Living in COVID-19 world and aftermath: How Indian consumers will buy

Lockdown induced isolation and prolonged co-habitation was a psychological dampener for many. Consumers would like to pamper themselves with products with a strong feel-good, I love myself component. This will drive demand for personal care, grooming and beauty products. For many Indians, their regular maids will not be an option as yet. Thus, products helping with those self-debasing household chores - vacuum cleaners and dishwashers - would now make perfect sense.

According to Nobel laureates Kahneman and Tversky, losses are perceived more hurtful than the pleasure we get from gains. With uncertainty and income erosion, the hurt from a loss will sting even more than in pre-COVID times. Thus, many consumers will shift towards safer options - a Fixed Deposit over Mutual Funds, Mutual Funds over Equity, and so on.

A big segment of customers who are facing loss of incomes, jobs and uncertainty, may economise on their consumption by trading down from their favourite brands. The trading down phenomena is likely to be more visible in case of consumer goods, especially FMCG products which have a lower but regular financial outlay. However, with greater financial stability, the consumers will return to their loved brands.

Like it or not, in the middle-income India, it is women who run the households and keep tab on regular expenses. With incomes under stress and uncertain economic future, the woman in the household will have a more significant voice in the family’s consumption decisions. They will assert themselves more than ever before in shaping the consumption decisions of the family.

Persistent economic uncertainty will make consumers prefer renting or leasing a high-value product rather than buying it outright. This will be evident in the case of real estate, automobiles and high-value durables. Such a preference will be further helped by falling interest rates.

Whether they purchase their essentials in store or online, consumers will tend to prefer larger unit sizes than before: say, bigger packet of their favourite noodles or tea-time biscuit. This will help them to reduce the number of trips to the offline retail store and minimise their contact with online delivery staff. Larger units will also provide a psychological hedge against possible supply disruptions, which may be more feared than real. That being said, the segment of lower-income consumers including daily earners who may have lost their livelihoods, may prefer smaller unit sizes or sachets over the normal-sized units.

With these likely changes in consumer behaviour, it is now up to the business managers and companies to bring in solutions that fit with the new reality. An offline retailer or an educational institute should look to develop its digital capability; an e-commerce player has to plan ahead for a higher volume of customer transactions; a financial institution needs to develop attractive instruments to address consumers’ lower risk appetite; an automaker should think about introducing quality lease and rental options; food and grocery players may have to innovate with different unit sizes; pharma companies may gain from stronger partnerships with telemedicine players and so on. Businesses that best adapt to the changing consumer behaviour will have the first laugh after a long period of gloom.