Next four months to see spike in discretionary spending: Survey
A survey conducted by LocalCircles, which received 44,000 responses, assessed that economic recovery seen in the last three months has buoyed optimism among consumers. While most surveyed respondents expect a decline in their household income this year, there was reduced uncertainty about the future.
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Among consumers asked about their household budgets over the next four months, 48% said they plan to spend between ₹1,000 and ₹50,000 on purchasing discretionary products. Nearly 10% households plan to spend over ₹50,000 on discretionary purchases in the same period, while 21% households plan to spend between ₹10,000-50,000.
“… Many consumers are now confident that though this year has been impacted, they haven’t lost their job and things are getting back on track with their business or employer’s business, and they will likely see their earnings increase or go back to previous year levels,” the survey said.
The pandemic cast a shadow over household budgets as people lost jobs or saw their incomes decline. Consumers spent more time indoors and cut back on discretionary expenses such as travel and eating out.
But companies saw a spike in sales during the festival season on the back of pent-up demand for home appliances and electronics, furniture and, to some extent, apparel.
Electronics retailers reported a 15-18% jump in the 30-day period before Diwali compared to a year ago. Sales of athleisure, casual wear and fitness footwear also grew.
However, demand in sectors like travel, tourism, home renovation and repairs took a significant hit during this period as people remained confined at home.
But these activities could now see an uptick.
Over 35% of those surveyed said they will spend money on home renovation and repairs, while 14% will buy new appliances. Another 14% is budgeting expenses for holidays while 12% of survey respondents said they will spend money on buying smartphones and gadgets. Additionally, 7% and 2% consumers said they plan to spend on “real estate” and “automobile”, respectively.
Kashyap Vadapalli, chief marketing officer at furniture retailer Pepperfry, said that typically post festival season, demand for furniture and furnishings declines 20-30%. This year, however the slump has narrowed. Vadapalli expects demand to fall 10%.
“This isn’t just pent-up demand because that got fulfilled, and not even festive-season demand, we are seeing some momentum continuing right into December and this is across categories beyond work-from-home furniture. So people are buying lamps, mattresses, beds, sofas, chairs, coffee tables etc. There is no reason for this to go down till January-March as this is also part of a broader phenomenon of people moving their purchases online in our category,” he said.
This, Vadapalli added, could be an outcome of people investing in their houses again whether it is new or buying replacement sets in existing homes.
Even as this bodes well for several sectors, many consumers are yet to fully recover from a drop in their personal finances after facing job loss, salary cuts and delays, the survey said.
While, incomes have now been restored across several sectors and the economy is clawing back from the lockdown-related disruptions, consumers surveyed by LocalCircles still expect a decline in their full-year incomes.
Of 8,240 responses it received, 68% consumers said their household savings declined in the last eight months during the covid-19 pandemic.
Over 60% consumers see their household income declining between April 2020 and March 2021. However, 15% fewer households now expect their FY20-21 earnings to decline year-on-year.
Published at Mon, 14 Dec 2020 12:49:06 +0000