Wary consumers rein in spending
The virulent second Covid-19 wave that is wreaking havoc in India is prompting consumers to cut back on discretionary spending, prioritise their health, shop online, and buy only essential goods, a trend that could take months to normalise, according to companies.
Consumers in India have once again turned to “cautious consumption”, Deloitte said on Wednesday after it released findings of a 30-day global consumer survey. Indians accounted for the most number of people who reported feeling anxious during the second wave, among 18 countries surveyed by Deloitte.
“Spending intent shows consumers are focusing more on non-discretionary items as compared with the previous waves of the survey. About 48% consumers show net spending intent towards healthcare, 33% towards medicines, 42% towards internet, 47% towards groceries, and 44% towards household goods, indicating that consumers want to focus on non-discretionary spends in the time of crisis,” Deloitte said.
The survey findings reflect heightened consumer apprehensions, which are at the core of their decision-making, said Porus Doctor, partner and consumer industry leader, Deloitte Touche Tohmatsu India Llp.
Worsening Covid situation is is prompting consumers to stock up on essentials.
Consumers are in no mood to experiment, said Venkatesh Vijayaraghavan, CEO and director, personal care and alliances, CavinKare. “The euphoria that we saw around indulgent products in the initial phase (last year) we may not see that in this round,” said Vijayaraghavan. This, he said, is translating into lower sales of indulgent snacking, dairy beverages and skincare products.
Growth will be delayed by yet another quarter, according to firms. “With a few states levying partial lockdowns, we anticipate some disruptions in the supply chain,” said Manish Sharma, president and CEO, India and South Asia, of Panasonic.
Pent-up demand will be back once markets reopen, but Panasonic may see a loss of 35-40% against projections during the ongoing quarter, Sharma said.
On Tuesday, packaged foods firm Britannia’s management said pantry-loading had returned in some markets with consumers preparing to spend long hours at home. “I don’t think we are going to come out of this situation for three or four months,” said Varun Berry, managing director, Britannia Industries Ltd.
The wave is also accompanied by strict state-wise lockdowns , with states such as Maharashtra, Karnataka and Delhi shut.
Further restrictions on movement in May and June could deeply impact discretionary purchases, said Amit Adarkar, CEO, Ipsos India.
Last week, Ipsos reported a 1.1 percentage point dip in consumer confidence in April over March 2021.