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Tuesday March 19, 2024

Half of Pakistan’s urban consumers prone to save money: McKinsey

By our correspondents
January 23, 2018

KARACHI: Over half of urban Pakistan’s consumers are now more prone to save money as Pakistan’s thriving consumer economy is experiencing a surge in thrifty brand loyalists, a foreign management consulting firm said.

“Fifty four percent of consumers in Pakistan changed their consumer buying habits to save (while) 29 percent of consumers look to buy their preferred brands at stores with lower prices,” McKinsey and Company said in its latest global sentiment survey.

McKinsey 2018 Global Sentiment Survey, spreading over Sept. 2015 to Sept. 2017, gleaned information from 4,007 respondents in Saudi Arab, UAE, Egypt and Pakistan. Having drawn its findings from in-person interviews with 1,000 respondents from major cities in Pakistan, the New York-based consultancy firm said “Pakistani consumers are generally brand loyal if they find the right price”.

“Consumers look for ways to buy their preferred brands for less; very few trade down and some trade up,” it added. Twenty nine percent of respondents prefer brand at stores with lower prices.

The central bank, in its latest Pakistan’s economy report, acknowledged growing consumer demand and improving buying power as prime reasons for broad-based growth. The consulting firm said all consumers find creative ways to spend less and save money, while 36 percent pay more attention to prices.

Thirty eight percent of respondents said they increasingly look for ways to save money, 37 percent delay purchases and 34 percent scour through sales promotions, coupons and loyalty cards and buy in bulk, and 32 percent shop around to grab deals.

Almost half of them represent low-, 28 percent middle- and 23 percent high-income groups from Karachi, Lahore and Islamabad. Sixty percent of them were females and 40 percent males. The New York-based consultancy said Pakistani consumers are becoming savvy cost-cutters as they “explore other eating habits to save money”. Twenty three percent of them cook from scratch as compared to 15 percent in the Middle East region.

McKinsey also found that local consumers are shifting their spending towards grocery stores and they are more bullish in their spending. “Pakistani consumers plan to spend 49 percent of additional income (and) most spending would go towards education and everyday necessities,” it said. Thirty four percent will prefer savings and other 17 percent to pay off debts.

The spending priority of 63 percent respondents is education, followed by everyday necessities, clothing, home goods and restaurants. While 62 percent of the respondents were concerned about job security of themselves or their family, the consultancy firm said “Pakistani consumers feel more financially secure and are more future looking than those in the broader region”.

Total 68 percent of the respondents in the region feared that they or a family member would loss job in the next year Thirty four percent of respondents said they are optimistic about household income and country’s economy. Forty two percent of them find it hard to make ends meet now than 12 months ago and 39 percent live paycheck to paycheck.