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Business News/ Industry / Retail/  Consumers rein in spending amid covid
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Consumers rein in spending amid covid

More Indians reported feeling anxious during the second wave of covid infections—the highest among 18 countries that participated in a 30-day global consumer survey by Deloitte

Indians are back to prioritizing health and safety over discretionary consumption, it said. Consumers are also choosing to delay large purchases, according to the survey. (AFP)Premium
Indians are back to prioritizing health and safety over discretionary consumption, it said. Consumers are also choosing to delay large purchases, according to the survey. (AFP)

NEW DELHI: The virulent second covid-19 wave that is wreaking havoc in India is prompting consumers to cut back on discretionary spending, prioritize their health, shop online, and buy only essential goods, a trend that could take months to normalize, 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.

Indians are back to prioritizing health and safety over discretionary consumption, the survey showed. Consumers are also choosing to delay large purchases.

“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.

India reported more than 3,000 deaths in the past 24 hours, the highest ever, and more than 360,000 cases in this period. The grim news is prompting consumers to stock up on essentials. Consumers are in no mood to experiment, said Venkatesh Vijayaraghavan, chief executive officer 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 companies. “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.

This year’s covid situation is worse than last year’s, he acknowledged.

The wave is also accompanied by strict state-wise lockdowns that have seen non-essential stores shut for days together. States such as Maharashtra, Karnataka and Delhi are currently under lockdown. Several states have imposed weekend curfews, capped large gatherings such as weddings, and placed night-time restrictions on the movement of people. More localized lockdowns could be in the offing.

Further restrictions on movement in May and June could deeply impact discretionary purchases, said Amit Adarkar, CEO, Ipsos India. “It is difficult to gauge the exact impact on discretionary purchases when people do not have the opportunity to buy because of restriction on movement and local lockdowns and with e-commerce companies being allowed to deliver only essential goods," he said.

Last week, Ipsos reported a 1.1 percentage point dip in consumer confidence in April over March 2021. If the situation improves, “we would have merely lost 2-3 months, but mid-term demand may not get affected that much," Adarkar said. However, if the covid graph worsens and vaccination is not able to keep pace, India could see a repeat of last year when it took almost six months to normalize the consumer sentiment, he said.

The current consumer mood is dark, in stark contrast to the year-ago period when people took to home cooking, organized zoom calls with friends and family, and binged on streaming platforms during the lockdown. “There is a lot of confusion and anxiety now," said Navin Tewari, CEO of Capital Foods.

Karthik Srinivasan, a Bengaluru-based communications strategy consultant, acknowledged he has simply no “interest or enthusiasm" in stepping out. “With social media platforms becoming sources of massive doom-scrolling, it feels both impossible and reprehensible to indulge in anything light or funny," he said.

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Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Updated: 29 Apr 2021, 12:03 AM IST
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