Uptick in uptake

Despite a challenging global economic environment, marked by an impending slowdown and rising inflation, the financial well-being of Indian consumers appears to be on the upswing. Evidenced by an increase in discretionary spending, consumers seem to be optimistic about the state of the economy.

According to the latest wave of Deloitte’s Global State of the Consumer Tracker 1, which has been tracking consumer behaviour around the world since April 2020, Indian consumers surveyed indicated a sense of optimism in stark contrast with those in larger economies. Inflationary concerns in India amongst consumers surveyed range at around 55 per cent, as compared with 73 per cent in the UK, 68 per cent in Canada, and 67 per cent in the US. While concerns around personal savings continue to remain high, 76 per cent of surveyed consumers indicated that their financial situation had improved over the past year. A concurrent effect has been in the spending patterns—a shift from the previous years that saw delays around large purchases. While this can be attributed to pent-up demand or “revenge shopping” arising post Covid-19, the outlook towards future finances also looks positive (62 per cent respondents expect higher incomes the coming year).

Indian consumers are looking to indulge in things that bring them joy — while willing to pay for premium quality. Trends in travel and hospitality reflect this sentiment, where longer itineraries and destinations, and more extravagant travel experiences saw an uptick.

The auto sector too, is witnessing a positive trend with 59 per cent consumers planning to buy a vehicle in the next six months, of which 92 per cent intend to buy a new one. 32 per cent respondents were willing to explore new vehicle features, while 10 per cent were inclined to switch to an EV.

A majority of consumers (73 per cent) are sensitive to inflationary trends and expect grocery prices to rise. While almost half shopped across multiple stores to get the best deals, quality continues to triumph.

Will this sustain?
While the trends offer an overall positive outlook for the sectors, the sustainability of it hinges on concerns around Covid-19. With rising cases in the country, trigger reactions can have a negative impact on discretionary spending once again. Further, a significant share of consumers is erring on the side of caution when it comes to budgeting their spending. However, the upcoming festive season is likely to continue the uptick.

The original article was published in Financial Express on 12 April 2023.