- Emerging markets including India are optimistic about the future economic outlook compared to the western markets
- 71% believe that the Indian economy will recover within one year
- Interim pressure of inflation may impact discretionary consumption-related segments
- Customer loyalty has reduced, with buyers exploring new brands offered on online shopping platforms
NEW DELHI, 19 September 2022: Indian consumers are feeling the pinch of inflation, which is likely to impact consumer loyalty and give impetus to value brands, according to the 10th edition of the EY Future Consumer Index.
As per the EY Index, 69% of Indian consumers consider rising costs as a concern but reaffirm their belief in the strong and positive outlook of the Indian economy with 71% stating that the economy will recover within a year. The rising cost concern is affecting the majority of all income levels, but more so the rich income group (82%), followed by the middle class (72%) and low income (67%).
Inflationary pressure, amidst a positive economic outlook
The research reveals a significantly pessimistic economic outlook from the Western markets when compared to emerging markets. Many more consumers from the US (54%), UK (65%) Germany (84%), and France (85%) believe life will remain the same or worse over the next three years, compared to Brazil (21%), India (24%), Saudi Arabia (37%) and China (38%). 49% of Indian consumers say their situation is better off compared to what it was 3-4 months back, and 83% are positive that their financial situation would be better off within one-year (globally 47%).
Even under inflationary pressure, while ‘price’ is the top criterion for purchase in global markets, factors such as ‘health and goodness’ emerge as equally important decision drivers for Indian consumers.
Angshuman Bhattacharya, National Leader – Consumer Products and Retail, EY India said, “Growth will come at a cost, and companies need to review their value delivery mechanism instead of simply raising prices. The long-term aspirational needs of the consumer need to outweigh the short-term challenges that consumers face. This means continuous innovation for greater value delivery through improved functionality or lower costs."
An opportunity for new brands
Customer loyalty is wavering under inflationary pressures, making space for new brands often offered online. 42% are trying new brands to reduce costs, and 63% are willing to purchase a store brand/private label.
Consumers deterred by online data protection
The EY survey also highlights that the preference for online shopping has become a habit and shall continue to stay. 62% continue to buy groceries online making it the most used online service. However, a similar majority (62%) of Indian consumers are apprehensive of sharing personal information on websites or apps, vis-a-vis their global counterparts at 36%, because of data security and ID theft. This is closely followed by other channels like email (61%), e-banking transactions (57%), and social media (56%).
Angshuman adds, “E-commerce is here to stay, in various forms such as B2C, D2C, and B2B. The journey has just begun, but the channel remains an expensive one to operate in. Cost pressures are likely to make brands review their e-commerce unit economics, and take a prudent path towards a choice of operating models which are profitability accretive”
The 10th edition of the EY Future Consumer Index is available at ey.com/futureconsumerindex10. This edition surveyed 18,000 consumers across the US, Canada, Mexico, Brazil, Argentina, Chile, the UK, Germany, France, Italy, Spain, Denmark, Finland, Sweden, Norway, Australia, New Zealand, Japan, China, India, Indonesia, Thailand, Saudi Arabia, South Africa and concluded in June 2022.
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