Brands try to understand cost-conscious consumer, evaluate purchase pattern

Value packs, local roots, budget labels mark the new shopping trail as consumers emerge from a series of lockdowns

With lockdowns easing up across the country, brands are looking to step back on to the slow-grinding treadmill of consumption. And as marketers rush to understand the new consumer, a bunch of surveys and research reports are throwing up clues to the emerging mindset: budget buys, large packs and loyalty with a frugal touch is the picture they paint, of the cost-conscious post-pandemic shopper. As for the rise of local brands, expect a twist in the tale.

Consumer behaviour is being influenced by anxieties that are preying on their desire to consume and propensity to spend. According to reports from Nielsen, Deloitte, Kantar, EY and KPMG, this has led to numerous adjustments in wants and aspirations, apart from creating an accelerated path to digital modes of payment. 

All reports have said that the most prominent and lasting impact of the pandemic on consumer behaviour is the digital shift that it has brought about. According to a KPMG report (Time to open my wallet) post Covid-19, 60 per cent of the people surveyed across cities said they preferred to shop online as compared to 36 per cent in the pre-Covid-19 period. “Typically, the 51-plus age band is the toughest to crack in terms of onboarding for e-commerce but that has doubled from pre-Covid-19 levels,” the report noted. Also tier-2 and tier-3 cities were seen to be more inclined towards online buying, almost 2X than pre-Covid-19.

The online adoption has been documented by many but, tangled within the digital web, are a bundle of small and big shifts that could bring about lasting change in the way customers and brand engage with each other. 

Bulk buys and value packs

According to EY and Nielsen reports, the post pandemic consumer is buying more on every purchase expedition. According to K Ramakrishnan, managing director-South Asia, Worldpanel Division, Kantar, people are buying in larger quantities and that explains the volume growth that several brands have seen during the Covid-19 months. 

It is not as if Indian consumers did not buy in bulk at all in the past; they did, but only when the value proposition was appealing enough. However there is a difference this time around. People want to cut down the number of trips to the store and want to stock up to avoid a situation like the one they faced in the early days of the lockdown. 

Hygiene issues and fear are pushing consumers towards larger, bigger shopping carts. This is a sharp change from their pre-Covid-19 behaviour and is likely to stay for the long term.

Budget trails and brand loyalty

A Nielsen report on the evolving consumer dynamics in a post Coronavirus world (July 2020) notes that consumers are staying away from discretionary spending, a trend that has significantly increased since its April study. The KPMG report offers a similar insight. “Consumers will be diligent in terms of their financial stability and companies need to adapt this new way of thinking,” it said.

The consumer is trapped within several layers of anxieties (economic and health) and has become extremely sensitive to price and need. Priya Lobo, CEO Ormax Compass, says that everyone is asking two questions before making a purchase: Do we really need it? And is the purchase worth the price? Brands have to factor in this reality in their approach to consumers. 

The budget conscious and anxious consumer is evaluating purchase options more carefully. And this, according to Shashank Shwet, partner–Customer Experience and Design Thinking, EY India has created a small window of opportunity of brand switch where new brands can find their way in (if they promise better value, safety and such). “If they are able to hold the trust of the customer, they may well displace old loyalties,” he said.

Rooting for local

The clamour for local has grown over the past few months but is this likely to influence consumer behaviour? 

According to the Nielsen report, there is a rising sentiment towards local but the understanding of local is a nuanced one. “Manufacturers need to understand the nuances of consumer perception of local and highlight their connection with Indian consumers in their communication,” it noted.

Ramakrishnan says that in the surveys his teams conducted, things that have been used for a long time are being seen as national or local brands. Hindustan Unilever’s Surf or Mondelez’s Cadbury are perceived to be Indian brands, for instance. Local may be the flavour of the season but what or who is truly local is still up in the air.