Home / This Week / Cover Stories / A Brief Review Of Consumer Spending Patterns In FY 2018-19

A Brief Review Of Consumer Spending Patterns In FY 2018-19

Pakistani society is highly consumption-oriented. This is further accentuated by the fact that consumer spending this Eid-ul-Fit’r crossed one trillion mark. With around fifty points on Consumer Confidence Survey, there is likelihood that mix trend is likely to continue. While rise in global oil prices and third round of Rupee depreciation will cause the inflation to spiral upwards which may subsequently result in squeezed spending patterns, it remains to be seen how availability of excess disposable income will come into play courtesy tax amnesty scheme. From the remittance-receiving perspective, beneficiaries are likely to continue availing the benefit of Rupee depreciation wherein UAE dirham is touted to reach the levels of Rs38/UAE Dh by 2019.

Another trend that is fast becoming popular is buying ‘online’. The recent acquisition of Daraz Online by Chinese e-commerce giant, Alibaba bears testimony to this fact. Further, the sales by TCS’s Yayvo are likely to cross a billion mark this year. This is a healthy sign for new entrants in the online business as more and more entrepreneurs are joining the bandwagon which ultimately will make the scene more competitive.

With rising ‘young’ population in the demography, smartphone adoption and fast diminishing ‘middle’ class, consumer confidence is becoming a leading indicator in Pakistan. With the changing habits of youth, people have also witnessed a boom in the food business, as international fast food chains set up shops across the country. Due to various socio-cultural change, it has been observed that there is a paradigm shift in the way eating habits prevailed a decade before. Globalization, not only opened the doors of opportunities for businesses, also brought a change in consumers preference for food items. The social media revolution has also had an impact on the eating habits of millennials. Food franchises are booming across Pakistan’s big cities as incomes swell and more women enter the workforce, leaving them with less time and inclination to fulfill the traditional role of cooking for the family.

 

When it comes to the automobile sector, two factors have come into play. On one hand, we see more and more youngsters opting for ‘ride-sharing apps’ (Careem & Uber) due to rising unemployment. On the other hand, salaried class is opting for car financing through banks because of lack of transportation facilities in Karachi. This is the main reason why auto sales have surged despite price hike by major automobile manufacturers. For those who could afford, preferences have shifted from conventional cars to hybrid/electric cars. Vacationing and technology are two other areas which are the main recipient of consumer spending. Apart from popular local and international destinations, there has also been a growing trend of making Umrah pilgrimage every year. The ‘class-divide’ is further fueling this aspect.

The consumer confidence, to a large extent, also rests on the smooth transition of power. With election looming just around the corner, people have put their finances on hold. Presently, consumer confidence is marred by macroeconomic woes, political instability, rising interest rates and inflation. Once the new government is formed, retail and commercial activities are expected to pick up and it is expected that consumer pulse will remain upbeat for most part of the FY 2018-19.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

Check Also

Pakistan sees huge expansion in cement industry

Pakistan sees huge expansion in cement industry

PSDP, CPEC with private housing schemes likely to push and growth and development of the …

Leave a Reply