More than 85 per cent of respondents are likely to stick to their savings plan even with a 10 per cent fall in their income, indicating the saving sentiment.
The unexpectedness, scale and severity of the global pandemic has led to increased anxiety about personal finances across all demographics. Especially for youths who were just making their foray into the job market, lack of prior work experience (and therefore savings) combined with the severely compromised economic outlook makes the situation particularly precarious.
In light of this, KPMG in India conducted a consumer survey – Me, My Life, My Wallet Report 3.0 – to capture the consumer behavior and choices that are emerging in new-age India. This comprised 2164 respondents across urban and semi urban markets over two phases.
The key findings of the survey are:
# More than 85 per cent of respondents are likely to stick to their savings plan even with a 10 per cent fall in their income, indicating the ‘saving sentiment.’
# 70 per cent of the respondents across all age groups are concerned about their future finances as against 49 per cent globally. 30 per cent of the respondents are focused on their current finances as against 51 per cent globally. This too indicates that savings are now an important factor being considered by Indians post pandemic.
# Interestingly, similar saving sentiments and spending patterns running across tier-1 and tier-2 cities were observed. 74 per cent of tier 1 city responders and 63 per cent of tier-2 responders gave more priority to their future finances over current finances, indicating the saving sentiment across all city segments. If income were to be decreased by 10 per cent, both tier 1 and tier 2 respondents show similar trends when it comes to cutting spending towards electronics, saving or investment, personal health, household goods, clothing and food like items.
# 78 per cent of Generation X (Age 37 to 53) and 70 per cent of Millennials (Age 17-36) are more concerned about their future finances, indicating the saving culture affecting all demographics.
As a way to lower up-front costs and save more, shared economy is on the rise with new share/rent models being preferred across categories such as clothes, mobiles, electronics and cars. Of the total respondents who are comfortable sharing/renting clothes and mobiles, 70 per cent of these are formed by Millennials (Age 17-36) and Generation Z (Age 7-16). Similarly, of the total respondents who are comfortable sharing/renting cars, 60 per cent of these are formed by Millennials (Age 17-36) and Generation Z (Age 7-16).
1. Financial priorities are evolving with the saving sentiment gaining clout
A further deep dive into the younger demographics specifically revealed:
- About 50 per cent respondents have started investing more in saving instruments post pandemic.
- Category-wise ownership/rent models highlighted by the survey are below:
With growing awareness around personal safety and wellbeing, shared mobility options are undergoing a dip as 69 per cent of the surveyed respondents suggested that they were not as inclined towards such options post COVID-19.
2. The data privacy and personalisation dichotomy
Personalisation has become integral across age demographics. Companies are becoming more efficient at leveraging available data on a consumer’s preference and buying patterns to create bespoke propositions.
The survey highlights that while the younger generation is more willing to trade privacy and personal data in exchange for a higher level of service and greater personalisation, the older generation seeks more data security and is reluctant to share data that easily.
- 81 per cent of all respondents expect personalised customer service with Generation-X (Age 37-53) forming the majority age group (88 per cent).
- Only 33 per cent of all respondents are comfortable sharing data with companies in lieu of better customer experience and personalisation, as against 15 per cent for USA and 10 per cent for UK.
- 11 per cent of responders were less comfortable with sharing their personal data, 10 per cent of the respondents who showcased complete denial towards data sharing and 21 per cent of responders consider data security as a significant feature that needs to be explicitly clarified by the brand before any kind of exchange. This thereby indicates that consumers are more informed than earlier, and data privacy is gaining clout in their minds.
- Amongst the younger demographics, around 67 per cent of the respondents are uncomfortable with brands that track digital activity for greater personalisation while 47 per cent are willing to pay a premium for data privacy.
3. Going digital across demographics
The acceptance and expectation of digital channels in this age and time are gradually gaining traction across India. By default, rather than by design, India’s older demographic has had to adopt a digital-first lifestyle. Indians, across all ages, have quite easily become conversant with video calling, net banking, online grocery shopping and streaming platforms. This was not a purely urban phenomenon, as the increase in digital sophistication of the older cohort was observed in smaller towns across India as well.
- 49 per cent of the surveyed respondents shared that they had become comfortable in using digital payment options to shop, as against 22 per cent globally. Some of them also revealed that an absence of a trusted payment gateway would affect their buying decision to a great extent.
- On digital experience expectations from retailers, 60 per cent of all respondents presented higher affinity towards Augmented/Virtual Reality, cognitive interactive robots in-store and webchat robots.
- 78 per cent of the respondents believe that Mobile Phone App availability and smartphone store interactivity should include it as part of their basic offerings now.
- More than 50 per cent responders want to be the first ones to buy a new device when it comes out (as against 26 per cent globally).
4. Social causes matter to new conscious consumers
The consumers in India may still be at a nascent stage of their evolution with respect to buying basic needs v/s splurging on luxuries, but COVID-19 has certainly hastened their progress towards becoming more conscious of their role in the ecosystem. Social community commitments and environmental records of an organisation also have started influencing the purchase decisions of new age Indians. Survey highlights:
- 90 per cent of all respondents say that the integrity of a company matters to them a lot when it comes to customer service.
- Majority of the responders have shown their evolved behaviour towards supporting a cause, brand or retailer that is giving back to the society.
- 84 per cent of the respondents prefer buying from and into brands whose actions align with their core beliefs and values (as against 80 per cent globally).
- Of the total Millennial responders (Age 17-36), 95 per cent agree to pay a premium for an ethical retailer, while only 74 per cent of Generation Z (Age 7-16) share the same opinion.
5. Adapting to the new normalised routine
Working from home blurred the lines between time dedicated for work and personal time. To top it up, movement was restricted with individuals spending disproportionate time at home. This led to new routine formations and behavioral patterns amongst consumers. Here’s a look at some of the key developments that were observed through the younger demographic study:
- Work hours: 85 per cent of the respondents witnessed an increase in their working hours, leading to reduced personal or leisure time. 36 percent of consumers revealed that this change affected their shopping behaviour to a great extent while for 56 percent of consumers, the reduced leisure time impacted their buying routine to some extent.
- Health and immunity: 88 per cent responders revealed that they have moved to product purchases in this category.
- Leisure activities: Predictably, 81 per cent responders feel uncomfortable to step into a theatre while 60 per cent showcased acceptance to dining at a restaurant now. It was also observed that Generation X (age 37-53) were more uncomfortable visiting a shopping mall as 61 per cent of them shared this feeling as against 49 percent of Millennials (age 17-36).
6. Vocal for local gains mindshare
Keeping Atma-Nirbhar Bharat and the Make in India initiative at the centre, preference towards buying localised products and services is gaining momentum amongst Indians. With emphasis on improving our manufacturing capabilities, the vocal for local initiatives could go a long way in shaping India to be a global manufacturing destination.
- About 60 per cent of respondents displayed active participation towards replacing foreign brands with indigenous goods. 41 per cent of respondents across all age groups are willing to pay a premium for indigenous goods.
- Amongst the factors which governed the purchase decision from an indigenous goods company; Price and product review stood out as the most important decision factors (77 per cent respondents), followed by product composition-ingredients used (55 per cent respondents), while packaging was the least determining factor when making a purchase.
Commenting on the survey, Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India, said, “The consumer sentiments have been changing manifold over the past few months in the current scenario. Going forward, organisations need to evaluate and invest in studying consumer profiles, keeping in mind the larger picture. We are hopeful that this report will introduce business leaders to such consumer behavior changes and help them traverse their decisions meaningfully.”