Households begin to reduce consumption, spending: Survey

Erwida Maulia, The Jakarta Post, Jakarta | Fri, 04/03/2009 2:18 PM

Upper-middle class consumers may not have suffered a reduction in income as a result of the global monetary crisis, but most have cut their spending on tertiary and even secondary products, a survey revealed Thursday.

The survey, conducted in February by market research firm PT Ipsos Indonesia, found that 70 percent of nearly 600 upper-middle class women surveyed in Jakarta had reduced their household expenses and were saving cash in anticipation of financial difficulties in the future.

Twenty seven percent of respondents preferred to cut their bill costs, 24 percent reduced consumption, 19 percent shifted to products with less packaging, 13 percent switched to cheaper brands, 8 percent chose to delay buying certain purchases and 8 percent said they would stop consuming some products.

"They tend to reduce tertiary expenses such as buying outfits, eating at restaurants, visiting malls and cutting pocket money for children," Ipsos Indonesia managing director Iwan Murty said at the announcement of the findings at a press conference.

"They also cut some costs for secondary expenses, such as electricity bills, cell phone bills and cosmetic and skincare products," he added.

Respondents opted to reduce their consumption of milk and snacks and their need for laundry detergent and home cleaning products.

"One respondent even said she reduced milk consumption for her infant from five to three times a day while others said they used less moisturizer," Iwan said.

The changes in consumption patterns were not the result of declining income, he said, with only one respondent saying her household experienced a slide in revenue.

This spending behavior is in response to the soaring prices of many products and because of media coverage of the global financial recession, Iwan said.

"Had the media taken a more positive spin on the crisis, these women would most likely have not changed their spending patterns.

Besides reviewing their attitudes to consumption, half the respondents said they planned to earn additional incomes.

This situation is not unique to Indonesia, Ipsos said, and resembled patterns in other Asia-Pacific countries.

Ipsos Asia Pacific chief executive officer Rodrigo Tony said in a press statement that according to surveys involving 1,000 respondents in India, South Korea, China, Japan and Australia, most households in the region were trying to reduce their expenses by cutting consumption.

Industry, however, should not be discouraged by this condition, Iwan said.

They should not cut prices or stop advertising because that would have long term effects on weakening brand positions and, subsequently, future profits.