The Covid-19 pandemic and the related nationwide lockdown created a huge dent in businesses throughout India. Shuttered stores and factories led to jobs losses, with India seeing its biggest GDP drop in decades. Due to the fear of further economic slowdown and impact on their income, most people limited spending to essential commodities. While the economic condition was expected to get even worse, things have slowly started improving and there appears to be light at the end of the tunnel.
According to a survey conducted by the RBI, consumer confidence has been low compared to 2019, but consumers have shown positive expectations for the next few months, which is a good sign for businesses. There is a revival in demand in segments like consumer durables, electronics, and appliances, with some segments seeing better than pre-COVID-19 sales. However, the new normal has brought along a significant change in consumer behaviour and lifestyle, and these changes could stay until we see a credible vaccine.
Higher Demand For Low-Ticket Items, Work-From-Home Products
With the lingering economic uncertainty in mind, consumers preferred shopping for lower ticket items after the lockdown was lifted. Brand loyalty has been low, and consumers are preferring brands and products that offer better deals and prices. However, people are not holding back on critical purchases. There has been a rise in demand for electronic devices such as smartphones, tablets, laptops, and Wi-Fi routers as most people are working from home and students are learning remotely. There has also been an uptick in demand for used products due to limited income.
As people are staying home more than they used to, there has been higher demand for larger-sized TVs for content consumption through OTT services like Amazon Prime, Netflix, and Hotstar. People who are reluctant to hire domestic help due to the fear of virus contraction are turning towards dishwashers, microwaves and washing machines. Demand for home appliances such as ACs and refrigerators has increased, too. Retailers like Croma and Vijay Sales have experienced YoY growth from June. While physical stores have seen reduced footfall, the conversion rate has shot up to 90% (compared to 20-40%). To reduce multiple visits, people are buying in bulk and bringing home larger packs.
More Consumers Relying On Online Shopping
Around 95% of India’s retail sales usually come from offline channels, but to keep human contact to the bare minimum, more consumers relied on online shopping and home delivery of products and services rather than visiting physical stores during the pandemic. According to a report from the Retailers Association of India (RAI), offline retailers have been impacted by 60% to 80% across malls and high-street stores during this pandemic. On the other hand, e-commerce stores have witnessed improved sales. Even shoppers from Tier 2 and Tier 3 cities have shown growing preference to shopping online during the post lockdown period.
Need For Increased Use Of In-Store Technology, Better Hygiene
‘Revenge shopping’ may kick in this quarter like it did in China, and in hope of attracting customers during the festive period, retailers are geared up with necessary safety and hygiene measures. Malls and stores are making sure people are wearing face masks and sanitizing their hands before entering. Most places also have a thermal screening process, frequent sanitization of common touchpoints, and markings for social distancing.
However, there is still a need to improve in-store technologies and take the adoption to higher levels so that customers feel safe while shopping. Barcode scanning through mobile devices, contactless and e-payment methods, sending bills and receipts through WhatsApp, and online feedback systems are the need of the hour.
New Opportunities For Startups In Shopping And Retail Technologies
While the pandemic has affected businesses worldwide, it also presents huge opportunities in shopping and retail technologies. Startups that develop AR (augmented reality) and VR (virtual reality)-based hardware and software, and help brands implement them in stores and online interfaces could see a tremendous growth in the near future. Apparel, beauty, and home furnishings brands, which are yet to see a proper recovery path, can benefit from AR and VR technologies. Consumer durables and gadget brands can use these technologies even more effectively.
Some brands have already started offering AR and VR experiences to people. OnePlus recently conducted a virtual launch event in which AR was used to showcase how its new smartphone looks in the hands of customers. This not only makes people comfortable before making purchase decisions but also improves brand loyalty and engagement.
Retail stores could also use facial recognition to retarget shoppers, show them customised offers based on their interest from previous visits, and improve conversion rates. There is also an opportunity for start-ups that help brands in diversifying sales channels and managing inventory, as companies are now increasingly using omni-channel strategies to target customers and offering doorstep deliveries and services.
The new normal comes with a lot of changes in consumer shopping habits, and segments that have been hit need to adapt to new challenges and offer better customer experiences to win back trust and see a path towards recovery.