Health, wellness and nutrition products & services will occupy a larger share of the consumer’s wallet in the new year. This is because cautiousness would continue to rule 2021, even as the Covid vaccine’s rollout plan raises hopes.
It is estimated that, before the pandemic, households on average spent less than 1% on health and wellness. This changed last year as the consumer started to mark health and wellness products & services as a ‘must-have’ on his list. The percentage of spend on this segment is certainly going to increase in 2021 as well, said industry experts, and this would include the amount a household sets aside towards health insurance.
The consumer would continue to spend on household products, grocery and the essentials as usual — this occupies about a third of his wallet. In addition, education expenses would be a priority for households. Alongside, internet connectivity required to work remotely would see a higher portion of spends.
Subramanyeswar S, Group Chief Strategy Officer at MullenLowe Lintas Group said, “The last three months have been particularly good, with consumers opening their purse strings during the long Indian festive season. What’s aided this is also the surge in online purchases, which became super convenient — to buy from anywhere and through any platform/mode. A large number of them were in fact first-time buyers who found the experience thrilling. Pent-up demand too helped in a generally feel-good spirit that happens during the festive period. However, consumers would be watchful about their spending in future. They would continue to spend on essential items, and would spend more on health and wellness related products & services, mobile & DTH services, online education, apparel, home renovations and food orderings. I expect that the share of the consumer’s wallet in each of these would go up.”
Home renovations, which suffered a setback during 2020, will surge. Nilesh Gupta, Managing Partner at Vijay Sales, said there has been a structural shift in the thought process of the consumer who is now willing to upgrade on the value of a durable, appliance or electronic item.
“Everybody stayed at home and has saved money that would otherwise have been spent on travel. The consumer’s attention is now on home enhancements. In 2020, consumers were fine with buying products for functional purposes. But they were highly conscious about the price. Today, they don’t mind spending on a larger capacity refrigerator or washing machine. This is one shift in mindset which is here to stay for the sector,” said Gupta.
A laptop too has become a necessity. “This year, given the pandemic, if a household either borrowed a laptop or settled for a cheaper one or a tab, they are likely to invest in a better model in the new year. One would see laptops following the cycle of a mobile phone, which gets replaced every two years,” said Gupta.
An urban household on an average would spend Rs 1.5 lakh in a year on a product in the combined sector of consumer durable/appliance/mobile phone. With children also studying online — an exercise that is expected to continue in the new year in some form — the sector’s share of the consumer’s wallet is expected to increase in 2021, said Gupta.
What’s also going to catch the attention of consumers are apparel. This segment could account for about 10% of a consumer’s spend on an average. This contribution had come down drastically in 2020 as window-shopping came to a halt.
Sanjeev Mohanty, MD (South Asia, Middle East & North Africa) at Levi Strauss & Co, predicts consumers could seek more premium and high quality brands and products as the pent-up demand to dress well has been bottled up for a year now. Pressures on food preparations at home would likely continue in 2021 as well, which means there would be more eating out or food orders being placed for home delivery. Dalip Sehgal, CEO of Nexus Malls, said people are expected to spend heavily on entertainment and dining out. However, certain things like grocery and fast fashion will continue to be ordered online.
“To me, the year 2021 is going to be a story of two halves. The first six months, people would still be working from home, schools and colleges will still take some time to reopen and therefore there would be a steady consumption pattern. During these six months, people will continue to spend on electronics, health and fitness, beauty and luxury,” said Sehgal.
With the psyche of an Indian household being one of saving, experts said consumers could make more solid investments such as in gold and real estate. Investments form 10-20% of a consumer’s wallet and this would remain unchanged, albeit with a certain rejig of the portfolio.