The pandemic has forced consumers across the globe to re-evaluate spending habits and prioritize differently. Moreover, it has also impacted and shaped methods of transacting. But to what extent? InterMiles explores.
InterMiles, a leading loyalty and rewards programme, has released the second edition of its ‘Consumer Spending Sentiment Index Report’ showcasing payment, purchasing and personal finance trends, along with shifting consumer spending patterns. The report is based on responses received from 1,697 InterMilers across India.
Key Insights from the InterMiles Consumer Spending Sentiment Index 2.0:
Indians are gearing up for big spends this festive season
When asked how open they were to making big shopping spends as compared to before to pandemic, a majority responded with optimistic enthusiam. A whopping 75% said that they were either more willing (33%) or just as willing (42%) to make big shopping spends as before the pandemic.
This spending boost can be attributed to rising consumer confidence levels in India, coupled with hopes of the economy catapulting back to normal. The maiden InterMiles Consumer Spending Report, released in March 2021, showed that close to 70% respondents placed greater emphasis on securing the future by increasing investments and savings. While this behaviour holds true even today, consumers are a little more eager to let down their hair, atleast during festivities.
The spotlight on gifting grows dimmer this festive season
While personal and household shopping is on the rise, gifting takes a comparative backseat. 2 in every 3 respondents (66%) say that traditional gifting does not rank high on their priority list at the moment. This implies a drastic change from pre-pandemic behaviours as Indians look to only gift immediate family (22%), be conservative about gifting (21%), narrow down their gifting lists (10%), given token gifts (5%) or not buy gifts at all (8%) this year.
That being said, 34% respondents stated that they will not cut down on gifting this festive season.
Majority respondents – around 40% – prefer to spend less than INR 10,000 on gifts for their loved ones, with an additional 7% stating that they would rather not spend on gifts at all. This is in stark contrast to high budgets that would typically be set aside for gifting during the festive season.
However, not all looks grim for the retail gifting industry this year, with a significant slice of the consumer pie still continuing to spend liberally on gifts – 28% consumers would be open to spending between INR 10,000 to 25,000 and 25% consumers will look at spending upwards of INR 25,000.
The what, why, where of festive shopping this year!
A whopping 78% respondents said they continue to prefer shopping online – this trend accelerated by pandemic-induced lockdowns, seems like it is here to stay. This can be attributed to the immense convenience that virtual shopping allows, along with consumer-friendly policies by online aggregators and vendors like expedited deliveries, easy no-cost returns, opportunities to customize orders and massive discounts.
With widespread online retail domination, only 14% respondents have called out shopping at physical branded stores as their preferred mode of shopping while 5% prefer shopping at hypermarkets and 3% at boutique stores.
When asked to point out their one-stop shopping destination of preference, Amazon emerged as a clear winner with close to 70% respondents stating that the US-based e-commerce giant was their go-to retail aggregator.
Flipkart (20%), Myntra (6%), Tata Cliq (02%) and Snapdeal (0.5%) follow at a distance on the consumer preference list.
When asked to rank factors that they actively sought in retail partners – online or offline, consumers largely prioritized them as below:
With value for money being more important for consumers more now than ever, it is no surprise that consumers are actively seeking out discounts and offers. Aware of this trend, the retail industry seems to be raining festive offers in a bid to attract more consumers. Reward points – which ranks 3rd on the list – is also crucial as consumers determine their shopping partners.
Given the lack of personal interface when it comes to online shopping, it is crucial for robust customer service systems to be in place as retailers seek to bridge the trust gap.
What are consumers shopping for this year? 30% respondents said that they will assign priority and invest in electronic/ gadget shopping this festive season. Given the growing dependence on technology and the lifestyle renaissance brought about by gadgets, it is not suprising to see a large focus on this essential commodity. These purchases are also anticipated to ease WFH pressures and lend an arm to those juggling household + professional chores by saving on time.
Additionally, 25% respondents say that they will invest in festive spends like gifting (9%), buying confectionary (2%) and purchasing apparel / accessories (14%). While material purchases seem to top spending charts, 16% respondents take another route by choosing to invest in experiences like travel (12%) or entertainment (4%) instead.
13% respondents will limit spending and focus on saving through the festive season.
Credit cards and cashless transactions are the latest buzzwords on the block
Credit cards are the most preferred form of payment this season, with close to 60% respondents choosing to swipe their cards as they seek to accumulate reward points, increase credit scores and gain access to exclusive discounts and benefits.
Other cashless forms of payments have also gained popularity with 20% respondents preferring to transact via UPI, 10% via debit cards and 5% via e-wallets.
However, the most standout trend here is the drastic reduction in the use of cash. This behavior change in India – induced and accelerated many times over by the pandemic, indicates a significant curve in a previously cash-based economy. This pattern is also fueled by the penetration of the internet even into deep pockets of India – consumers who were once vary of digital transactions now find assurance in the safety of it.
It is interesting to note that 44% respondents stated they have embraced going cashless seamlessly and with no difficulty at all. 21% respondents said they face minor inconveniences as they cannot make e-payments as frequently when visiting tier-II and tier-III cities (14%) or they do not have change for in-person tips (7%). Overspending seems to be the only significant concern that consumers have as they completely embrace a cashless economy, with 22% saying that going cashless causes them to overspend, while 13% state they cannot tracking digital spending as well as with physical cash.
About the InterMiles Consumer Spending Sentiment Index 2.0:
The InterMiles Consumer Spending Sentiment Index was introduced to identify trends that matter and enrich the industry’s understanding around the always evolving consumer payment and purchasing behaviors. This survey was conducted between 11th to 16th October 2021.
The programme which has a 10mn plus member base, is committed towards understanding the pulse of consumers across various travel & lifestyle categories. Data collected through these surveys will not only enable InterMiles as a programme to create unique and compelling value propositions for its members, it will also create meaningful business opportunities for its partners.
The member base for the InterMiles Consumer Spending Sentiment Index comprises of multi demographics as well as diverse payment, lifestyle and travel preferences.