Stark Changes In The Consumer Expenditure During The Lockdown.
The consumer spending during the lockdown has changed a lot because of the pandemic. There are different trends being witnessed all over the world. The whole process of analyzing the consumer spending is very vast. We can break the consumer spending into a few parts.
- The first one would be analyzing the spending on groceries.
- The second one would be on dining and drinking.
- The third one will be miscellaneous expenditure.
According to various researches, spending on groceries has increased when we talk about middle-class people. Since people are staying at their houses, they’re eating inside and are not moving out. Due to this, the amount of money being spent on groceries is high. People are not ordering from outside and are trying to make new dishes at home.
When we talk about discretionary spending, this is usually related to goods that are not of an essential nature. This expenditure has gone down drastically because the income of the people is reducing. Businesses have been shut down and people are not able to earn money. They are only trying to spend money on the necessities.
The last one would be about drinking and dining. Since we all know that the entire world is on the lockdown and the people are going through the whole situation of a pandemic, people are obviously not going out and drinking and dining. Due to this, the revenues of various hotels and restaurants have gone down. Some restaurants are on the verge of shutting down because they cannot function with a shortage of revenue. It is very natural to say that the consumer expenditure for this segment has gone down.
According to a survey by Deloitte, the spending pattern of the consumers has changed over the last few weeks because the people have become more responsible about what they eat and its health benefits. They are focusing more on immediate needs rather than stocking up the food. Nearly 64% of the consumers who are being surveyed said that they will buy from brands. The Indian shopper is loyal to the demand fulfillment and authenticity of the brands. The consumer demand is more coming from online buying. 51% of the respondents have switched to online shopping.
This is the new normal, the spending intent is down across two-thirds of the world. People want to save money because now they have seen the worst days of their lives. People are expected to fend for themselves and sustain themselves. This is the major reason why the demand for luxury goods is going down.
The US consumer spending increased by 7.5% in March as the Americans stayed at home. Personal incomes fell down by 2% with wages and salaries not being given on time. Consumers are restricting themselves to goods that are of greater importance. In the United States of America, consumer spending accounts for 70% of the economic activity. The GDP declined in the first quarter means that people are spending less money.
Various economists all over the world are worried that this trend will continue for other nations and for the United States of America till the time a vaccine is not developed. It is said that this trend will continue until the middle of next year. The Coronavirus fear, social distancing measures, and the financial dependence of the people on their savings has taken a serious toll on consumer spending.
In India also the only sector which is doing fine right now is related to selling the groceries. Even though there are supply chain barriers are hindering over this sector but still, the people are eating food and drinking milk. The basic necessities are being procured by the people no matter what and the remaining items are chucked off.
For example: earlier you used to spend on a sweet dish worth Rs.300 along with your basic meal of Rs.200. Now the tables have turned. You are not even spending Rs.200 on a basic meal let alone purchase a sweet dish worth Rs.300.
You are just procuring the groceries worth rupees hundred and making a dish at home. This hundred is with respect to the basic necessities and the remaining opportunity cost is for dining and drinking. This sector and this spending are the least right now and it is said that till the time the virus has not been cured, it will continue to be like this.
