63% urban shoppers tighten purse strings
2 min read . Updated: 08 Mar 2021, 12:45 AM IST
PremiumIn India, the percentage of ‘newly constrained’ is higher than the global average of 46%, the NielsenIQ online survey found
A growing number of urban Indian consumers are keeping a close watch on spending as they suffer from the continued impact of covid-19 restrictions, a global survey by market researcher Nielsen has found.
In urban India, 63% of consumers fall in the “newly constrained" category, facing a decline in household incomes, or a worsening of financial situation, which has prompted them to watch their expenses.
In India, the percentage of ‘newly constrained’ is higher than the global average of 46%, the NielsenIQ online survey found. In fact, over a third of respondents in urban India said they feel less confident about income prospects in the first half of 2021. This group is rapidly growing, it said.
The survey was conducted across 16 countries in December 2020, polling more than 11,000 consumers.
Including ‘newly constrained’, Nielsen identified four consumer cohorts whose spending habits are set to be different from what they were in mid-2020. The others are ‘existing constrained’ or those who were already cautious about their spends pre-covid, ‘cautious insulated’ or those who faced limited impact on their incomes but continue to closely monitor their spends, and ‘unrestricted insulated’ or those who are witnessing same or improved financial situations and are not concerned about their spending power.
The change in behaviour is expected to shape purchase decisions among Indian households, Nielsen said, as consumers rely on lower-priced products, seek promotions and purchase private labels to stretch their budgets.
“A large number of urban consumers in India are employing new coping mechanisms to manage household budgets: 46% are driven by the lowest price, irrespective of brand; 50% always seek private labels; 45% say they buy products based solely on promotions. But 61% of consumers say they are brand loyal and will only change brands if the regular price increases (62%)," Nielsen said in its study.
Nielsen pointed out that within these new cohorts, the circumstances of those in the ‘newly constrained’ and ‘cautious insulated’ consuming classes in urban India have changed significantly as a result of covid-19. As a result, they are shifting their consumption and buying patterns.
“The two specific consumer cohorts account for a huge part of the population, over 70% of those globally and 88% in urban India, demonstrating real constraint in their ability to spend freely," said Scott McKenzie, global head, NielsenIQ Intelligence Unit.
McKenzie said this “cautionary spending environment" implies that brands will need to tailor offerings to their needs. “Assortment, pricing, innovation and distribution of products will need to be recalibrated; and quickly," he said.
