LIFESTYLE: Decline in footfalls and sales at malls
The ongoing economic slowdown has affected consumer spending with downtrading becoming evident.
Consumption habits and behaviour of both Sec A and Sec B consumers in India have changed in the last few months, indicates a joint research conducted by Starcom MediaVest Group — one of the largest media buying and marketing agencies in India — and The Key, a qualitative research company.
Conducted in the last two months of December 2008 and January 2009, the study highlights the cutback in expenses on account of the global financial meltdown by Sec A consumers. Whereas for lower income households (Sec B), the change in consumption habits is largely on account of inflation or rising prices of the household and health care expenses.
The categories that affect Sec A do not touch Sec B at all, notes the research. Sec A consumers are cutting back on luxury, holidays, purchase of car/ reality and even financial planning an investment. Meanwhile Sec B consumers (more effected by the rising prices of vegetables, fruits and groceries) has cut back on household consumption of food and beverage, eating out, mobile and telecommunications and consumer durable purchases.
Shalini Rawla, managing consultant, The Key says: “Only 30 per cent of Sec B households say they have been affected, 70 per cent of Sec A have felt the pinch and have already started adjusting their lifestyle to ward off recession.”
The categories where both (Sec A and B) have been affected equally are local travel and commute and jewellery.
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The study also confirmed the declining number of footfalls and sales in modern retail trade. “The slowdown will see consumers returning to the kirana (retail) store as consumers cut back on indulgences and buy only necessities,” said Rawla.
These findings also reflect the changes and product tweaking strategies being adopted by Fast Moving Consumer Goods (FMCG) companies. For instance, Dabur had stated in the past its intentions to refocus and further strengthen its presence in the traditional retail stores.
Likewise, auto and apparel companies have been luring consumers with large discounts to boost the falling volumes. However, “Its not only discounts that will work during a slowdown,” observed Nikhil Rangnekar, executive director (India-West), Starcom.
“The need is for innovative new marketing methods to induce spending, like clubbing apparels with laptops (targeting a student’s needs), or reducing the down payment for automotives (due to consumers struggling with credit squeeze)instead of a price off,” he adds.
The study is based on 450 consumers (split equally between students, working professionals, self-employed and housewives) in the metros of Mumbai, Delhi and Bangalore.