TomorrowMakers

Less clothes and make-up, more hygiene and wellness products. Let's take a look at how consumer behaviour has evolved in the last year.

Changing habits have been transformed

The unprecedented global lockdown brought upon us by the COVID-19 pandemic has led to a major shift in consumer behaviour and preferences, many of which experts believe will be permanent. While some changes have been necessitated due to social distancing norms, others are on account of the economic disruption this black swan event is predicted to have in the coming year. 

Let’s take a look at changing consumer behaviour as we anticipate the third wave of COVID-19 in India.

Growing digital affinity

India’s base of digital users grew fastest across the world in the first six months of 2021 – by 38% 

Technology has become the centrepiece of life in 2021. While the initial phase of the lockdown pushed consumers to explore online shopping, over a period of time a large segment across age groups have transitioned to digital channels for everything from banking to doctors’ consultations to fitness classes and live-streaming of social events. 

Boom in sales of personal hygiene products

Penetration of hand sanitisers in India skyrocketed from a meagre 1% in September 2019 to 45% by September 2020

With the pandemic, the perception and effort towards hygiene and sanitisation has shifted drastically. The demand for everything from sanitisers, hand wash, disinfectants, detergents, floor cleaners, and soaps has seen a huge uptick. This also created a temporary demand-supply gap during the early days of panic buying, resulting in price escalations and black marketing, which forced the government to intervene against exploitative business practices.

Focus on health and wellness

Indians spent over Rs 15,000 crore on vitamin supplements and immunity boosters over the last one year

We are witnessing a ‘positive spending sentiment’ on fresh foods and staples, while spend on packaged foods has been relatively neutral. Families are embracing daadi’s nuskhas in the kitchen for immunity building with honey, turmeric, ginger, herbs, etc. 

Psychological factors also partially contribute to new found interest in prophylactic health remedies, especially immunity-boosting products. The demand for OTC Ayurvedic products, Chyawanprash, giloy tablets, immunity-boosting vitamins and mineral supplements grew nearly seven-fold during the first quarter of 2020-21.

Shift in discretionary spends

Non-essential expenditure has been down, fluctuating between 65% and 85% of pre-pandemic levels

As per a Consumer Confidence Survey (CCS) by the RBI, purchasing behaviour with respect to discretionary spends has been muted on account of low consumer confidence owing to reduced household income, increased fear of unemployment, and inflation levels. 

However, in urban areas there has been an increase in spend on digital entertainment, educational and online courses, gardening tools, and DIY products as people search for in-house entertainment. The shift to working from home (WFM) has also fuelled demand for home furniture and coffee!

Here is a quick look at changing consumer buying behaviour across various product categories:

Increase in demand

Decrease in demand

Hand sanitisers: 350% 

Confectioneries: 35%

Hand wash: 60% 

Consumer durables: 55%

Chyawanprash: 80%

Alcohol (IMFL): 12%

Turmeric: 40%

Apparels: 27%

Packaged health foods: 35%

Cosmetics: 55%

Please note that changes across some product categories cannot be directly attributed to consumer behaviour. For example, the demand for alcohol has been high throughout the lockdown but the restriction imposed on sales and distribution is responsible for category decline. Similarly, salons and spas account for about 31% of the beauty and wellness market, and the establishments have only recently been permitted to open – that too, with limited occupancy. 

Last words

Consumers are a lot more conscious of their buying choices. There is a preference for sustainable and locally sourced products. People are also looking for better value propositions while minimising resource wastage. The general shopping patterns are expected to continue to change as the situation evolves, but categories associated with habitual buying behaviour are not expected to be highly impacted.