Consumption sentiment revives, but consumers more cautious than ever post coronavirus

The much talked-about new normal seems to have finally arrived. Consumers have come to terms with living in a world where the fear of contracting the deadly virus still looms large.  This got reflected in BCG's latest consumer sentiment study, which shows a slight revival in sentiments across the country. The study says, as opposed to 57 per cent Indians in April-May, who feared job loss, the number during the months of July-August has come down to 44 per cent. Similarly, only 42 per cent consumers are saying that they would spend lesser than what they did over the next six months, compared to 53 per cent when a similar survey was done in the month of May. People are stepping out of their homes more regularly than they did in April and May. The BCG report says that 53 per cent of the consumers surveyed said that they have been going out to work, while 66 per cent have started visiting friends and family, versus 15 per cent and 10 per cent, respectively in May.

The mood, however, is one of caution. Consumers are stepping out and trying to get back to normal, but with a lot more caution. In fact, as per the Deloitte Global State of the Consumer Tracker, the anxiety level in Indians has been the highest through the COVID lockdown. The tracker says that 40 per cent of Indians are anxious vis-a-vis China, where the anxiety level is barely 6 per cent. Around 75 per cent of Indians according to the Deloitte report have said that they are concerned about their physical well-being, 48 per cent said that they feel unsafe to go out for shopping, while 66 per cent are delaying their purchases.    

In an environment where there is so much anxiety about physical wellness, safety and hygiene are obvious priorities. "Within a month of the outbreak, 'immunity' became one of the most searched words on Google, reflecting the shift in consumer preference. The word 'immunity' saw a 5X increase while 'Vitamin C' searches went up by over 150 per cent in 2020," points out Mohit Malhotra, CEO, Dabur India. From immunity building foods product to sanitisers, disinfectant sprays and wipes, the obsession to stay healthy and hygienic has increased manifold.

 Consumers are also consuming a lot of packaged food. There is a huge movement from buying loose food products and staples to packaged ones, as packaged is perceived as hygienic. Almost 50 per cent of kirana store sales (as per retail technology company, Snapbizz) in tier-1 cities came from loose products but ever since the pandemic, it has dropped to 35 per cent. "Consumers are choosing to trade within their trusted brands. They are buying lower-priced branded packs instead of loose ones," points out Koshy George, CMO, Marico India. However, moving from loose to packaged  food doesn't necessarily mean that they are buying reputed brands. Sale of branded food products has indeed increased, but consumers are also open to buying loose products packed and sold by their neighbourhood grocer. So, grocers are packing products such as rice, atta and sugar and consumers are willing to pay a slight premium for it. The locally packed products are cheaper than branded products and the value-seeking consumers are opting for them as it offers them value for money in addition to the perception that they are safe. "In tier-1, people were going for premium brands during April and May but now they are shifting towards packed/store items," points out Prem Kumar, Founder, Snapbizz.

In the case of branded products, the move clearly is towards smaller pack sizes. Be it biscuits or sanitisers, consumers are clearly moving towards lower priced products and SKUs. Beauty and cosmetic major, Loreal India, for instance, is seeing higher demand for its mass brand Garnier, and pack sizes priced between Rs 50-100 are what doing better than the ones priced at Rs 250-300. Therefore, while consumer sentiment is picking up, the consumers are even more value conscious than they were earlier. "Consumption in the new normal is all about choice simplification and no-frill buying," says Amit Sharma, CEO, Shop X.

The BCG report also says that the extent of revival of sentiments is much faster in smaller cities and towns. For instance, 52 per cent of consumers in tier-1 and metro cities believe that their income will reduce, while only 41 per cent in tier 2-3-4 towns think the same. Similarly, 36 per cent of small town consumers are going to local markets for essentials shopping as much as they used to pre-COVID, compared to 27 per cent in metro and tier-1.  Companies across sectors also confirm that smaller markets are definitely showing positive sentiments. Kavi Mishra, CEO, House of Anita Dongre, says that through the unlock phase smaller markets have contributed over 40 per to the apparel company's sales. "Tier 2-3 markets have more high street stores and that has helped. Consumers are more comfortable shopping on high street rather than going to malls. We are at 50-60 per cent of last year's numbers in tier 2-3 markets."

Also read: Tier II, III consumers look forward to a normal lifestyle; caution persists