Consumers set to loosen their purse strings as vax drive, urge to spend boost sentiments
NEW DELHI : Urban Indians could open up their purse strings this festive season after a low-key affair last year. Consumer sentiment is yet to fully recover from the devastating second wave and climb back to pre-covid levels, but a step up in the country’s vaccination drive coupled with consumer intent to step out and socialize has improved their intent to spend more this festive season.
YouGov’s Diwali Spending Index reveals a spending propensity of 90.71 among urban Indians this festive season. The intent to spend is higher than last year when it was 80.96, though it remains below pre-pandemic levels when it was 100. This indicates a recovering appetite to spend among urban Indians, YouGov said.
YouGov surveyed 2,000 respondents on the India online panel in August 2021. The sample primarily constituted urban consumers from socioeconomic classes A and B. However, those surveyed also spoke of uncertainty over their current finances.
The change in mood comes in the aftermath of the second wave that significantly dampened consumer confidence and once again paused discretionary purchases.
YouGov’s data suggests that consumers, who have been living more confined lives over the past 18 months are seeking more occasions to spend. “This is likely to be the factor that has improved the overall sentiment to spend more this Diwali as compared to last," it said.
Festive spending is a big factor for most retailers across categories such as apparel, electronics, gifting items and household goods. Companies are already ramping up supplies to the market and ensuring availability of stocks.
As much as 29% of all respondents agreed to increase their spending this festive season compared to the year ago period. In 2020, 17% agreed to up their festive spends.
“While the spending intent is yet to go back to normal (pre-pandemic times), we see a marked improvement since last year and this is good news for brands trying to woo consumers this festive season," according to the survey.
Meanwhile, 31% of respondents plan to spend less than a year ago. The number is down from the 54% of respondents who planned to lower their festive season spending in 2020.
However, despite an improved sentiment compared to the year-ago period, households are still cautious and uncertain. “Close to 50% respondents last year said they were more careful with their finances than they used to be in the past. Now a similar proportion, 43.6%, feel the same thing, indicating that the fear of the uncertain is still strong among the public," it said.
Given that 2021 saw a devastating wave of covid, despite excitement among the public for Diwali this year, consumer sentiment is yet to match that in pre-pandemic times, it said.
Brands will need to work smartly to capture this recovery, said Deepa Bhatia, general manager, YouGov India.
Respondents have shown a higher intent for purchasing smart home appliances, Bhatia said. “The upcoming festive season will certainly benefit from a recovery in consumer appetite though we must bear in mind that consumer sentiment has not recovered fully to pre-pandemic levels," she said.
YouGov’s Diwali Spending Index is calculated as a weighted impact of 10 factors, including increase in gross household income, increase or decrease in household expenses, intent to invest or splurge and general optimism towards economy and on their intent to spend more or less this Diwali season versus the last.