Despite escalating inflation, the forthcoming festive season is poised to witness substantial shopping activity. People are prepared to open their wallets wider this year compared to the previous one, with a notable trend towards shopping in local markets, malls, and offline stores.
A survey report from the broking and banking firm, UBS, has unveiled that a significant 70 percent of Indians plan to increase their festive season spending in comparison to the prior year. In contrast, 18 percent of respondents intend to maintain spending levels similar to those of the previous festive season.
However, only a mere 11 percent of those surveyed anticipate reducing their spending this time. The reason cited is the relentless upward trajectory of inflation. The cost of living and other expenses have surged, while income levels have remained stagnant.
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The survey findings also shed light on consumer preferences for the festive season. A substantial number of respondents express their intention to invest in smartphones, two-wheelers, cars, and prioritizing purchases of air conditioners, televisions, refrigerators, and laptops.
Traditionally, the festive season witnesses heightened demand for electronic goods, yet this year, a shift in consumer plans is evident, with increased interest in assets like gold and other investments.
Notably, the survey reports a decline in the preference for digital payments, with trust in cash transactions experiencing an upswing compared to previous trends. According to UBS, the inclination towards digital payments has dropped from 71 percent to 58 percent, while cash payments have risen from 27 percent to 35 percent.
Jayan Nayak, CEO of Nexus Mall, emphasized during a recent shopping centers conclave that traditional shopping destinations such as malls and local markets continue to attract visitors. The trend of online shopping also remains robust. Notably, in smaller cities, malls and markets continue to thrive as they have in the past. The surge in digital payment popularity in Tier 1, 2, and 3 cities is expected to further bolster this trend. However, this year, the impact on malls and markets may be somewhat subdued.
Inflation has impacted budgets, resulting in a 6 percent increase in expenditure. High inflation has been a cause for concern among those willing to spend. Around 60 percent of survey respondents reported having to allocate 6 percent more to their purchases in the last one to two years. Presently, the inflation rate stands at 6.8 percent.
The survey also reveals a surge in gold purchases among 50 percent of respondents in the past three months, likely attributed to the festive season and upcoming weddings. In addition to gold, a substantial 52 percent express their intent to invest in property within the next two years, with budgets falling below Rs 50 lakh.
The Indian consumer’s inclination for in-person shopping experiences remains robust, and the quest for a one-stop destination akin to local markets and malls is evident among today’s new customers. The return from shopping is not merely limited to acquiring items but is enriched with a complete experience and satisfaction, regardless of whether it’s at a local market or mall, as explained by Rajendra Kalkar, President, Phoenix Mall.