Second Covid wave weakens consumer sentiments, anxiety at an all-time high

Mumbai: Consumer anxiety is at its highest level since the coronavirus outbreak hit India last year, shows the latest round of consumer sentiment survey conducted by Boston Consulting Group (BCG).

The second wave of covid-19, which saw a huge spike in the country’s caseload and casualties numbers, has further weakened consumer sentiment as households cut their expenditure, says the report. At least 58 per cent of consumers think their income in the next six months will be lower than pre-COVID levels, as against 44 per cent in July last year. Similarly, the sentiment about spending has been impacted, with 51 per cent of consumers expecting their spending over the next six months to be lower, as compared to 40 per cent in July 2020.

According to the survey, this fall in sentiment is steepest among the less affluent income groups or those with annual household income less than Rs five lakh. The study carried out between 23 May and 28 May covers 4000 consumers across all socio-economic groups in urban and rural India and is the sixth conducted by the group during the pandemic, since March last year.  

Unlike last year, sentiments were impacted more uniformly across large towns, small towns, and rural areas in 2021 with 55-60 per cent of consumers across all feeling that the worst of the coronavirus is still ahead, BCG said in its report.

Even amongst those in the Rs 10 lakh and above annual income bracket -- termed as “affluent" households by the survey -- expect their incomes to shrink in the next six months.

The survey demonstrates uncertainty for more discretionary categories such as apparel, personal care, cosmetics, travel, and out-of-home entertainment in particular. "Travel, out of home entertainment continues to show negative sentiment with expected cutbacks reaching all-time highs," as per the survey’s findings.

The report sheds light on consumer anxiety, which is at its 'highest levels' since the pandemic hit India, with concerns around economic outlook, health, and lifestyle being accentuated.

An overwhelming 86 per cent of those surveyed cited concerns over an economic recession due to the pandemic. Over 80 per cent reported feeling some sense of uncertainty toward their jobs and income—the highest ever recorded by the consulting firm.

However, the forecast is not all bleak- there are certain positive themes too. Some categories like essentials, health, in-home entertainment, etc continued to show a stable, positive sentiment.

“There is an impending sense of uncertainty however we have observed certain positive messages too. The spending sentiment has not been impacted similarly across categories. Essentials, health, in-home entertainment continue to be winners. Some of the discretionary categories, however, have been negatively impacted.” said BCG India MD & partner Nimisha Jain.

There were also indicators that the shape of the new normal for consumer behaviour is beginning to emerge, now that we have been in the crisis for over a year.

“Many of the newly adopted behaviours ranging from social commerce, online shopping, digital content/ payments – have continued to stick, even when the lockdowns were no longer in place. However, others like ‘do it yourself’ regimes, online doctor consultations have shown high sensitivity to the pandemic situation.” said BCG India Centre for Customer Insight lead Kanika Sanghi.

A positive trend has also emerged, which shows a significant increase in the willingness to take vaccines after the lethal second Covid wave – especially in small towns and rural areas, which had shown high levels of hesitancy/ indifference earlier. At least 78 per cent of the eligible consumers in large towns said that they were very willing to take the vaccine now – compared to 62 per cent earlier. For rural, it stands at 63 per cent now as compared to 41 per cent earlier.

BCG’s COVID-19 consumer sentiment research is based on a global survey that currently covered both developed and emerging markets. It is fielded in waves to provide a longitudinal view of consumer sentiments about the coronavirus pandemic, and changes in consumer consumption behaviour.