The new Indian consumer emerging from the Covid-19 crisis

KPMG reports that a new Indian consumer is emerging from the Covid-19 crisis – one that is optimistic, tech savvy and open to a cashless economy.

The Big Four accounting and advisory firm surveyed more than 2,000 consumers in India between May and June, looking to gauge consumption patterns. The results revealed certain broad trends that stretch through the consumer market, with interesting nuances based on demographic segments.

For one, KPMG found consumers in India are optimistic about the country’s economic recovery from Covid-19. More than half of the respondents to KPMG’s survey predicted a short-lived economic fallout from the crisis. In fact, more than 15% of these have trudged on completely unhindered, reporting no change to their consumption activity from Covid-19.

The remaining 35% have been cautious with their routines and spending, but expect to be back to normal within the next three to six months. While these are the broad strokes, KPMG notes distinct demographic variations here. A lot of the optimism, for instance, appears to be coming from Tier-2 and Tier-3 cities,

In fact, more than a fifth of consumers in Tier-3 cities report no change in routines and spending, while nearly a fifth report the same among Tier-2 cities. This figure stands at less than 10% among Tier-1 cities, although even here most expect to be back to normal within the next year if not six months.

Interestingly, age also plays a factor in the degree of optimism. Consumers between the ages of 20 and 30 expect a much quicker return to normal spending and routines, while older demographics anticipate a slightly longer recovery time. Across the board, however, the primary factors hindering optimism are economic uncertainty, fear of the virus and poor supply chain hygiene.

Amid these fears, many are happy to move to the digital space for their purchases, so as to avoid any risk of contracting the virus. The lockdown and virtual working conditions no doubt accentuated this tendency. KPMG reports that the preference for online buying models has nearly doubled since the Covid-19 crisis, while the preference for in store purchases has plummeted. 

The average Indian consumer was already growing more tech savvy prior to the crisis, as low data prices caused a boom in internet access across the country. At the same time, few consumers had made the leap from using the internet for information/entertainment to actually making purchases and payments online.

The Covid-19 crisis has changed this scenario. In fact, well over 80% of respondents to KPMG’s survey chose cashless and contactless payments, indicating the scale of this change. Of these, most choose to pay via government-powered Unified Payments Interface (UPI) and online wallets, while a significant number also choose to pay by card.

And this preference for contactless is not just a product of major cities. UPI, online wallets and card payments were in demand across tier-1, tier-2 and tier-3 cities. According to KPMG, the shift to contactless and these broader demographic trends are all worth a considering for brands in India.

Understanding the new consumer is one of the biggest challenges facing brands in coming months. India is among the largest consumer markets, and brands will hope to capitalise on the shifting priorities to gain a competitive edge in this vibrant landscape. While knowledge of purchasing trends is important, KPMG highlights that building trust will also play a crucial role for companies going forth.

“Consumers are increasingly aware of the brands they invest in, hence trust will play a vital role for their purchase decisions. Companies need to prioritise their needs in terms of providing a safe environment for shopping as well as provide easier and convenient modes of payment. They also may need to gear-up and realign their supply chains, including logistics and warehousing for a better consumer experience. Such measures could help induce brand loyalty among consumers, which will serve as a long-term benefit,” said Harsha Razdan, a partner at KPMG.