The rich are feeling the heat of rising inflation the most, followed by the middle class and then the lower income groups, which is likely to impact consumer loyalty and give an impetus to value brands, according to the 10th edition of the EY Future Consumer Index.
According to findings of the survey, 69% of Indian consumers consider rising costs a concern, but reaffirm their belief in the strong and positive outlook of the Indian economy. As many as 71% believe the economy will recover within a year. The rising cost concern is affecting most consumers from all income levels, but more so the higher income group at 82%, followed by the middle class at 72% and low income at 67%, the study found.
Even under inflationary pressure, while price is the top criterion for purchase in global markets, factors such as health and goodness emerge as equally important decision drivers for Indian consumers.
“Growth will come at a cost, and companies need to review their value delivery mechanism instead of simply raising prices. The long-term aspirational needs of the consumer need to outweigh the short-term challenges that consumers face. This means continuous innovation for greater value delivery through improved functionality or lower costs,” said Angshuman Bhattacharya, national leader (consumer products and retail), EY India.
Customer loyalty is wavering under inflationary pressures, making space for new brands often offered online. About 42% are trying new brands to reduce costs, and 63% are willing to purchase a store brand or private label.
The EY survey also highlighted that online shopping is here to stay. Grocery shopping is the topmost online service, with 62% consumers opting for it. However, a similar majority of 62% are apprehensive of sharing personal information on websites or apps — vis-a-vis their global counterparts at 36% — because of data security and ID theft fears. Grocery shopping is closely followed by other channels, like email at 61%, e-banking transactions at 57%, and social media at 56%.
Also read: How to tame inflation
The findings also show a significantly pessimistic economic outlook from the western markets when compared to emerging markets. Many more consumers from the US at 54%, UK (65%), Germany (84%), and France (85%) believe life will remain the same or worse over the next three years, compared to Brazil at 21%, India at 24%, Saudi Arabia at 37% and China at 38%.