63 pc Indian Consumers to Cut Back Non-Essential Spending

Consumers globally are weighed down by concerns about the cost of living and personal finances. Around 74 percent of Indian respondents say they are concerned about their personal financial situation, as opposed to 50 percent globally. 63 percent of Indian consumers are cutting back non-essential spending altogether.

According to the 2023 PwC Global Consumer Insights Pulse Survey, most Indian consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline in planned spend across all categories since the previous pulse survey in June 2022. Industries, including luxury and premium products, travel, and fashion, expect to see the greatest portion of consumer spending reductions over the next six months, whereas the groceries segment is expected to decline the least.

“PwC’s latest Global Consumer Insights Survey for India drives home the key message of ongoing financial stress in the lives of the consumers, where 75 percent of them are very concerned about their financial situation. This sentiment will have a potential restraining effect on spends in highly discretionary categories of electronics and luxury. Consumers will continue to demand world-class buying experiences in both physical and digital channels with work cut out for brands to reduce costs, enhance availability, and for ‘going local’. The silver lining here remains the unequivocal growths in the adoption of digital channels and the desire to spend more on travel in the coming months,” said Ravi Kapoor, Partner, and Leader - Retail & Consumer, PwC India.
 

Key trends emerging from the survey results:

• The cost of living weighs on consumer confidence

Consumers, globally, are shifting their consumption habits in-store and online as the cost-of-living surges and supply chain disruptions impact product availability and delivery times. As a result, almost half (45 percent) say they are buying certain products when on offer/promotion, 44 percent are looking to retailers offering better value, 38 percent are using comparison sites to find cheaper alternatives, 36 percent are buying in bulk to save cost, and 33 percent are buying retailers’ personal brands for better savings.

• Supply chain disruption is shifting in-store/online consumer behavior

Half of the Indian consumers (50 percent) said rising prices remain the most frequently experienced issue when shopping in-store, supply chain issues also dominate with larger queues and busier store locations (35 percent), along with product availability (28 percent), which is also impacting consumer behavior.

• Luxury/premium product industry to see decline in consumer spend

Consumers are planning to reduce their spending across all surveyed retail categories over the next six months, with the greatest decrease forecast in luxury/premium products or designer products (38 percent), virtual online activities (32 percent), consumer electronics (32 percent) and fashion products (clothing and footwear) (31 percent). However, there remains an appetite for future spend, with 38 percent indicating they will look to treat oneself/others, whereas 54 percent view them as better quality. Travel (30 percent) and groceries (21 percent) had the least reported planned to spend reduction.

• Vocal for local (Sustainable products are in demand from consumers)

Despite a planned spending reduction and a challenging economic environment, consumers say they are still willing to pay more for sustainable products. Overwhelmingly, more than 88 percent are willing to pay higher for a product that is produced/sourced locally, made from recycled, sustainable, or eco-friendly materials (87 percent), or produced by a company with a reputation for ethical practices (87 percent). 

Metaverse: Early-stage adoption strong, executives recognize the importance of risk management, cyber security, and governance

Adoption of the Metaverse as a shopping channel is still in its early stages, however, the medium remains under-utilized, with only one-quarter (23 percent) of Indian respondents familiar with the term. The largest portion of these users has primarily employed the Metaverse for virtual reality (VR), i.e., playing games or watching a movie (20 percent), experiencing the virtual world through the retail environment or a concert (13 percent), or purchasing a digital product, such as a Non-Fungible Token, or NFT (17 percent). Millennials (36 percent) are most likely to use the Metaverse, especially in countries like India (48 percent), Vietnam (43 percent), and Hong Kong (42 percent).

All the while, as online shopping continues to grow in volume, consumers are increasingly weary of data privacy. 65 percent of respondents are extremely or very concerned when interacting with social media companies, third-party/portal travel websites (54 percent), healthcare (59 percent), and consumer companies (58 percent). As a result, 41 percent of respondents do not share more personal data than they must, 37 percent opt out from receiving communications from these companies, and 38 percent have overall reduced their interaction with these types of companies.