Is Indian consumer saving for the future?

The second wave of Covid-19 has made Indians more cautious in their spending habits, with a predisposition to save and invest over the next few months, according to a KPMG report released recently. The report ‘Me, my life, my wallet’, which probed the changing consumer behaviour around the world, said the swiftness, scale and severity of the pandemic has led Indians to higher anxiety about their personal finances.

The research has shown that younger people in the country are more inclined to reduce discretionary spending with a drop in income, rather than alter their planned savings and investments.

“Overall, 85% of respondents are likely to stick to their savings plan even with a 10% fall in their income. Nearly 78% of Generation X (age 37 to 53) are more concerned about their future finances than their current savings, with 70% of millennials (age 17-36) sharing the same mindset. Around 35% of millennials said they would cut down on their gaming and media activities to save money,” said the report.

As a way to lower upfront costs, Generation Z (age 7-16) and millennials also appear more open to shifting from ownership to a share-rent model for certain purchases. “Of the total respondents comfortable sharing or renting clothes and mobiles, 70% were from these two groups, followed by sharing or renting cars (60%).”

India’s Baby Boomers (age 54-74) and The Silent Generation (age 75 and above) have had to adopt a digital-first lifestyle by default. Indians across all ages have adapted and become confident with internet banking, online grocery shopping, video calling, and streaming platforms.

More conscious Indian consumer
The typical Indian consumer has gone past the traditional definition of being price-conscious. Today, consumers are considering intangible assets such as brand’s goodwill, equity, ethics and purpose more while making their purchase decision,” says Abhijeet Ranade, Partner Markets and People, Business Consulting, KPMG in India.

The Indian consumer may still be in the early stages of their evolution with respect to buying for their basic needs versus splurging on luxuries, but Covid-19 has certainly hastened their progress towards becoming more conscious of their role in the ecosystem.

Clearly, the Indian customer has become focused on saving in the pandemic and shut the door on spending on luxury items. At the same time, extended lockdowns have driven people online and hastened the need for widespread digitisation. The pandemic has also created a greater consciousness of consumers’ power in society, with more Indians seemingly aware of brands’ ethical positioning. This is affecting their purchasing decisions more than in the past and is likely to be a growing trend as India moves into a `new normal’ following the pandemic.

Focus on customisation
Companies are becoming more efficient at leveraging the available data on consumer preferences and buying patterns to create bespoke propositions. Personalisation has become integral to the customer experience. The report said the technology behind this personalisation is also getting more sophisticated, with complex algorithms leveraging large amounts of information to recommend the next movie, beauty product or news article with increasing precision and relevance.

“While our research shows 81% of all respondents expect personalised customer service, with 88% of Gen X forming the majority age group. Younger generations are more willing to trade privacy and personal data in exchange for a higher level of service and greater personalisation. Older generations seek more data security and are reluctant to share data that easily,” it said.

The customisation however comes at a cost. “To build a holistic profile of the Indian consumer, companies need a continuously updated stream of data on user behaviour, and the challenge arises when either consent for the collection and use of such information is ignored – or worse, not explicitly sought.”

According to Harsha Razdan, partner and head, consumer markets and internet business, KPMG in India, the consumer sentiments have been changing manifold over the past few months in the current scenario. “Going forward, organisations need to evaluate and invest in studying consumer profiles, keeping in mind the larger picture,” says Razdan.

The trends are different in other countries. For instance, in Brazil, consumers’ concerns about data security have grown exponentially just like how e-commerce has grown. Greek consumers, on the other hand, expect seamless customer journeys from companies that care. As per the report, Japan is ready for more digitisation, but businesses need to focus on customer experience lest they should be abandoned. In the US, more than 80% of respondents want to engage with companies whose actions reflect their values.