How does the road to consumer recovery look like?

This report captures a few interesting findings from the surveyed nations, with a particular focus on India. The findings are intriguing and in many instances, trends in India defy those seen in the other surveyed countries. The number of infections is increasing in India at a pace faster than that in a majority of other surveyed nations. Since the last week of May, India has moved up the rank (in terms of the number of infections) from 10th to 3rd (at the time of writing this article).

Consumers are cautious

The collective net anxiety index (measuring anxieties concerning personal health, safety, and finance) has declined substantially in recent weeks from levels seen in the first wave (in April) in all countries, except in China and India where the indices have remained close to levels seen in April (Figure 1). This could be because of the rising number of infections in India and a recent surge in the number of cases in China. In India, the intermittent and extended lockdown in several parts of the country, economic uncertainties, and social distancing and isolation norms are affecting consumers who are worried about their physical well-being, financial health, and employment opportunities.

Demand for consumer durables may remain subdued

Higher saving intent amongst consumers does not bode well for the demand for ‘more discretionary’ consumer goods, which is also evident in the survey (Figure 3). Consumers across the world have expressed their reluctance to spend on items such as new vehicles, furnishing, electronics, and travel in the near future. Decisions around a few of these spending intents are influenced by restrictions on movement and social interactions, and consumer fear of contracting the virus. However, other discretionary purchases are probably being deferred because consumers are worried about their ability to meet short-term and long-term obligations, and future purchasing power.

The rise in e-commerce

A majority of the countries have shown an improvement in consumer sentiments towards going to stores compared with the results in April (when the survey began). This improvement suggests that retailers in these nations have upped their safety precautions and standards to attract consumers to their stores. However, relatively more consumers prefer buying discretionary goods online, while visiting stores mostly for essential goods, such as household goods and groceries (Figure 6). That said, there is still considerable apprehension about going to stores, especially amongst consumers from a few Asian nations (Japan and South Korea). These nations remain wary of the virus spread based on their past experiences.

What does it mean for the consumer industry?

With every survey, it is observed that countries are experiencing fluctuating trends, indicating uncertainties and anxiety about the future. As long as there is no medical advancement, uncertainties will keep consumers wary of spending. The survey findings have implications for the hospitality and automotive sectors, retailers, and a host of other consumer-oriented businesses. A few trends (such as rising demand for online orders) are emerging and it is up to the industry to strategize to adapt to the new normal.

In India, the number of infections is sharply rising, suggesting that the return to normalcy may not be near. The economy is expected to contract this fiscal year. If the pandemic prolongs, stress on consumers will increase and their ability to spend will reduce. That said, the survey suggests that there is pent-up demand amongst consumers that aspire to spend more, despite higher anxiety. However, consumers will likely prioritise well-being, which will determine their consumption patterns and behaviour. There will be demand for goods sold online as local and regional lockdowns restrict mobility and people prefer staying at home. If the industry desires to convert this potential demand into actual demand and translate into revenues, suppliers of goods and services have to adapt to the new normal. They also need to improve consumer confidence by following the best safety practices.