Indians itching to splurge on holiday, entertainment

The Indian consumer’s confidence level is not too high but he has lately been buying like crazy, according to findings of Nielsen, which regularly tracks consumer buying.

Piyush Mathur, president of Nielsen India, said in a statement that despite a marginal drop in their confidence level, they have been making much more discretionary spending than before.

Better still, says Mathur, consumers are thinking of loosening their purse strings over the next few months for home improvement, holidays and entertainment.

“At the same time, building up savings for the future with retirement and mutual funds is a healthy indication of how Indian consumers are viewing this year, and the added stress on long-term financial stability is encouraging for the economy,” a statement issued by Mathur says.

Consumer confidence in India dropped to 120 in the first quarter of calendar 2013 from 121 in the preceding quarter. Globally, at 122 Indonesian consumers were the most confident. A year back, India’s index was 123.

Mark Ashman, CEO of HyperCITY Retail, told Financial Chronicle, “Despite the economic crisis, shoppers are stocking up on all kinds of products, including discretionary ones: this is evident in our quarter IV (of 2012-13). We have done reasonably well in terms of volumes in January-March.”

Pranab Barua, CEO of Madura Garments, part of Aditya Birla Nuvo, has a similar experience: consumers are spending on items across the board and particularly on discretionary products. “The mood is quite buoyant unlike last year. We have seen decent growth in January-March,” he says.

Industry experts say retailers are positing consistent profits and decent sales. “Products that are selling fast are not the really very expensive ones but fun stuff such as exotic biscuits, shampoos, cocktail mixers – an indication that consumers like to party when the chips are down,” says a Mumbai-based retailer.

Consumer psychologists say people cannot hold back purchases in a long-drawn economic crisis. “In a weak economy, people will have problems with self- control. When a slowdown hits and people really start to feel the pinch, they like to spend on discretionary products to feel- good,” Siddharth S Singh, associate professor of marketing at Indian School of Business, told FC.

Economists say it is but natural for people to gravitate towards finer products once their basic needs are fulfilled. “So the perception of economic slowdown is not true. Our economy is doing well and hence people are realising it and buying more comfort products,” said Piyush K Sinha, marketing professor at IIM Ahmedabad.

“Despite the job uncertainty and no increments, I want to feel good, so I’m going on a holiday to Thailand,” said Mahua Sarkar, a Mumbai-based dancer.

The last quarter showed more Indians spending of spare cash on holidays: 39 per cent of the sample surveyed, up from 28 per cent in the preceding quarter.

Almost two in five (38 per cent) online urban Indian respondents indicated focusing on home improvement, an increase of 11 per cent. Intent to spend on out-of-home entertainment also increased (26 per cent respondents against 19 per cent).

As many as 54 per cent of the Indian respondents see themselves buying things they want or need over the next 12 months.

“This highlights a contradictory nature of the urban Indian consumer, cautious about the state of the economy but at the same time indicating a higher discretionary spending for the year. Small- ticket consumption will be encouraged, but not large- ticket investments like automobiles and homes,” Mathur said in the statement.

meghnamaiti@mydigitalfc.com

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