In urban India, 63% consumers fall within this consumer group and are in the top five across countries surveyed. This is higher than the global average of 46%, the report said, adding that consumers’ circumstances and intentions relative to spending has changed.
Four consumer cohorts are driving spends in urban India, with these cohorts adapting new coping mechanisms to manage household budgets as consumption trends shift.
“The cautionary spending environment means brands will need to be laser-focused on this group’s newly emerging need states,” said NielsenIQ Intelligence Unit global head Scott McKenzie.
The four cohorts identified by the report said consumption habits are expected to be different compared to what was experienced mid 2020. The report identified existing Indian constrained consumers (10%) who were already watching what they spent prior to Covid-19, and 63% newly constrained consumers in India who experienced worsening household incomes and are consciously watching what they now spend.
The other two cohorts the report identified include 25% of cautious insulated consumers with limited income who are watching what they spend, and 3% unrestricted insulated consumers who said their financial situation is either the same or has improved and hence they do not have to watch what they spend.
The report added that large numbers of urban consumers in India are employing new coping mechanisms to manage household budgets, with lowest price, private labels and promotions influencing consumption. However, 61% consumers said they are brand loyal, and will only change brands if the regular price increases.
When it comes to grocery spends in India, 31% indicated they would spend less on groceries if the economic situation worsened, whereas 26% said they would spend more.
In addition, 90% of those polled said they want better variety of good quality value offers, with 83% willing to buy direct from manufacturers and 79% willing to pay more for better product quality.
“While India’s FMCG industry has seen an uptick in consumption towards the end of last year, the consumers that brands and retailers knew last year are not the same today”, said McKenzie. “Even with positive news of vaccine deployment, urban consumers are likely to stay cautious and continue to control their spending. Brands and retailers need to understand how their consumers’ situations have changed so they can meet their new needs,” he added.
