Consumers prefer spending online for both discretionary and non-discretionary spends

Delhi spends grew to 135%, while Mumbai was at 133% and Bangalore at 124% post-lockdown.

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Rising spends on insurance, fuel and digital wallets indicated that health and safety concerns drove purchase decisions during the lockdown and unlock period.
The two-month lockdown and phased unlocking has a significant impact on credit card spends with more consumers preferring to shop online rather than offline. A recent study by CRED, a credit card payment platform that incentivises users for timely payments, found that affluent consumers continued to make discretionary and non-discretionary spends online, despite the relaxation in restrictions during the unlock period.

“During the lockdown, spending on digital and online platforms was the only available avenue for affluent consumers. While the trend stemmed out of necessity, the convenience, safety and accessibility of digital has led to a sustained behavioural change where we are seeing consumers continue spending on these channels post the lockdown as well,” said CRED founder Kunal Shah. “This poses a unique challenge for brands as they have to figure out ways to reach affluent audiences and have to consider digiConsumers prefer spending online for both discretionary and non-discretionary spendstal-first strategies to engage them.”

So how exactly did consumer spends change before, during and after the lockdown?


Health and Safety Drove Most Purchase Decisions
Studying the credit card spends of 3 million consumers across Delhi, Mumbai and Bangalore between February and July 2020, the payment platform found that credit card spends on wallet top-ups were relatively high during and post the lockdown across all three cities indicating a preference for contactless payments in light of the virus.

When it came to grocery spends, more individuals sopted to shop online. Sharp spikes were recorded in online grocery and e-commerce surpassing even pre-COVID levels, while spending on physical grocery and shopping fell substantially. In Mumbai, online grocery spends increased nearly 1.5 times (147 per cent) during the lockdown when compared to pre-covid levels.

Insurance spends was also a key purchase for most consumers. While insurance spends remained close to pre-COVID levels during the onset of the lockdown, they spiked across all three cities during the May-June period and surpassed pre-COVID levels. These eventually stabilized but remained high during the unlock period. Mumbai topped with consistently high expenditures on insurance across time periods.
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Dining Out Suffered (Except in Bangalore)
CRED noted that there was a significant erosion in spends on dining out and ordering in during the lockdown and that these categories have not picked up post-lockdown, especially compared to pre-COVID levels. However, they found that Bangalore managed to top spending in both categories during and post-lockdown, indicating higher levels of trust in the city for outside food.

E-commerce Grew
Post the lockdown, CRED found that e-commerce spends surpassed pre-COVID levels across all three cities indicating a larger behavioural trend. Delhi spends grew to 135%, while Mumbai was at 133% and Bangalore at 124%.


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