NEW DELHI :
More shoppers were cautious about spending on discretionary items and a large majority claimed to have cut down on non-essentials as the uncertainty and fear of covid-19 are altering consumer behaviour, said a recent survey by KPMG India. A majority of the participants said concerns over finances and job prospects prompted them to cut discretionary spends.
Interestingly, more shoppers in tier-I cities, such as Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad and Mumbai, said they had cut back on discretionary expenses, while fewer people in tier-II and tier-III cities had taken similar steps.
In all, 78% of those surveyed said they had reduced their discretionary spends, while 18% claimed their spends were at similar levels, and 4% said their discretionary spends had actually increased.
However, many were also hopeful about tiding over the covid-related challenges within six months. Overall, 51% respondents said the impact will be short-lived and normalcy will return soon. Interestingly, people from tier-II and tier-III cities were 1.9 times more positive than those in tier I cities.
KPMG surveyed 2,376 respondents between 18 May and 7 June. Close to 60% were aged 20-30 years, 37% were from tier-I cities, while 40% were from tier-II cities. Over 20% respondents were from tier-III towns. As part of its report titled Time To Open My Wallet Or Not, KPMG interviewed 60% of those who were “tight fisted", 21% who were cautious about their money, and 19% who were more affluent.
“Our survey focuses on the evolving consumer sentiments among Indian citizens, as well as the emerging trends that are gaining momentum during this continuously changing new normal. Our study indicates that 22% consumers in tier-II and 30% in tier-III feel their spending will either increase or remain the same as prior to covid-19 and this could be the next focus area for retailers to expand their presence," said Harsha Razdan, partner and head, consumer markets and internet business, KPMG in India.
KPMG said that while the pandemic has set in a new reality, consumer mindset is bound to be reset in a post-covid world. “Consumers will be diligent in terms of their financial stability and firms need to adapt to this new way of thinking in order to re-evaluate and reinvent their business models," it said.
A clear winner of the covid crisis has been the pivot to online shopping, contactless payments, and click-and-pay gaining favour among shoppers as they avoid crowded supermarkets. “While e-commerce has been gaining for a while, the pandemic has provided motivation to consumers to engage in online shopping," it said. As covid alters shopper behaviour, omni-channel modes of operations, digital payment facilities, hygiene standards and need-based product preferences are bound to grow, it added.