Malls and restaurants, however, are yet to report a turnaround in business.
Malls and restaurants, however, are yet to report a turnaround in business.

3 min read. Updated: 21 Jul 2021, 11:27 PM ISTSuneera Tandon

  • As curbs ease, consumers plan to spend more on discretionary items, says a Deloitte report
  • A Deloitte tracker reported a 6% fall in consumer anxiety among Indians compared to 1st wave

Consumer goods companies, including those selling packaged foods, daily use items, electronics and apparel, have seen sales recover faster in July 2021 than the year-ago period, as people throng large markets in big cities.

There has been a 6% decline in overall consumer anxiety among Indians during the second wave of the covid-19 pandemic compared to the first wave, according to a consumer tracker released by Deloitte earlier this week.

Deloitte has been tracking consumers’ mood across major global markets since the onset of the pandemic. In its latest report, it surveyed Indian respondents till 30 June, covering the second wave of covid-19.

The pace of vaccination has helped in “uplifting the consumer sentiment”, according to the report. The tracker reported a slight increase in discretionary spends after restrictions were relaxed in June.

“July has been the first month in this financial year when the markets are completely open. Consumption is better than July of the previous year and the lead categories are refrigerators and washing machines. Demand is up by more than 20% year-on-year,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances.

Working from home has helped employees save significantly on transport and employers on rent, Deloitte said. At the start of the second wave, spending was limited to essential items. However, as restrictions ease, consumers plan to spend more on discretionary items such as clothing, footwear and electronics, the Deloitte report said.

“We are at exactly the same level as 2019 despite so many restrictions, except for markets in south and west India,” the India chief executive of a foreign fashion brand said on condition of anonymity, attributing this to pent-up demand. “We are seeing higher conversion and basket size, and units per transaction is up from 2.2 to 3,” he said.

Competition in the market has also reduced. “So strong brands are getting stronger,” he said.

Pawan Sarda, group chief marketing officer, digital, marketing and e-commerce, Future Group, said the recovery in categories such as apparel is much better than last year. This is true for formats such as Fashion at Big Bazaar.

“It’s more than just pent-up demand. It is the need to feel good. As and when things are opening up, I think people do want to venture out,” Sarda said.

Mall owners and restaurants, on the other hand, are yet to report a turnaround in business. In states such as Maharashtra, restaurants are still working with restricted timings and malls are yet to reopen. “As a result, recovery in Delhi, Chandigarh and Bengaluru has been faster than in west India where there’s a 4pm deadline. It will only get better with better timing,” said Mayank Bhatt, business head at cafe-bar chain Social, part of Impresario Handmade Restaurants.

In contrast to the unlocks last year when consumers were apprehensive about returning to stores, this year, with staff and consumers vaccinated, diners are returning much faster, Bhatt said.

Meanwhile, in New Delhi, malls are reporting steady recovery. However, the closure of cinema halls and gaming zones is denting business.

“The present steadiness in sales leading to recovery can be attributed to pent-up demand from consumers. People were bored sitting at home and thus are escaping to tourist destinations and malls to take the much-needed break from confinement. Adding to the demand recovery, the coming festive months will be very crucial for malls,” said Abhishek Bansal, executive director of Pacific Group, which operates malls in the national capital region. Recovery is led by categories such as fast-moving consumer goods (FMCG), digital technology, gadgets and apparel, he said.

Bansal, however, flagged an impending third wave as well as the 15-day ‘Shradh’ period when Hindus pay homage to their ancestors and avoid shopping and celebrations.

Mumbai-based Parle Agro Pvt. Ltd, which sells beverages under the Frooti and Appy Fizz brands, reported a 45% growth in demand in the first few weeks of July compared to 2019. Nadia Chauhan, joint managing director and chief marketing officer of the company, attributed this to new launches and relaxations in markets, which resulted in better mobility.

Data from retail intelligence platform Bizom suggests sales of daily goods grew nearly 40% between June and July.