6 in 10 Indians slash discretionary spending as inflation bites, says PwC survey

• Indian consumers are adopting cost-saving behaviour like shopping with retailers who offer free or discounted product delivery.
  
• Consumers also say that they would buy certain products only when they are on promotion or on a special offer. There is also a shift towards value buys and bulk purchases.
  
• The report also says that urban Indian consumers have tasted luxury and are resisting a reduction in their luxury consumption.
  
• Over 80% are willing to pay higher for a product that is produced/sourced locally, or made from recycled, sustainable, or eco-friendly materials.
  

The Indian consumer sentiment seems to be a long way off from the post-pandemic revenge-spending trend. After suffering through a year of high inflation, a lot of Indians are weighed down by the rising cost of living. Six in ten Indians i.e. 63% said they are cutting down on non-essential spending, in a PricewaterhouseCoopers survey.

About seven in ten Indians or 74% of them are concerned about their personal finances, said PwC Global Consumer Insights Pulse Survey, which captured the views of 500 Indians across 12 metros.

“In the current economic climate, where the economic growth rate has slowed to 4.4% in the third quarter of 2022 as against 6.3% in the previous quarter, with the consumer price index hovering at around 6–7% for over a year, the impact on consumer confidence is markedly visible,” the survey report said.

Shift to bulk and value buys

Over the next six months, consumers plan to adopt an array of cost-saving behaviours and one of them is discount shopping.

Ravi Kapoor, partner and leader - retail and consumer at PwC India said that the ongoing financial stress in the lives of the consumers will have a potential restraining effect on spends in the highly discretionary categories of electronics and luxury.

Nearly 47% of Indian consumers say they will shop with retailers who offer free or discounted product delivery. And, 45% also say they will buy certain products only when they are on promotion or when there is a special offer.

Consumers also plan to shop with retailers who offer better value; they are also looking to buy in bulk, sign up for subscription services, switch to cheaper brands and even go without a product they use regularly, the survey said.

Even as they are turning tight-fisted, consumers are willing to shell out a few extra bucks for sustainable products. Over 80% are willing to pay higher for a product that is produced/sourced locally, or made from recycled, sustainable, or eco-friendly materials, or produced by a company with a reputation for ethical practices, the survey said.

“Consumers will continue to demand world-class buying experiences in both physical and digital channels with work cut out for brands to reduce costs, enhance availability, and for going local,” said Kapoor.

Online shopping to go hybrid

As more Indians shift to the cost-saving mode, they want to shop online more. Around 61% of respondents indicated that they plan to shop online more often over the next six months. However, the increased cost of delivery has now started to pinch them, and many of them are now keen on going the distance to collect their purchase — moving to hybrid e-commerce.

“The use of hybrid e-commerce models such as ‘click and collect’, wherein people purchase or select items online and pick them up in-store or at a centralised collection point, is also gaining popularity. Around 42% of Indian consumers say they will increase the use of click and collect services over the next six months,” the report said.

In the lap of luxury

In order to help improve their stressed financial conditions, Indians are planning to slash luxury/premium products or designer products the most, as indicated by 38% of Indians.

At the same time, the report also says that urban Indian consumers have tasted luxury and are resisting a reduction in their luxury consumption. Half of the survey respondents said that luxury goods make them feel good about themselves, and a similar number also seem to prefer them as the product quality is better than that of a non-luxury good.

The need for wanting to keep up with latest trends is also driving people towards luxury — indicating that there is an appetite for future spending.

After luxury, most Indians are keen on reducing spending on virtual online activities (32%), consumer electronics (32%) and fashion products like clothing and footwear (31%). Travel (30%) and groceries (21%) had the least-reported planned reduction in spending – indicating that the revenge travel trend is likely to stay on, especially amongst GenZs and millennials.

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