NEW DELHI: Which marketer doesn’t know about the theory of lipstick effect? Tracing its roots to the great depression of 1929, the theory substantiates that glum consumers will continue to spend money on small luxuries during or after times of economic crisis to keep up their spirits. Several reports indicate a similar behaviour demonstrated by Americans after the 9/11 and also the global recession of 2008.
Most recently, consumers in China recreated the scenario as sales of cosmetics plummeted as much as 80 per cent in February. According to the Chinese ministry of commerce, resumption rate of large supermarket chains and convenience stores reached 99.5 per cent and 95.4 per cent in the month of May, respectively, with their sales volume surpassing the levels recorded in the same period last year.
The industry is expecting a similar reaction to the lifting up of lockdown in India and is preparing for it.
According to McDonald’s India West and South head of marketing Arvind RP, the market is observing a lot of pent-up demand in his industry segment as people are reliant on home-cooked meals for over a month because of the lockdown.
He said: “There is a lot of pent-up demand among the consumers and they will be looking for high-quality, hygienic food. Will it be more towards dining out or deliveries is a separate question, but I guess it will be more towards the latter.”
He added that since the customer might be frugal and careful with the spends, brands like his, which serve in the value category, will see an upsurge in the sales. He also noted that there will be little to no concept of brand loyalty while making these purchases.
Wavemaker India VP Kishan Kumar Shyamal said: “Brand availability is going to be greater than brand equity.”
Madison World Sigma CEO Vanita Keswani put herself in the consumer’s shoes and admits that even she is looking forward to visiting places like Hypercity for purchasing her ration than going to the local stores.
She also noted: “As per a Kantar study, Indians are hopeful that they will bounce back from the situation quickly. Also, international researches indicate that the recession will not be very terrible in the country.”
Initiative India CEO Vaishali Verma also pointed out while categories like fashion and apparel are suffering because of the lockdown, there is definitely a lot of pent-up demand that will arise once the situation normalises.
However, she added that consumers will be more rational in their choices and brands will have to adapt to their needs to benefit the most out of the situation.
