It’s all about attitude. And the attitude of the Indian consumers seems much more positive and upbeat, compared to their counterparts in other parts of the world. This can largely be attributed to the significant increase in the number of young working adults, looking to spend on experiential categories such as travel and leisure, entertainment and big-ticket purchases like automobile and electronics.
Riding on this, nearly 36 per cent of consumers in India are expected to increase their spending in the next six months across categories, which is more than double the global average of 17 per cent. At least, that’s what a recent study by Boston Consulting Group indicates. Quite significantly, India happens to be one of the most optimistic markets, with five of 10 Indians, exhibiting positive sentiment with regards to macro-economic factors like geo-political concerns, recession or inflation as well as micro factors such as personal finances and their future income outlook.
One may presume that macro issues like geopolitical disruptions, economic challenges, and technological changes drive consumer spending and saving. But that may be a misconstrued notion as micro concerns like an individual’s job, household income and finances weigh much more heavily.
Globally, 83 per cent of consumer resilience is driven by micro factors, compared to just 17 per cent for macro factors. And India is no exception. The positive attitude of Indian consumers is now getting translated into spending resilience. Interestingly, there is no one single answer on how consumers around the world are feeling. Concerns about both macro and micro issues are high and both show wide ranges. Around 50 per cent of Indian and Chinese consumers are worried about personal finances and income while more than 80 per cent are worried in Japan, Argentina, and France. Consumer sentiment in the US rests somewhere in between.
Be it in India or elsewhere, there is no surprise that the spending outlook is relatively more positive among young working adults—those in the 18 to 34 years age-group. Around 16 per cent of that group expects to change their spending, compared with 13 per cent of those aged between 35 and 44 years and eight per cent for those aged above 44 years. Apart from India, the other countries that continue to see positive sentiment and a good spending outlook include China, UAE and Saudi Arabia. These countries will continue to see growth over the next one to two years.
Going by the BCG study, non-negotiable categories, such as baby food, fresh food and packaged food, have demonstrated strong recent spending, which is expected to rise in the future. Consumers refuse to compromise on quality in these important categories and are willing to trade up, if required, despite inflation. Additionally, consumers are still prioritizing experiential items such as air travel, vacations and luxury brands.
All these notwithstanding, consumer spending is heading southward for a few years now, in categories like large electronics. Also, categories such as food delivery and alcohol, whose sales were inflated during the pandemic, are seeing decreased demand as the post-Covid cool down.
