JEDDAH — The Saudi Arabian consumers remain No. 5 in “Credit Suisse Emerging Consumer Scorecard 2015”. Credit Suisse survey said the mid-table ranking is the result of a set of mixed responses from Saudi Arabian consumers, reflective of the wider socioeconomic imbalances present in a population with around 30 percent immigrants. In this year's survey, Credit Suisse sees a continuation of the trend where the highest income earners are most optimistic about the state of their personal finances. This group has been a net 15 percent – 20 percent more optimistic than the lowest income earners for three consecutive surveys going back to the 2012 survey data. Interestingly, the survey sees a slight jump in the expectations of the lowest earners in society, with a net 24 percent of those earning less than SR5,000 expecting their personal finances to improve over a six-month period. “This can arguably be attributed to the Ministry of Labor's initiative from early 2014 to raise the minimum wage,” the report said. Market penetration in Saudi across the board is once again the highest in our survey, with above 90 percent penetration in items such as computers, cars and smartphones. In fact, all 1,583 respondents surveyed in Saudi confirmed that they own a mobile phone. High penetration rates such as these lead us to believe that the market opportunity now lies in the trading up of goods. This can be observed by the continued strong momentum in smartphone penetration, which has risen from 68 percent in our 2012 survey to 96 percent this year. Stefano Natella, Global Co-Head Securities and Analytics Research at Credit Suisse, said: “Our survey provides a unique and detailed analysis of consumer sentiment in the emerging world. While many are actively scrutinizing the macro outlook for emerging markets amidst the current volatility, the granular bottom-up analysis in our survey highlights how far from uniform consumer sentiment is. Differentiation not generalization is key for both companies and investors. The analysis delivered in this report and its related proprietary database underlines the ambition of the Credit Suisse Research Institute to provide our clients unique insights to assist their investment and corporate strategies.” Giles Keating, Credit Suisse's Global Head of Research for Private Banking and Wealth Management, said: “The survey shows the contrasting impact of the oil price collapse on Emerging Markets. Consumer sentiment in Russia and key Latin American economies is under pressure, in contrast to India where the consumer looks robust, helped by reforms. Overall, structural investment opportunities in these economies have not disappeared, but nor have their vulnerabilities.” This year's survey provides very positive support for the outlook of e-Commerce across the countries surveyed, with feedback from this year's study indicating that e-Commerce across the nine countries could become bigger as a share of total retail sales than in developed economies.
Some of the reasons for this are the relatively underdeveloped “bricks and mortar” retail sector, especially in more rural areas, the rapid increase in the share of consumers with smartphone-related inter net access creating new verticals of spending and the underlying driver of expanding disposable income. Today's survey estimates that this could lift total annual online retail sales across our surveyed markets to as much as $3trn, which would impact companies across multiple sectors including retail, finance, security and technology. Of particular note is the growth in online behavior amongst Indian consumers. For example, the share of respondents in India that have used the internet for online shopping increased to 32 percent from 20 percent in 2013, while the share that is likely to use the internet for online shopping in the future is now higher than that of China. Sizeable potential also lies in Latin America. The desire to increase future spending on holidays and travel has been a consistent theme of all our previous surveys, and this continues into 2015. The propensity to travel has risen again in this survey with consumers holidaying rising from 45 percent to 65 percent during the life of our surveys with multiple holidays now a feature.The short-term trends manifest themselves differently by country. For example, the desire to travel more has accelerated most meaningfully in Mexico and India but has slowed in China, Turkey and South Africa. Moreover, global travel distribution channels are evolving rapidly, with more emphasis on web-based bookings via both direct (company owned) and indirect channels (third party online travel agents). The associated changes in consumers' chosen booking channel are having profound effects upon the industry value chain, especially for hotels, where margins are coming under pressure, though presenting great potential for the on-line platforms themselves Mobility is another key trend for economies where GDP per capita is rising. The largest car market in the world, China, has continued its strong positive trend in car ownership, growing at a compound annual growth rate (CAGR) of 13 percent since our 2010 survey, the strongest growth in our survey. Turkey is also moving up the curve rapidly with a CAGR of 6 percent. Ownership rates have remained broadly stable in other regions. India and Indonesia have the lowest household car ownership rates, at 19 percent and 7 percent respectively, and in that respect are a source of great potential. However, it important to note that the development of the car market in the emerging world, and particularly in China, cannot be looked at in isolation from regulatory developments in areas of pollution control, energy efficiency and also, if to a lesser extent, safety requirements. Where emissions are concerned in China, 2020targets for CO2, for example, require a 32 percent reduction from the 2013 actual level (versus 25 percent in Europe). This underlines the significance of technological developments in the auto component field addressing these needs. Healthcare in emerging markets is seen as a structural growth opportunity by both companies and investors alike. Indeed the relationships between healthcare spending and rising GDP per capita are well established. The reality is that the picture is far more complicated than the simple relationships would suggest, particularly when translated into the revenue projections for companies. The nature of healthcare provision (public versus private), local versus global brand positioning and who is ultimately paying the bills are key considerations. The survey also noted that access to healthcare is growing. “There is growing government involvement in most countries, with reported access to free medicines increasing from 26 percent of the emerging market population in 2011 to 48 percent in 2014,” the report said. — SG
