Indians optimistic on growth outlook amid high inflation: EY study

They are shifting to new brands in search for value, says multi-nation survey

Indian consumers tackling inflation are shifting to new brands often offered online, said a report on Monday.

Indian consumers are concerned about rising costs but 71 per cent of them believe the economy will recover within a year, said the 10th edition of EY Future Consumer Index. All income levels are concerned about costs: 82 per cent of the rich, 72 per cent of the middle class and 67 per cent of people with low income.

The report said the developed Western world had a pessimistic economic outlook compared to emerging markets. Over half of the consumers in the United States, 65 per cent in the United Kingdom, 84 per cent in Germany, and 85 per cent in France said life will be the same or will get worse in the next three years.

As many as 49 per cent of Indian consumers said they are better off compared to some four months ago, and 83 per cent were positive that their financial situation would be better off within a year. Inflation and product cost were the top criteria for consumer purchases in global markets. For Indian consumers, health and goodness were equally important.

“Growth will come at a cost, and companies need to review their value delivery mechanism instead of simply raising prices,” said Angshuman Bhattacharya, national leader—consumer products and retail, EY India.

“The long-term aspirational needs of the consumer need to outweigh the short-term challenges that consumers face. This means continuous innovation for greater value delivery through improved functionality or lower costs,” he said.

Under inflationary pressure, consumers are opting for new brands that are often offered online. The report said that 42 per cent are trying new brands to reduce costs, and 63 per cent are willing to purchase a store brand/private label.

The report said consumers prefer online shopping and that practice might continue. As many as 62 per cent consumers still prefer to buy groceries online. However, 62 per cent of Indian consumers are apprehensive of sharing personal information on websites or apps, compared to their global counterparts at 36 per cent, because of data security and identity theft. This is closely followed by other channels like email (61 per cent), e-banking transactions (57 per cent), and social media (56 per cent).

 Bhattacharya said that e-commerce is here to stay in various forms such as business-to-consumers (B2C), direct-to-consumers (D2C) and business-to-business (B2B). “The journey has just begun, but the channel remains an expensive one to operate in. Cost pressures are likely to make brands review their e-commerce unit economics, and take a prudent path towards a choice of operating models which are profitability accretive” said Bhattacharya.

The Index surveyed 18,000 consumers in some 24 countries between May 18 and June 7 2022.