Consumers up spending as areas reopen for business

MUMBAI: Signs of a revival in consumer demand are emerging after weeks of a declining trend, as the country gradually opens up for business in the green zones. There is a slow improvement in overall spending across categories — be it for staples, household hygiene, food ordering-in, toys and even beauty — led by consumers in green and orange zones, finds a survey by Bain & Company and Price.

The survey, which was exclusively shared with TOI, said online channels are starting to become more significant, in particular for essentials, as households increase their proportion of e-shopping. As online access is more broadly opened, it said one could expect to see a similar phenomenon for currently restricted categories.

Bain & Company partner Nikhil Prasad Ojha said, “Our weekly consumer survey showed significant deterioration in sentiment all through April. Curtailment of spends, which started with lower-mid and low-income households, had become a pan-income-class phenomenon. This wasn’t only because of lack of access. Increasingly, income loss and uncertainty about future income were the main drivers of reduced compression. After that, in May week one, green and orange zones showed positive movement, possibly reflecting some pent-up demand. Red zones continue to contract spending and remain more pessimistic about return to financial normalcy. Amid all this, online channels grew in significance, particularly for essentials, and we can expect similar uptick for categories currently restricted.”

Concurring with the view about an uptick in demand, ITC divisional chief executive (foods division) Hemant Malik said, “We have been witnessing a surge in demand for essential food items, including Aashirvaad atta, spices, salt, Sunfeast biscuits and Yippee! noodles across the country at a time when people are confined to homes. This trend is expected to continue for some time as people look to buy essential food products in bulk.”

Malik said the demand for discretionary as well as on-the-go food offerings, including confectionery and chocolates, is impacted currently and will start picking up once the lockdown restrictions ease. But it will be lower than previous years. However, the revival of demand for such products will also be a function of shops reopening and availability.

GSK Consumer Healthcare (GSKCH) area marketing lead-OTC, Naveed Ahmed, said after the initial impact on demand due to restrictions on people movement, and last-mile connectivity issues, “We have been seeing consistent demand for our products across the portfolio.” On the consumer front, GSKCH continues to stay relevant with the right messaging across brands.

“On the retail front, we are making sure that our products are readily available to our consumers across channels where they shop,” said Ahmed.

The ongoing weekly survey, which reached out to 2,500 households across rural and urban markets nationwide, said e-channels continue to be significant across categories, with interestingly 8% respondents being first-time buyers, of mostly staples.

Online buying of essentials like household hygiene, semi-essentials like packaged food and even non-essentials like beauty saw an uptick in demand during this week. Up to 14% respondents have expanded online buying to new categories after the lockdown the started, with online penetration growing 1.5-2x across most categories.

On the other hand, as the lockdown extended, outlook for large spends, including vehicles and durables, is starting to look increasingly less favourable over the next 12 months. Most households are likely to defer big-ticket buys like durables and property if existing conditions continue.

“We foresee short-term uptick as the markets reopen. However, low and low-mid income households, especially selfemployed ones, will rebuild savings that have been depleted in the last 45 days. Therefore, consumption demand revival will be gradual,” said Ojha.