In a bid to cope with inflationary pressures, Indian households are increasing the number of shopping trips and reducing spends on discretionary categories such as ready-to-eat foods, jams, floor cleaners and soft drinks. There is also a shift towards omni-channel shopping, especially in urban regions. While inflation rates have come down from last year’s levels, they remain elevated.
As per Kantar’s latest data, household consumption levels in the January-March period in 2023 were lower than in the September quarter of 2020. Nearly 38 per cent of the households surveyed were identified as still “high impacted” and buying less; another 38 per cent were “moderate impacted”; and 24 per cent “low impacted”. For instance, the average consumption of the “high impacted” segment was pegged at 86.7 kg per household in the September 2022 to April 2023 period, compared to 88.3 kg per household during Mayto December 2021.
Highly impacted households reduced spends on discretionary categories such as ready-to-eat foods, ready-to-cook curries and pastes, jams, floor cleaners, balms and soft drinks. They also rationalised spends on essential categories such as toothpaste or toothpowders, milk, food, drinks, fabric care and hair oils.
Meanwhile, low-impacted households were seen reducing consumption on discretionary home and hygiene items, besides food categories such as cold drinks, jams, squashes and floor cleaners. However, there were silver linings as consumption of categories such as snacking, hot beverages and hair wash remained robust.
“While household consumption has seen signs of revival, it has not yet come back to pre-inflation levels. This has led consumers to change their behaviour. They have started shopping more often to manage their budgets as well as dropped a few categories from their basket,” said K Ramakrishnan, Managing Director-South Asia, Worldpanel Division, Kantar. Brands will need to focus on price reductions and promotions for revival of consumption, he added.
Kantar’s data showed that Indian consumers are shopping more frequently, making 152 trips (including ecommerce) in 2023 compared to 144 in 2022. Low-income strata (SEC D/E) shop once every 52 hours. “India is the second fastest growing in terms of purchase occasions among various Asian countries,” it added.
“Freshness and accessibility are factors that have led to an increase in average shopping occasions. But nearly one-third of consumers said affordability is the key reason — that means if they shop more often they have to spend less on each trip,” Ramakrishnan added.
Consumers are also increasingly becoming omni-channel shoppers, purchasing from general trade, modern trade as well as e-commerce. In the last two years, omni-channel shoppers have grown 2x in urban India, from about 3.08 million households to 6.45 million households, as per Kantar’s data.
Local brands gain
As consumers are managing spends due to inflation, some local brands seem to have gained in terms of household penetration. Data revealed brands such as Supremo 51 dishwash bar in Madhya Pradesh and Reflect Dishwash in Maharashtra have seen strong gains. In the noodles category, 1 to 3 Noodle in Karnataka and Balaji Gippi Noodle in Gujarat are giving tough competition to national brands. Teju Masala in Karnataka and Vasant Masala in Gujarat have also seen strong share gains in the spices segment.
“While local brands lost out to national brands during the pandemic and also during the early phase of inflation as raw materials became expensive, they are now seeing a resurgence. As consumers are managing their spends, they are also looking at buying local brands,” Ramakrishnan added.