Indian consumers cautious about spending amidst COVID-19 crisis: KPMG

Consumers in India are cautious about spending in the wake of the coronavirus pandemic with 78 percent of respondents claiming to reduce discretionary spending, according to a survey by consultancy firm KPMG.

However, consumers in Tier-II and III cities were almost two-times more optimistic on their spending habits than those in Tier-I, hence it could be the next focus area to monitor spending habits, as per KPMG in India's report titled 'Time to open my wallet or not? - The new spending patterns emerging from a consumer's perspective'.

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Interestingly, the survey said, "Overall 51 percent of respondents feel that the impact of COVID-19 will be short-lived and normalcy is not far".

Commenting on the findings, KPMG India Partner and Head Consumer Markets and Internet Business Harsha Razdan said, "Our study indicates that 22 percent consumers in Tier-II and 30 percent consumers in Tier-III feel that their spending will either increase or remain the same as prior to COVID-19 and this could be the next focus area for retailers to expand their presence."

"In the next three months, 49 percent respondents intend to spend up to Rs 5,000, across categories which makes this the most popular basket value and indicates that consumers are cautious about spending," she added.

Elaborating on consumer spending habits, the KPMG India survey said, "78 percent of the respondents claim to reduce on discretionary spending...Tier-II and III cities are 1.9X more positive than the Tier-I cities."

Consumers in Tier-III cities were 1.4 times more inclined towards spending on apparel than those in Tier-I cities for spending more than Rs 5,000, it said.

Across all categories, males intend to splurge more than females in the spending range of over Rs 5,000 with 60 percent of males intending to shell out up to Rs 5,000 in skincare and cosmetics, it added.

In terms of consumer age band, the survey said, "The 20-30 age band is more optimistic on discretionary spending, while spending habits reduced considerably among both male (76 percent) and female (82 percent) consumers."

The survey also said a comparative study of pre- and post-COVID-19 scenario clearly showed that preference for online channels has seen 1.6 times growth.

KPMG said the survey has been conducted with 2,376 respondents, of which 66 percent were male and 34 percent female.

It was conducted across Tier-I, II, and III cities, among different types of spenders and age groups, between May 18, 2020, to June 7, 2020.