The Pakistani consumer is losing hope. Job uncertainty and a fear of wage freeze/pay-cut amidst a rising cost of living have overwhelmed the country’s teeming millions. The changing consumer behaviour has rocked the market. The trend has not spared even high-end fashion brands and eateries.

Read: Inflation jumps 11.4pc in September

But the latest consumer confidence survey of the State Bank of Pakistan (SBP) projects a different trend. It indicates a modest improvement in household sentiments.

Most marketing professionals, business leaders and traders’ representatives, however, contest the SBP survey’s findings. They nervously quote anecdotal evidence to prove that the collective depression is growing deeper and there seems to be no stopping in the steady fall in consumer confidence for now.

According to the SBP’s recent survey report, consumer confidence scaled up to 44.2 index points in September from 43.3 two months ago.

The Consumer Confidence Survey (CCS) is the telephonic survey of 1,600 households that are selected randomly across the country. The disclaimer on the SBP website says that these surveys reflect the opinions of households and should not be considered the SBP’s views.

The latest CCS, however, earned a mention in the most recent monetary policy statement. It was termed “indicative of (a) modestly better economic outlook of the public”.

“The will of remarkably resilient Pakistani consumers seems to be weakening. People who returned to bazaarsunfazed after bloody terrorist attacks are applying restrain. They are not frequenting markets with the same spirit as before. Rising inflation and unemployment have chopped the real disposable incomes. The crushing final blow is dealt by a gloomier future economic outlook,” said a market watcher over the phone from Lahore.

SBP’s survey shows household sentiments are improving, but anecdotal evidence suggests otherwise

Sometime back, Unilever Pakistan CEO Shazia Syed in an exclusive interaction with Dawn mentioned that the consumer market was under stress.

“People are rebalancing their monthly spend, our sales data indicates. Instead of stocking kitchen and hygiene products for a month, people now prefer to shop for a week, switching from big to small packs and from pricier to cheaper brands. In extreme cases, they are going for the cheapest varieties without nametags,” she remarked during the conversation.

“We know this because this is our business. We deal in multiple fast-moving consumer products and their sales numbers are regularly pooled and analysed to fashion a befitting strategy,” she noted.

“Chaos is not a ladder that anyone can climb,” remarked another frustrated representative of a national trade body. “Pakistanis have high lifestyle aspirations, but without money it remains a private wish list with no relevance for the market. Affordability translates wish to effective market demand. The government seems too absorbed in raising revenue to care about people or their needs. The approach can land the country out of the frying pan into the fire,” he warned.

LXY Global CEO Yousuf Jamshed confirmed that the slide in the market is getting pronounced by the day. “Businesses are down drastically. Companies are behind their last year’s sales targets. On average, the food business is down by 20 per cent and fashion and lifestyle by as much as 30pc. People are closing down their outlets. This is generating negative vibes in business circles and will increase unemployment,” he said in his emailed views on the evolving situation.

Another marketing guru active in investor circles informed Dawn that multiple big western fashion brands are in the process of winding up their operations in Pakistan. “Changes in the tariff regime have rendered the business of foreign brands unviable. The falling sales volumes and higher tariffs have squeezed margins. To exit a big market like Pakistan is not easy, but it looks unavoidable. This is not going to sit well with potential foreign investors,” he said.

Some businessmen found the projected scenario to be too pessimistic. For example, the business of prepared frozen food is said to be expanding at an accelerated pace despite everything. PK Meat and Food Company CEO Saqib Butt did not notice the general contraction in the market.

“There are seasonal variations, but there is double-digit growth in the processed food segment annually. People are scaling up and there is a regular influx of new players,” he said.

‘Chaos is not a ladder that anyone can climb,’ remarked the representative of a national trade body

He believes that society has accepted the change and returned to pre-election normal. “For some time, consumers were reluctant. But now they are back. Otherwise, big departmental local chains such as Imtiaz and Chase Up wouldn’t have been expanding their networks, entering second-tier cities like Gujranwala, Faisalabad and Multan,” he said. He also mentioned foreign retail chains such as Spar entering the country.

When confronted with these facts, a tycoon said there is scope for businesses that like to operate anonymously while staying under the tax radar or enjoying backing from the right quarters to guard their business interests.

Aamir Abbasi, a Pakistani marketing professional based in the United Kingdom, blamed the media for hurting consumer and business sentiments. “It’s not just social media. The mainstream media also distorts facts and tends to exaggerate negatives. A good number of journalists are politically aligned and their analyses have a political tilt. They like projecting doomsday scenarios,” he said in an emailed comment.

Faisal Siddiqi, chief operating officer of CMC, forwarded his written comments: “I personally feel consumer behaviour is changing more than waning. They have more choices, less time and are sensitive about packaging, which many a time takes precedence over other things. In a slowdown, the disposable income falls, reducing the overall buying (power). However, I won’t attribute it to waning customer confidence but on ability to spend.”

“Pakistani consumers seem to have spoken. Dismissing it as white noise is not an answer.

The government needs to pay attention,” concluded an analyst.

Published in Dawn, The Business and Finance Weekly, October 7th, 2019