Urban consumers spend cautiously owing to worsening financial situation: Survey
As per the survey, 63% of consumers were added to the 'newly constrained' list, 10% are under 'existing constrained' and 25% are 'cautious insulated' consumers
In 2020, Nielsen IQ identified two new groups—“constrained” and “insulated”—as unemployment surged due to COVID-19 pandemic. The new report says that over 60% of consumers have now been included in the “newly constrained” category. Consumers under this category have experienced a spurt in household income post-pandemic. Also, urban consumers have been consciously watching what they spend because of their exacerbating financial condition.
Indian consumers were more cautious than other countries in the post-pandemic world, according to ET.
With vaccine optimism coming in, it was believed that people would get back to normality. However, consumers are still sceptical to spend freely. Instead, they have become more cautious while spending. A Money9 survey conducted in January 2021 with a total of 16,100 participants also highlighted that respondents are not willing to spend huge on big expenses.
As per Money9’s survey, 58% of the respondents do not intend to buy a house this year and more than half of the respondents do not plan to buy a car or two-wheeler this year. This clearly indicates the restricted spending style of the consumers after Covid-19.
Due to job losses and salary cuts, the demand graph in urban areas has been declining while in rural areas, it did not see any major decline owing to the intense migration that took place during the COVID-19 induced lockdown and several other reasons.
Varun Berry, Managing Director, Britannia Industries told the publication that the FMCG industry is optimistic about the increase in demand in the next six months.
The report by Nielsen on February 25, 2021 stated that due to COVID-19 people have started consuming food at home. Distribution gaps also occurred during this time when big national brands experienced supply cuts during the lockdown. The private sector on the other hand had better supply chain management. The situation this year seems to get better.
NielsenIQ has divided its survey into four categories as per the spending trends—Newly constrained, existing constrained, cautious insulated and unrestricted insulated.
As per the survey, 63% of consumers were added to the ‘newly constrained’ list, 10% are under ‘existing constrained’ and 25% are ‘cautious insulated’ consumers.
The COVID-19 situation has worsened the financial situation of low-income households. Money9’s survey showed that around 77% of respondents are not left with any cash surplus at the end of the month.