Consumer sentiment picks up faster in smaller cities; DIY the new mantra: BCG report

Even though the pandemic has continued to worsen in India, the consumer sentiment is beginning to get a little better as per BCG’s latest round of consumer sentiment survey conducted over July 20-Aug 2 among 3,000 urban consumers (covering all socio-economic groups across Metro to Tier 4 cities). This is the 5th round of survey conducted by them. The overarching theme emerging from the latest survey is one of ‘cautious living’, with consumers beginning to feel that it is time that they need to resume their activities albeit with a lot of caution. 

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As per the latest survey, 44% of consumers think their income in the next 6 months will be lower than pre COVID levels – significantly lower than 57% in the last round conducted over May 18-23. Similarly, the sentiment about spending is beginning to look better. The latest round had 42% consumers expecting their spends over the next 6 months to be lower, compared to 53% in the last round. There is also a pick up in routine activities, with 53% consumers stating that they have been going out to work and 66% consumers saying that they have been visiting friends in the latest round as against 15% and 10%, respectively, in the last round. Majority of the consumers, however, say that the frequency of most of these activities is still not at the pre COVID levels. 

“We are beginning to see a change in the consumer sentiment. The overarching feeling in all the previous rounds of survey had been more around fear, worries about economy and their own incomes, whereas the latest round speaks much more about learning to live cautiously with the virus,” said Kanika Sanghi, Lead, Centre for Customer Insight for BCG India

The extent of revival is much faster in the smaller cities. Across metrics, Tier 2 and below towns show faster pick-up. For example, 52% consumers in metro and Tier 1 cities think their income will be lower, while only 41% in T2 and below think the same. Similarly, 36% of small town consumers are going to local markets for essentials shopping as much as they used to pre COVID compared to 27% in metro and Tier 1. 

The spending sentiment has improved across many categories. While essentials, health, in home entertainment continue to be winners, there is an uptick in sentiment across many semi-essentials like personal care, packaged food as well as discretionary items like apparel, cosmetics, auto, consumer electronics. On the other hand, travel and out of home entertainment continue to show little to no improvement. 

“Now that we have been into the crisis for 4-5 months, the shape of new normal for consumer behaviour is also beginning to emerge. There has been adoption of many new behaviours ranging from online shopping, digital first in everything, new ‘do it yourself’ regimes – which are all sticking to varying degrees,” remarked Nimisha Jain, Managing Director and Partner, BCG India

The strong acceleration in e-commerce continues. As per the survey, around 20% new users have been added to the universe of online shoppers in the last 3-4 months. Many of the categories have seen an even faster acceleration – with fresh foods, staples seeing up to 40-50% new users. There is also increase in the average number of categories bought online – increasing from 4 to almost 6 per user. 

Similarly, there are up to 30% new users of healthy food, and 20% new users of fitness related activities. The study also shows that 64% of consumers have started doing their grooming regimes – hair cut, waxing, hair colour, etc. – themselves. The proportion among affluent and elite consumers is even higher at 80-90%.


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