2ND COVID WAVE HAS WEAKENED CONSUMER SENTIMENT: BCG

NEW DELHI: The ongoing wave of Covid-19 infections has once again weakened consumer sentiment as Indian households lowered incomes and expenditure projections over the next six months.

This decline in sentiment is the steepest among the less affluent income groups or those with annual household income less than ₹5 lakh, said a survey of 4,000 Indian consumers by the Boston Consulting Group (BCG) conducted between May 23 to May 28.

The study, BCG’S sixth since the pandemic spread in India, spells uncertainty for more discretionary categories such as apparel, personal care, cosmetics, travel and out of home entertainment.

The report highlighted that consumer anxiety is at its “highest levels” since the outbreak of pandemic; concerns around economic outlook, health, and lifestyle are accentuated.

In fact, 58% of those surveyed expect their incomes to decline in the next six months—this is “significantly higher” than the 44% reported in the July survey, it said. Meanwhile, 51% consumers expect their spends to shrink over the next six months—again higher than the previous surveys conducted by the firm.

Overall, 86% of those surveyed cited concerns over an economic recession due to the virus. Over 80% reported feeling some sense of uncertainty toward their jobs and business—the highest ever recorded by the consulting firm.

Last year’s cautious behaviour has been replaced by uncertainty and panic as India’s daily caseload spiralled as the country faced a more virulent Delta strain, said Nimisha Jain, managing director and partner, BCG India.

The report also corroborates The Reserve Bank of India’s (RBI) assessment of consumer confidence that fell to a record low in May as household perceptions about the economy and employment weakened.

Consumer mobility and sentiments had picked up earlier this year, with most firms reporting healthy business in the March quarter. This is especially true for retail and restaurants, that saw business dip in 2020.