As India moved to prevent the spread of Covid-19 with a lockdown late March, household budgets and consumer behaviour have since shifted. After months of pantry loading, consumers are now turning more value conscious. Sanitizers, floor cleaners, packaged foods and immunity boosters have found favour among Indian shoppers. Here are five things you may want to know about the changes:
Income decline turns shoppers frugal
A massive spike in unemployment, economic uncertainty and declining consumer confidence has led buyers to become risk averse. They are seeking products and services that deliver value and quality. Market researcher Nielsen reported visible signs of consumers either downgrading to more affordable (mass and popular) offerings or shifting towards value for money large packs.
Euromonitor said India’s middle-income households that fall under the social economic classification (SEC) C and D – that form 58% of India’s households – are expected to see a 20% year-on-year decline in consumer spending owing to income losses. This consumer cohort accounts for 70% of total spending as of 2020. Euromonitor defines SEC D and C in India as people with annual household incomes ranging from $5,000 (Rs. 3,68,734) to $45,000 (over Rs 33,00,000).
Shopping list ranges from chyawanprash to dishwashers
The pandemic may have reset consumer habits across the globe but Indians are buying sanitizers, hand washes, floor cleaners, apart from immunity boosting products like honey and chyawanprash.
In-home cooking and snacking pushed sales of biscuit, packaged flour, rice, noodles, pasta, ready-to-cook meals, and dairy products. Absence of house help led to rise demand for small kitchen appliances, microwaves, food processors, washing machines with the more affluent even buying the pricey dishwashers.
People also bought more office furniture as work from home becomes a more permanent feature. Chairs and tables were in high demand, Euromonitor said.
Some new habits will stick around
Companies are expecting demand for certain hygiene products to eventually cool off, while that of health foods to stick around and become more permanent.
Already, Nielsen reported some moderation in sales of FMCG products in August as consumers went easy on pantry-loading. However, some consumers may incorporate new hygiene rituals that outlast Covid-19.
Dabur India’s Mohit Malhotra said that post-Covid, demand for immunity boosting products is likely to sustain; while the demand for hygiene products may moderate once the pandemic subsides.
In a survey by Euromonitor, 45% of the respondents said they expect their need for such products to become more permanent.
Private labels fill in need gaps
In the initial lockdown period, private labels came to the rescue of retailers as the supply lines of big FMCG firms were disrupted. Private labels from companies such as Future Retail and Metro Cash and Carry saw a jump as they were quick to fill in the need gaps in categories like oil, flour, rice, snacks, processed foods and even home and personal hygiene products.
Going forward, economic slump is likely to help drive sales of private labels as they are typically cheaper than regular brands. Online retailer, Grofers plans to invest $15 million in its owned brands over the next year.
Such value-seeking shopping behaviour could last well over six months, said Nielsen.
Companies step on the gas to meet demand
As the beauty needs of consumers took a back seat, fast moving consumer goods companies pivoted to focus on hygiene products like surface disinfectants, hand washes, soaps, vegetable cleaners, immunity boosters to compensate for a sharp fall in demand for discretionary products in the personal care segment.
Nielsen said that over 1,890 new products were launched under the health and hygiene category between March and August. Other than personal and home hygiene products, launches in food categories like ketchup, jams, cheese, saw an uptick too.
As the consumers become thrifty, they are nudging companies to roll out offers on both small and large pack sizes and expand their value range.