Rising Consumer Demand in the Festive Season and Chances of an Early Recovery
The COVID-19 pandemic has not only targeted the people across the world but has also affected businesses at large. No one has been spared from this unprecedented event. Initially when the COVID-19 outbreak began, we did not anticipate the length and breadth of disruption that India would face because of it. However, within 6 months India became the second worst affected country after USA. Since March, businesses and governments across the world have been fighting to control the pandemic and to protect the people. Everyone is now preparing for a safe transition towards a ‘new normal’ so that social and economic life can start functioning, and the disease transmission can be kept in check.
India – The Land of Festivals
India is known across the world for its diversity. This can be seen from the various festivals in the country that are celebrations of different religions, states, and cultures. India celebrates around 50 major festivals throughout the year. Festivals and festival related spends are extremely important for economy. The consumer demands for clothes, electronic and consumer goods, etc. witness a huge surge during these times, and we do hope the pandemic has not changed the sentiments majorly.
Festivals amidst a pandemic
Studies have shown that around 89% of Indian consumers are willing to spend on shopping during the ongoing festive season, with a significant increase in demand across various products. 55% of these transactions are expected to be done using credit cards and 28% through debit cards. Presently, we are experiencing an increase in demand for consumer products with the relaxation of lockdowns across the country. Unlike the first quarter of the financial year, the second quarter has seen considerable improvement after Onam. Businesses across the country are hopeful and gearing up their operations to recover the revenue loss from the first half of the year in the upcoming months.
Shopping in the new normal – Offline and Online
With Unlock 5.0 now in effect, most offices have opened, factories have started production, logistics facilities have resumed operations, and malls and shops have started welcoming customers once again. Further, a lot of customers have now resorted to online shopping. Online shopping has seen an increase from 28% (pre-pandemic) to 36%, since the outbreak of the COVID-19 pandemic. A survey said that 90% of consumers now prefer the home delivery of products over a shop visit and 80% are likely to use digital modes of communication with store associates. I would expect this trend to continue in the upcoming months during the ongoing festive season. For this festive season, the average customer spend on consumer durable goods has been estimated at Rs.15,000. Though this is 13% lower than last year’s festive season, but it does bring in a lot of positivity and hope for the industry at large.
Hope for a good revival with cash in hand
I foresee a very fast recovery in terms of production and supplying of goods and services, and also in creating demand during the upcoming festive season. Several corporates have already announced and released FY2019-20 incentives for employees that were withheld initially due to the pandemic. On another hand, some service sector companies have managed to save money by way of cost reduction in workstation rent, electricity, transport, canteen cost, etc. during the pandemic. This has resulted in those companies announcing better increments and bonusses for their employees and giving some extra surplus in the hand of the employees. All these factors point to a very good sign of economic recovery as the customers will be able to spend money on their desired purchases.