Indian consumer behaviour reflects increasing confidence

The latest wave of Deloitte’s Global State of Consumer Tracker shows that the road to recovery of the Indian economy may be opening, but this is a slow process and there could be a long way to go

Indian consumer behaviour reflects increasing confidence
The increase in vaccine administration is expected to boost travel sentiment going ahead.

By Porus Doctor

Analysis of the behaviour of Indian consumers reflects reduced anxiety levels and portrays increased confidence

COVID-19 which began as a health crisis initially, gradually transitioned to an unprecedented economic crisis. As a result, the economies around the world have been grappling with new strains of the COVID virus and efforts to increase vaccine rollouts.

The Deloitte Consumer Industry has been conducting surveys across 18 countries for over a year with Wave 1 being initiated on April 15, 2020 to better understand the interplay between current consumer mindset, their buying behaviours as well specific drivers of anxiety, safety, financial challenges, brand preferences, e-commerce shifts, and more.

The recently kicked-off Tracker 2.0 with our latest wave (July 28, 2021) shows signs of reduced anxiety among Indian consumers (37 percent as compared to over 40% in the initial waves), along with increasing consumer confidence and positivity.

Key trends emerging from our analysis show:

1)Decreased anxiety leading to a boost of in-store shopping at one end but there is an inclination towards online buying at the same time as physical well-being remains a concern

As the nationwide vaccination coverage increases, Indian consumers are looking forward to a post pandemic world, but safety and health of self and family remains a concern. 80 percent consumers are concerned about their physical well-being and 82 percent are concerned about health of their family.

The Indian consumer is now seen opening up to increasing discretionary spends. While there is largely an inclination to shop online for convenience and safety, there is a shift towards in-store shopping, with 67 percent consumers feeling safe going to the store.

Consumers are adjusting their preferences and shopping behaviour with the evolving retail landscape. Looking ahead, brands and retailers will need to constantly realign their businesses and priorities. The pandemic has caused a disruption in traditional shopping experience and the retail landscape is likely to see reinvention.

While online shopping will never totally replace in-store shopping experience for customers, cross-channel shopping will continue to grow in importance. With the lines between online and offline channels blurring more rapidly, having presence across all retail channels is pertinent to retain market share, as a connected ecosystem of products & services is the way forward.

2)Declining use of public transport and spending cautiously on the next vehicle is a constant trend

Consumers are reluctant to use shared transport modes due to increase concerns about hygiene and safety. 73 percent of consumers will limit their use of public transport and 70 percent will limit the use of ride-hailing cabs over the next three months. This is expected to lead to an increase in personal vehicle ownership. However, the financial concerns might eventually lead to a structural shift to more affordable options, including new vehicles with fewer advanced features, or the used vehicle market.

The prolonged economic shutdown has affected the consumer finances, causing many people to reconsider large purchases.

The findings indicate consumers’ intent to continue with their current vehicles for a longer period than they had earlier expected (78 percent, the highest amongst the 18 countries surveyed, while the global average stands at 57 percent). Waiting for better deals and work from home are the major factors to keep the current vehicle longer than expected. This represents a significant challenge for automotive manufacturers looking to reboot demand. With the mounting pressure on the automotive industry, the manufacturers and dealers will need to capture more value from servicing rather than selling vehicles.

Health concerns will be one of the major deciding factors between vehicle ownership and use of alternate modes of transport. Consumers continue to see the car as an attractive transport choice, especially due to safety and hygiene concerns over shared transport modes. While this brings some hope for the automotive industry, innovation in sales and servicing, better deals and cost reduction will be required from the automotive manufacturers to recover and thrive in such challenging market conditions.

3)Positive Consumer sentiments prevail; confidence in venturing out and travelling

Fears about virus infection, air travel restrictions, and social distancing measures have hit key services sectors, such as tourism, aviation, hospitality, etc. However, in our recent survey (Wave 20), we observed that more consumers are feeling safe taking a flight (57 percent), staying in a hotel (55 percent) and going to a restaurant (55 percent).

Travel sentiments are showing positive trends. Those consumers in the age group above 55 have shown a willingness to travel for leisure in the next three months, and 81 percent of consumers have indicated that they feel safe taking a flight and 79 percent of consumers have indicated they are comfortable staying at a hotel.

With the pent-up demand for travel and trends like staycations, people have started venturing out with adequate safety protocols, such a vaccination certificate.

The hospitality and travel companies have adopted various initiatives to attract customers – flexibility for travellers through easy cancellations and extensions, low-cost EMIs, and pay-at-the-hotel schemes. Airlines are offering flexibility to the travellers to modify or make last-minute adjustments to their travel bookings. Hospitality companies are offering convenient options for long family staycations and workcations.

Flexibility in terms of booking timelines and ease of cancellation or modification, along with following safety and hygiene measures will be required from travel and hospitality industry to recover and gain consumer confidence. Further, increase in vaccine administration is expected to boost travel sentiment going ahead.

Consumers showing optimism, but there is a long way to recovery

COVID-19 has transformed our lives in many ways leading to new ways of operations. It has compelled us to relook into – the way we work, eat, shop or travel.  The latest wave of Deloitte’s Global State of Consumer Tracker shows that the road to recovery of the Indian economy may be opening, but this is a slow process and there could be a long way to go.

The author is partner and consumer leader, Deloitte India. Views express are personal. 

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First published on: 05-09-2021 at 15:11 IST