The Covid-19 pandemic is reshaping the consumer goods industry in real time. The pandemic has compelled individuals to bring changes in their shopping behavior. A survey was conducted by KPMG which covered various demographics, to analyze the changing consumer sentiment with respect to the COVID-19 pandemic.
The optimistic consumer
The COVID-19 pandemic has created a great impact on the consumer behavior patterns. This pandemic has set a new mindset in the consumers which will make them more attentive towards financial stability and companies need to change their business models accordingly.
According to the survey done by KPMG, a total of 51% consumers are optimistic towards future. Surprisingly, most of the consumers feel that the impact of COVID-19 on spending patterns will not last more than 6 months. Although there is a decrease in discretionary spending, but majority of respondents specially from tier-3 cities and within age band of 20- 30 are optimistic. So, this could be the focus area for companies to monitor the spending habits and retailers can grab this chance to expand their presence in these cities.
According to the spending range across discretionary categories, it is found that 49% intend to spend up to INR 5000 in the next three months and this implies that consumers are still cautious about spending. If we consider across the product categories, 64% of consumers preferred segment is apparels, furniture and electronics. As the government has started with the unlock process, the most important factor that will affect buying patterns of consumers post COVID-19 is economic uncertainty.
Digitally savvy consumer
Today the consumer is digitally savvy, and have adapted to a complete digital experience. A comparison of pre and post COVID scenario by KPMG clearly indicates that there has been 1.6x growth in the consumer preference of online channels. As per the report there has been an increase in adoption and willingness for e-commerce purchases over physical stores, during the pandemic. The pandemic has proved to be that “Extra push” for consumers to engage in online shopping. As we can see from the graph; there has been 24% increase in the online mode as the preferred buying mode after the arrival of COVID 19 in India.
People are more content to move to the digital space for their purchases, so as to avoid any risk of contracting the virus. Consumer preferences are changing. While 59% of the respondents value pricing and promotions as the key to their purchase decisions, 68% respondents expect safety precautions to be their primary priority.
While people are engaging in online buying, the offline retailers require different measures to ensure a customer’s physical visit to the store. Safety and hygiene has become a non negotiable requirement. Under online buying mode 84% of consumers prefer Click and delivery over pickup at store, where as under physical buying modes 67% of consumers prefer standalone stores over malls.
Unlocking the Potential of Consumer Digital Payments
The global COVID – 19 pandemic has had a deep impact on consumer behavior. Amid the fears, digital payments platforms have not just seen a surge in the number of transactions but the number of downloads of these platforms have also almost doubled. National Payment Corporation of India (NPCI) announced the highest ever transactions by UPI mode in June 2020. This clearly indicates that the consumers are now getting habituated to the new normal.
The survey conducted by KPMG, indicates that UPI and Wallet modes put together are 1.3X more than card payments. Cash payments were opted by only 15 per cent of consumers. Also, 85 per cent respondents have chosen contact-less modes over cash. UPI transactions in India have crossed 149 crores in volume and $41 billion in transaction value, in July 2020. The lockdown has also brought many first – time users who were earlier not very keen on using digital payments’ mode for payments as now due to social distancing measures they need to pay online for buying essentials. The NPCI has also urged people to use digital payment method, so that people do not step out. Among the top gainers, PayTM and Google pay are top payments app being used by consumers.
The COVID-19 pandemic has fundamentally changed the world as we know it. The virus is reshaping the consumer goods industry in real time, rapidly accelerating long-term underlying trends in the space of mere weeks. Consumer priorities have become centered on the most basic needs, sending demand for hygiene, cleaning and staples products soaring, while non-essential categories slump. For certain products and brands, COVID-19 caused supply-chain disruptions. And when consumers couldn’t find their preferred product at their preferred retailer, they changed their shopping behavior. The pandemic has compelled individuals as well as organizations to re – evaluate their payment framework and infrastructure so as to incorporate considerations of disruption mitigation and continuity planning. Cash withdrawals in the NFS network have displayed signs of rebounding to pre-COVID-19 levels indicating that the Indian populace has a certain proclivity and propensity to transact in cash.