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Consumers trim wish list, biz wary
- Companies such as Metro Cash and Carry, Amul, Marico Ltd and Usha International said consumers are sticking to buying only essentials this quarter even as they boost spending on healthcare
Consumer goods companies are flagging a slowdown in discretionary purchases such as large appliances, apparel and beauty products in the June quarter as India faces a brutal second wave of the pandemic.
Companies such as Metro Cash and Carry, Amul, Marico Ltd and Usha International said consumers are sticking to buying only essentials this quarter even as they boost spending on healthcare.
Sales are also being impacted by strict lockdowns imposed by several states, with some allowing only stores that sell essential items to operate, that too with restricted timings.
Arvind Mediratta, managing director and chief executive, Metro Cash and Carry India, said compared to last year’s lockdown, consumer sentiment in the second wave is depressed. “The mood is quite sombre, so people are not expected to splurge. When the lockdown was implemented last year, the cases were very limited, so the mood was still buoyant,” he said.
Mediratta said consumers are unlikely to splurge on big-ticket items like large televisions and pricey smartphones this year amid the depressed sentiment.
Saurabh Baishakhia, president of appliances at electronics firm Usha International, said the buying behaviour of consumers has totally changed with the devastating second wave. “There wasn’t such gloom last time as people were safe at home. This time, they are either spending on medicines or hospitalization or keeping money aside for such exigencies,” Baishakhia said. “The consumer is in a saving mode,” he added.
The maker of fans, air coolers and kitchen appliances expects sales to halve this year compared to 2019.
“We were expecting double-digit growth in April-May-June. Even the first 10 days of April were good. But if you ask me now, we are back to where we were in April-May 2020 when there was a complete lockdown. Even online sales are in a bit of a blind spot right now, with only some states allowing appliance sales and others prohibiting all non-essentials,” said Baishakhia.
Mint reported earlier that several large consumer electronics firms scaled back production in April after a surge in infections led states to announce partial curbs. Most were geared for a strong summer season.
R.S. Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which sells the Amul brand of products, said large consumer durables and fast-moving consumer goods makers may face a difficult quarter. “People are spending less on clothes or eating out. So, when I’m reducing expenditure, I’m spending on the bare minimum, like small packs and not buying expensive brands or luxurious things. That will impact FMCG and durables in this quarter very badly,” he said.
Kolkata-based packaged consumer goods firm RSH Global said consumers are also likely to down-trade to cheaper brands. “Discretionary consumption products will see a lesser amount of spending— either by downgrading to an economical option or by eliminating the consumption. In the personal care sector, there could be depletion in consumption of items like lipsticks, nail polish and colour categories,” said Sunil Agarwal, chairman, RSH Global.
Shuchi Bansal and Lata Jha contributed to this story.
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First Published:18 May 2021, 12:02 AM IST
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