Spending cut by urban consumers likely: EY
A report based on global trends and primary research data by Ernst & Young has revealed that at least five out of 10 urban consumers will continue to cut back on spending. This has been attributed to the fact that economic recovery and market normalisation are unlikely before March next year.
The consultancy also added that a majority of consumers will trade down towards value brands, over-invest in health and safety products, and fundamentally change their buying patterns towards home delivery and e-commerce. The study noted that 9% of consumers will be frugal and make cuts in future while 38% of the segment would be spending much more across categories as the economy opens up. Further, 11% of them will be cautiously extravagant, which means they will pay a premium but only for certain products.
“Indian consumer products companies face a multitude of challenges…coupled with the radically changing consumer behaviour. Companies must formulate strategies including re-evaluating brand portfolio, expanding relationships with third-party e-commerce platforms, exploring shared warehousing and be ready to respond to newer habits that consumers will develop after living through the pandemic,” Pinakiranjan Mishra, partner at EY India stated.