Rising inflation dampening consumer sentiments
Homemakers redraw their priorities and adjust their budget to keep up with the inflationary times. And, with prices rising unabated, it seems the worst is yet to come.
By Sanjeev Choudhary, ET Bureau |
NEW DELHI: The rising inflation has already started dampening consumer sentiments in the country. Retailers say some segments are already seeing marginal decline in sales, but fear worse could be in the offing.'
���We have seen weakening demand in fruit, juices and soft drinks in our stores. Consumers are substituting high-priced products with low-priced ones in several food categories, such as edible oil and rice,��� says Subhiksha MD R Subramanian.
It���s increasingly becoming difficult for housewives to keep their budget within their means. Nidhi, a homemaker in East Delhi, says the rice she bought five months ago at Rs 20 per kg has gone up to Rs 48. She has now settled for the rice available for Rs 35, lower in quality, but within her budget. She is one of many consumers who are redrawing their priorities and adjusting their budget to keep up with the inflationary times.
���We have seen weakening demand in fruit, juices and soft drinks in our stores. Consumers are substituting high-priced products with low-priced ones in several food categories, such as edible oil and rice,��� says Subhiksha MD R Subramanian.
It���s increasingly becoming difficult for housewives to keep their budget within their means. Nidhi, a homemaker in East Delhi, says the rice she bought five months ago at Rs 20 per kg has gone up to Rs 48. She has now settled for the rice available for Rs 35, lower in quality, but within her budget. She is one of many consumers who are redrawing their priorities and adjusting their budget to keep up with the inflationary times.
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Says Big Bazaar CEO Rajan Malhotra, ���People have started downtrading. Prices have shot up and the consumer is now settling for something lesser in quality to prevent overspending.���
Big retailers say their overall sales has only grown in the past few weeks because of higher prices and more consumers coming to their stores to save cost. Big retailers have partly absorbed the rise in procurement cost and not passed on the full impact on consumers resulting in lower margins for retailers. But with cost rising, retailers say, prices are likely to increase further.
Eating joints such as Pizza Hut, Costa Coffee and KFC have already hiked prices by 5%. ���We have kept price rise to minimum level so as not to dissuade customers from coming in,��� says Ravi Jaipuria, master franchisee of these restaurants in India. He added that his eating joints have not witnessed any drop in footfalls.
Retailers, however, fear that the worse is yet to come. ���The real impact of inflation would be seen in the next couple of months. So far we were insulated from the oil price hike,��� says Big Bazaar���s Malhotra. Retailers feel, if the inflation continues the way it is, consumers will be forced to cut down on their spendings. ���We don���t see consumers cutting down on food and other basic needs. They may be forced to defer their purchase of fashion, electronics, furniture or luxury items,��� he says.
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