The unexpectedness, magnitude and severity of the global pandemic have created growing concerns about personal finances among all population groups. Especially for young people who have only just gained a foothold in the labor market, the situation is particularly precarious due to the lack of work experience (and thus the savings) combined with the severely impaired economic prospects.
With this in mind, KPMG conducted a consumer survey in India – Me, My Life, My Wallet Report 3.0 – to capture consumer behavior and choices emerging in New Age India. This comprised 2,164 respondents in urban and semi-urban markets in two phases.
The main results of the survey are:
# More than 85 percent of respondents are likely to stick to their savings plan, even if their income drops by 10 percent, which indicates the “savings mood”.
# 70 percent of respondents across all age groups are concerned about their future finances, up from 49 percent globally. 30 percent of respondents focus on their current finances versus 51 percent globally. Again, this shows that savings are an important factor now considered by Indians after the pandemic.
# Interestingly, similar savings sentiments and spending patterns were observed in tier 1 and tier 2 cities. 74 percent of the tier 1 city responders and 63 percent of the tier 2 responders gave their future finances more priority than their current finances, which indicates the savings mood in all city segments. If income were to be reduced by 10 percent, both Level 1 and Level 2 respondents show similar trends when it comes to spending on electronics, saving or investing, personal health, housewares, clothing, and groceries such as Lowering objects.
78 percent of Generation X (37 to 53 years old) and 70 percent of Millennials (17 to 36 years old) are more concerned about their future finances, suggesting a savings culture that affects all populations.
To cut up front costs and save more, the divided economy is on the rise. New stock / rental models are preferred in categories such as clothing, cell phones, electronics, and automobiles. 70 percent of those surveyed who comfortably share / rent clothes and cell phones are made up of Millennials (17-36 years old) and Generation Z (7-16 years old). Similarly, 60 percent of those who enjoy sharing / renting a car are made up of Millennials (17-36 years old) and Generation Z (7-16 years old).
1. The financial priorities develop with the increasing impact of the saving mood
Another deep look into recent demographics revealed specifically:
- Around 50 percent of those surveyed began to invest more in saving instruments after the pandemic.
- The categorical ownership / rental models highlighted in the survey are listed below:
With growing awareness of personal safety and wellbeing, options for shared mobility are diminishing as 69 percent of respondents said they are less inclined to use such options after COVID-19.
2. The dichotomy between data protection and personalization
Personalization has become an integral part of aging demographics. Companies use the available data on a consumer’s preferences and buying patterns more efficiently to create tailored offers.
The survey shows that the younger generation is more willing to trade data protection and personal data for a higher level of service and greater personalization. However, the older generation is striving for more data security and is reluctant to simply share data.
- 81 percent of all respondents expect personalized customer service, with Generation X (37-53 years) making up the majority of the age groups (88 percent).
- Only 33 percent of respondents like to share data with businesses rather than improving customer experience and personalization, up from 15 percent in the US and 10 percent in the UK.
- 11 percent of the respondents were less satisfied with the disclosure of their personal data, 10 percent of the respondents who showed a complete refusal to share data, and 21 percent of the respondents consider data security to be an important characteristic that the brand explicitly clarifies beforehand needs any type of exchange. This indicates that consumers are better informed than they used to be and that data protection is growing in their minds.
- Among the younger population groups, around 67 percent of respondents are uncomfortable with brands that pursue digital activities for greater personalization, while 47 percent are willing to pay a premium for privacy.
3. Digitize demographically
The acceptance and expectation of digital channels in this age and time is gradually gaining importance across India. By default, and not by design, India’s elderly population has had to adopt a digital-first lifestyle. Indians of all ages have easily become familiar with video calling, net banking, online grocery shopping, and streaming platforms. This was not a purely urban phenomenon as the increasing digital sophistication of the older cohort could also be seen in smaller cities across India.
- 49 percent of the respondents surveyed said they made it easy to use digital payment options to shop, compared to 22 percent worldwide. Some of them also showed that the lack of a trustworthy payment gateway would greatly affect their purchase decision.
- Based on expectations of the digital experience of retailers, 60 percent of all respondents showed a higher affinity for augmented / virtual reality, cognitive interactive robots in stores and web chat robots.
- 78 percent of those surveyed believe that the availability of mobile apps and the interactivity in the smartphone store should now include them as part of their basic offering.
- More than 50 percent of respondents want to be the first to buy a new device when it comes out (up from 26 percent globally).
4. Social causes matter to new conscious consumers
While consumers in India are still in the early stages of development in terms of purchasing basic necessities related to luxury goods, COVID-19 has certainly accelerated their progress to become more aware of their role in the ecosystem. An organization’s social obligations and environmental records have also begun to influence the purchasing decisions of New Age Indians. Survey highlights:
- 90 percent of all respondents say that the integrity of a company is very important to them when it comes to customer service.
- The majority of respondents have shown their developed behavior towards supporting a cause, brand, or retailer that is giving back to society.
- 84 percent of respondents prefer buying from and in brands whose actions align with their core beliefs and values ââ(versus 80 percent globally).
- 95 percent of millennial responders (17-36 years old) agree to pay a premium for an ethical retailer, while only 74 percent of Generation Z (7-16 years old) agree.
5. Adaptation to the new normalized routine
Working from home blurred the lines between work and personal time. To top it off, exercise was restricted as people spent a disproportionate amount of time at home. This led to new routine formations and behavioral patterns among consumers. Here’s a look at some of the key developments seen in the recent demographic study:
- Working hours: 85 percent of those surveyed recorded an increase in their working hours, which led to a reduction in personal or leisure time. 36 percent of consumers said that this change had a major impact on their shopping behavior, while 56 percent of consumers said the reduced leisure time had some impact on their shopping routine.
- Health and Immunity: 88 percent of respondents said they switched to product purchases in this category.
- Leisure activities: 81 percent of respondents are likely to feel uncomfortable when they enter a theater, while 60 percent showed their acceptance of eating in a restaurant. It was also observed that Gen X (37-53 years old) found it more uncomfortable to visit a mall, as 61 percent of them shared this feeling, compared with 49 percent of millennials (17-36 years old).
6. Singing for Local Profits Mindshare
With Atma-Nirbhar Bharat and the Make in India initiative in the spotlight, the preference for buying local products and services is becoming increasingly important among Indians. With a focus on improving our manufacturing capabilities, the Voice for Local Initiatives could go a long way in making India a global manufacturing destination.
- Around 60 percent of those surveyed showed an active participation in replacing foreign brands with local goods. 41 percent of respondents of all age groups are willing to pay a premium for local goods.
- Among the factors that determined a domestic goods company’s purchasing decision; Price and product evaluation were the most important decision-making factors (77 percent of those surveyed), followed by the ingredients used in the product composition (55 percent of those surveyed), while the packaging was the least determining factor in the purchase.
Harsha Razdan, partner and head of hypermarkets and internet business at KPMG in India, commented on the survey: âIn the current scenario, consumer sentiment has changed many times over in recent months. Going forward, companies will need to evaluate consumer profiles and invest in research, taking the bigger picture into account. We hope this report introduces business leaders to such changes in consumer behavior and helps them make meaningful decisions. “