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Photo: Kalpak Pathak/HT
Photo: Kalpak Pathak/HT

Opinion | Firms track key shifts in consumption habits in a post-pandemic world

Trading down is already obvious for companies in personal care and packaged food segments

Ankur Bisen, vice president, retail and consumer products, Technopak, a management consultancy, has been, like many others among consulting companies, busy figuring out how life for his clients will change after covid-19, as the Indian consumer starts behaving differently. His recent conversations with consumer groups show that athleisure wear, or what he calls comfort wear, will grow as work-from- home remains in vogue for a while. “Innerwear, which is a core consumer product, will not decline, but fashionwear and office shirts may drop."

However, according to Bisen, the fall in apparel sales will be temporary. “It’s a short-term thing because this work-from-home phenomenon is being overplayed. Eighty-one percent of our workforce is in the informal sector and cannot work from home. Even among the remaining 19%, there are a number of jobs in sales and dealerships, which cannot be accomplished from home," he said. So, in the short term, there may be a rise in demand for casual wear, but in the long term clothing category will do well, he added.

This is just one of the observations of Technopak, which has been monitoring behaviour patterns of Indian shoppers. It has studied consumer psyche, and triggers, that may affect behaviour.

Foremost among these are lower or no wages, salary delays and cuts, and anxiety over retrenchment. Other triggers that will impact behaviour will be the notion of health, especially building immunity. For businesses and the self-employed, working capital will be critical. Social distancing will also influence behaviour towards travel, meetings and social functions such as weddings.

For a start, consumers will delay purchase of non-essential or discretionary items. Trading down is a given and is already obvious for companies in household and personal care segments, as well as packaged food categories.

Staples and edible oil companies, such as Adani Wilmar, are already making more value packs compared to bulk packs for its products. Other experts have also spoken of down trading leading to growth in smaller packs and private labels that are cheaper.

“Trading down also includes single purchases instead of buying all at one go," said Bisen, adding that there will be suspension of consumption in certain categories even as shoppers cut back expenditure.

What will not decrease, however, is the budget for essentials. In fact, consumers will also seek immunity-boosting products, and nutrition and wellness solutions.

This was corroborated by Nestle’s chairman and managing director Suresh Narayanan in a recent video call with reporters. Narayanan said the pandemic will lead to increased demand for health and immunity-boosting products which might drive premiumization for some of its portfolio since “those who are fortunate to hold on to their income lines will continue seeking such products".

Even as the government extended the countrywide lockdown till 31 May, albeit with fewer restrictions, research firms and management consultancies continued to study consumers and their sentiments around the pandemic. Audit, consulting and advisory firm Deloitte has been tracking consumers globally. In India, it surveyed a sample size of about 1,000 people between the age groups of 18 and 55, and at a ratio of 51% men and 49% women.

In the latest findings of this ongoing survey, 66% people said they were delaying a large purchase, which they would have otherwise made. Half were concerned about not being able to make a payment (mortgage, rent, auto loan or credit card bills).

According to the Deloitte study, the spending pattern of the consumers has also changed over the past few weeks with 33% respondents willing to spend a lot more on groceries, 30% on everyday household goods, 31% on healthcare, 27% on medicines and 31% on home internet/mobile phone. Expenditure on activities, such as travel, eating out, auto fuel, furnishing, apparel, footwear and alcohol, is down big time.

Asked about the intent to use digital services, 45% respondents of the Deloitte survey said they were very likely to use it for buying groceries. That’s not all. 31% said they could use online media for virtual doctor appointments, 37% for exercise programmes, 58% for video conferencing with family and friends, and 55% for payment apps/services.

Half the respondents said the trend of making purchases online and then picking up the stuff at the store was a safer option. In fact, 37% said it’s faster than shopping at stores.

Clearly, what definitely seems to be fading is the scepticism around digital and online commerce.

And, with most e-commerce companies accepting only digital payments at the moment, their share of cash-on-delivery may also go down eventually.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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