Pandemic sees emergence of ‘newly constrained’ consumers

With the pandemic-induced economic uncertainties forcing people to tighten their purse strings, a new group of consumers has been identified across the globe as ‘newly constrained’. Newly constrained consumers are those who have experienced a decline in household incomes or have seen their finances worsen, making them consciously watch their spends.

According to NielsenIQ, in urban India, nearly 63 per cent consumers fall within the newly constrained consumer cohort, which is higher than the global average of 46 per cent. Scott McKenzie, Global Head of the NielsenIQ Intelligence Unit, told BusinessLine that speed of re-calibration of business strategy will be fundamental for consumer products companies in the changed set-up.

“Brands and retailers will need to understand how their consumers’ situations have changed so they can meet their new needs. These newly constrained consumers are closely watching their spends and looking to brands and retailers to help them do that through promotions, low prices, own label products and more,” he added.

“The consumers that brands and retailers knew last year are not the same today. In order to find growth in the year ahead, they must identify who these new consumers are, understand the impact of the pandemic on their personal and financial circumstances as well as on their spending intentions to develop strategies to meet their needs,” McKenzie said.

‘Cautious with spends’

According to the study by NielsenIQ, about a quarter of urban Indian shoppers have been identified as ‘Cautious Insulated’. These consumers have experienced a limited impact on their financial situations but remain cautious about their spends. McKenzie believes this group of consumers present an opportunity, which brands can unlock with new innovations and relevant premium offers.

“There is no one-size-fits-all strategy; brands and retailers will have to adopt measures that meet the rapidly evolving needs of their specific consumers,” he added.

Stating that brands will need to help consumers flex their budgets, McKenzie added that downtrading within product ranges will be a key component , but brands should also explore how they can help consumers trade up when budgets allow. “This could include volume-based promos for cautious spenders, and for the more insulated consumers, innovative in-home occasions and relevant premium offers,” he added.

Asked if this changed scenario will make programmes like ‘Vocal for Local’ gain salience, he said local products played a critical role during India’s lockdown period last year. “Consumers who now buy local as part of their regular shopping habits are likely to continue to do so, but cost will be a factor. India has one of the highest levels of consumers who say they will stick to their regular brand preferences but it also has one of the highest levels of those who say they will switch brands if the regular price increases,” he said.

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