companies in the downturn
This survey finds Hong Kong consumers are very brand loyal. In addition to spending money as usual, consumers have not switched brands to get more for the same amount of money in the current economic situation.
A high majority indicate they will continue to use the same brand for staple food items (85%), hot beverages (82%), laundry and cleaning products (82%), dairy products (81%), soft drinks (79%), canned goods (78%), bottled water (75%), cosmetics (73%), healthcare products (72%), and alcoholic beverages (68%).
"These numbers reinforce the idea that companies should continue to invest in building and maintaining their brands despite the downturn. A brand is one of the most important aspects that connect to consumers. By continuing with customer experience improvement and understanding which brand attributes appeal most to consumers, sales will keep rolling in."
About the Synovate Economy and Prices May 2009 survey
The latest Synovate survey on economy and prices was conducted in May 2009 across 26 markets and over 17,300 respondents.
The markets covered were Argentina, Australia, Belgium, Brazil, Bulgaria, Canada, Cyprus, Denmark, France, Germany, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Netherlands, New Zealand, Serbia, South Africa, Spain, Taiwan, Turkey, the UAE, the UK and the USA.
For more information on this study, visit www.synovate.com/insights/infact .
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions.
The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,700 staff across 62 countries.
For more information on Synovate visit www.synovate.com .
Hong Kong - 10 August 2009