The Indian Consumer: Pre and Post Pandemic

The significant impact of the current pandemic on both the Indian consumer and the markets has far-reaching implications on marketers. Indian Marketers need to analyze the pre and post-pandemic consumption patterns as well as consumer trends to evolve feasible prescriptions and solutions for the way ahead.

The Pre-COVID Indian Consumer

Before the lockdown caused by the pandemic, consumption by Indian households was growing at a nominal rate of 13% (YoY basis) and had touched the INR 120 trillion mark in 2019.  

While the largest single category was food and grocery, the fastest-growing categories were health and education indicating the Indian consumer’s growing need to invest in a better future for themselves.

Driven by changing lifestyles, Indian consumers had also adopted various new categories like mobile wallets, ride-hailing, and Over-the-Top (OTT) content. There were many noticeable drivers for the growth and broadening in consumption.

Key Drivers for Change in Consumption Patterns (Pre-Pandemic):

• Increased Exposure: The increasing influence of social media and higher distribution of entertainment products and services led to a significant increase in the exposure of the Indian consumer to a bouquet of brands and offerings.
• Accessibility: Rapid growth in smartphone users, the emergence of online shopping platforms with a great variety of products, and an overall increase in the number of shopping malls in India had made the market more accessible to the consumer.  
• Income: Income had been a key factor in the increase of consumption and the annual average household income in India had increased showing positive trends in consumption. 
• Urbanization: Though the rate of growth in urbanization had reduced, Urban India still had a significant migrant workforce.

The Post Pandemic Indian Consumer

According to the CMIE consumer pyramid survey, as of December 2020, the index of consumer sentiment is still about 50% below the pre-pandemic levels. The index is an indicator of the consumer perception of their propensity to spend on consumer durables.Though the much-awaited event of being vaccinated is now well in sight, the sentiment and behavior of most Indian consumers does not reflect optimism. This reiterates the imperative for Indian marketers to examine the changing behaviors and preferences of Indian consumers.  

The New Segmentation

Noticeably, apart from the traditional segmentation criterion, a new segmentation criterion has emerged through numerous recent consumer studies with four diverse consumer segments being identified based on consumer situations and behavior  

• Subsistence: Consumers facing economic challenges due to significant fall in income or unemployment and are still focused on their bare and basic needs.  
• Compulsion: Consumers who were compelled to postpone a significant event due to the onset of the pandemic and have now decided to go ahead being reassured of their safety. These could be consumers opting for elective surgery or a necessary social event. This segment has been responsible for the partial revival of some sectors. 
• Cautious: Starved-for-outdoor segment who have cautiously started seeking the reprieve from the locked-up situation faced during the early pandemic period.  They have started spending (though sporadically and cautiously) on categories like dine-ins and staycations.
• Splurging: Habitual of splurging, this segment is looking for the slightest assurance of safety to indulge themselves more than ever now. This is perceived as an attractive opportunity by them to spend on luxuries, and holidays while there are attractive bargains due to the low demand.

Marketers and brands need to identify the market potential and create and deliver value to the proposition around these segments based on their category of offerings.

They also need to be cognizant of following changes in consumer behavior and attitudes.  

Change in Shopping Attitudes and Behaviors

The influence of the pandemic on the Indian consumer attitude and behaviors can be observed in the following trends:

• Brand scores over Variety: Strong need for reassurance and trust has made Indian consumers stick to brands especially in categories like Staples, Healthcare, and Food.
• Functional scores over Intangibles: As consumers are driven more to fulfill their basic needs, the functional value has assumed great importance. The peripheral values are being compromised for tangible benefits. Consumers now prefer comfort and effortless cleansing in apparel as compared to style, while they work more from home.
• Price scores over Augmentation: Faced with economic insecurities, Indian consumers have become more price-conscious than ever before. The exceptions though are food and health-related offerings.
• Online Scores over Word of Mouth: More consumers are influenced by online reviews and posts than by word of mouth. This is probably because of consumers spending more time online than they used to do pre-pandemic.
• Online Channels score over Physical: There is a large shift to online buying as compared to buying from the brick and mortar. Indian consumers have overcome the habitual and trust barriers they had especially in online buying of staples and groceries.

Marketers need to change their offerings and value propositions keeping the above consumer trends in mind

The Way Ahead

Even though mass vaccination is around the corner and Indians are adjusting to the new normal, companies still look ahead to uncertain times with several unknowns. Few accepted prescriptions emerge from studies and practice.

• Build an online presence and create platforms for the digital interface: As consumers increasingly purchase and engage with brands online, brands must reinforce their online presence and proactively engage with customers digitally.
• Multiple Contingency plans: Due to the high uncertainties and the challenges in forecasting time to recovery, it is essential for brands to come up with more than one recovery strategy for all different possible scenarios 
• Improving strategies: Consumer trends have changed significantly since the onset of the pandemic. While some changes are temporary, many are here to stay necessitating appropriate changes in marketing strategy.
• Selectively venturing into new models/products: As the consumers are now more open to change, companies have an opportunity to enter into new products’ markets selectively.

Needless to say, a dynamic roadmap customized to consumers, category, and the company will be the beacon for the way ahead.