In a recent survey conducted by “Retail Updates”, over 63% respondents felt that consumers in metro cities will move towards e-commerce for day to-day Grocery and household shopping. These and many such insights were gathered in a dip-stick study covering respondents who represented various parts of the country and from varied professional backgrounds.
FMCG and daily use products
Consumer spending on non-discretionary products such as grocery and household items is expected to continue as they are, according to 55% of respondents while 39% of them felt that this could reduce considerably on the back of continued lockdowns, reduction in salary levels and anticipated or existent job losses. 6% of respondents felt that Consumer spends shall remain status quo compared to last year.Interestingly, a majority of them indicating that current spends shall be somewhat maintained is great news for 1,000s of FMCG brands, Regional, Indian and International, even as some are fighting for survival while a few like Tata Consumer Products have seen a fantastic year that passed by with their stock value almost doubling during the 12-month period that passed by recently. HUL, Nestle, ITC, Marico and many others had a good year in FY 20-21, despite the pandemic which led to multiple lockdowns, though household consumption increased due to Work from Home and students across schools and colleges had a year at home, almost all through the year.

This piece of information also shows the resilience of the category which is led by neighbourhood shops, called Kirana stores in the USD 350 Bn Food & Grocery Market in the country, the total size of which is estimated at USD 850 Bn. Only 12% of the total Grocery Retail market is organised and is dominated by ah handful of players including Reliance Retail, Future Group’s Big Bazaar and Aditya Birla’s More Retail (jointly owned by Amazon) as well e-commerce players such as Big Basket and Grofers among a few others. According to a recent report, the total Retail market size could shrink this year by USD 40-50 Bn, but that would not wipe away the market size of this category, perhaps. The fact that non-discretionary spends shall remain as they are, is a strong reason for FMCG brands and Grocery retailers, offline and online to continue their focus in strengthening the supply chain, launch newer variants as well as expanding geographies. In the short term, Margins will be squeezed due to increased competition at a brand-level as many of them are trying to retain customers by not increasing MRP although cost of doing business has gone up.
Discretionary shopping
Almost half of the respondents, about 46% of them felt that their spends on discretionary products such as Fashion Apparel, Accessories, Watches, Perfumes, etc. will remain the same as last year and would pick up from Jan. ’22 onwards and 29% of them felt that they would spend more than last year commencing from the festival period, the critical Q3. While the Dassera Puja seasons commences in September usually, this continues in full flow until mid November when Deepavali is celebrated pan-India. The festival shopping continues with Bakrid and culminates with Christmas-New Year. 25% of respondents felt that no new spends on such products would happen during this Financial Year, indicating a weak economic situation ahead.Â

This is a very critical piece of information for brands and retailers in this space as it shows an indicative trend on how and when consumers would shop for such discretionary products, given that most of Corporate India would continue partial WFH in the coming months. Many large companies have indicated to their employees that they may not turn up at office until Jan. ’22 while others have decided to get employees on a rotation basis, thereby saving precious money paid towards office rent, maintenance, employee welfare, etc. Discretionary spends are usually on how people dress up and includes all the way from personal grooming to footwear and everything I between. While Wedding Season Shopping is an important outing for most Indians, the last year and the last few months have been low-key affairs with no more than 300 people attending even large family weddings. This, compared to 3 days – 7 days of wedding festivities which could host between 2,000 to 7,000 people in Metro Cities as well as in smaller towns from middle class and wealthy families.Â
Shopping Offline
Only 12% of respondents recorded hesitation to visits Malls and Shopping Clusters in High Streets with the Unlock that has begun since end-June onwards across the country while 45% of respondents feel confident to visits Malls, especially those who have been vaccinated at least one dosage, already. 43% of them felt that Consumers would trickle in to Malls around the  peak festive season beginning Sep. ’21.Â

This should bring some cheer and happiness to Mall Owners and Tenants as there has been a huge dip in footfalls though conversions to sales have remained higher, with serious shoppers walking in to malls to buy what they need. However, the closure of Cinemas (iindefinitelly) is a dampener as this drives the youth and family cohorts who eventually spend on Food at Restaurants and Food Courts. Window shopping is not bad especially when the footfalls at Malls have reduced more than by half compared with the pre-pandemic numbers.
Eating Out
41% of respondents said they would step out to eat at restaurants once the Unlock begins. 26% customers felt that they would increase their spends on “eating” but would really more on “in-home dining”, that is ordering food to their doorstep instead of stepping outside. 22% respondents felt that eating out will reduce considerably due to weak economic conditions and a weaker economic outlook, perhaps due to job losses, pay cuts and an overall uncertain scenario towards earning income. 11% respondents felt that spends will be the same as last year – which was not very positive when compared with the year before, that is the pre-Covid scenario.

Restaurants are built for dine-in purposes, in most cases. There is an aura around eating out. Indians are fond of eating at restaurants and neighbourhood hotels, essentially because it is a way of celebrating their daily lives. People dress up, plan in advance, do some shopping and also spend on dining. Ordering at home, which was once a vertical (Parcel Delivery in olden times) at hotels and restaurants has found a new meaning these days with many new restaurants opening up only to cater to this segment (Cloud Kitchens). Many other hotels have shrunk their dining area and have started focus on take-aways and deliveries.
e-Grocery
44% of respondents in Metro Cities feel they will (or are already) move back to physical shops for day today Grocery purchases as compared to the lockdown period. Of this, 18% of them said they increased their preference to e-Grocery shopping due to the lockdown but would move back to offline shopping thereafter while 12% of them said that they have already started visiting physical shops ever since the Unlock began around mid/end- Jun. ’21. 14% respondents said that though they had a preference towards e-commerce shopping for grocery and household, they would certainly not continue with it after Unlock and when shops reopen. However, 56% respondents said they have a higher preference in general towards Grocery shopping online and that this may continue.

This throws open surprises, anguish and a large untapped opportunity for Kirana shops, neighbourhood, regional and National Grocery Retail chains. Many of them have inclined themselves already towards online by tying up with the likes of Dunzo, Swiggy and many such local platforms while some have started their own e-commerce platforms such as Big Bazaar, Reliance Fresh, Spencers Retail and More (integrating through the Amazon App). On the other hand, players like Big Basket, Grofers, etc. are smiling away to profitability, with lower discounts, higher delivery fees and an order book which is unserviceable in a short time slot. With more consumers showing interest on E-commerce for grocery and household, the future looks promising for all partners.Â
Delivery Fees
Who doesn’t want Free Home Delivery? As per our findings, 42% of them in Metro Cities wanted the Retailer or the App Platform to delivery goods for free, of course over an above a certain bill value. 27% of respondents said they are happy with the current rates of door delivery (which differs across cities) while 21% of them said they are willing to pay for door delivery albeit a lower fee, perhaps. Only 10% of the respondents across Metro Cities felt that they wouldn’t want to pay for door delivery and wanted this absolutely free of cost.Â

Delivery Charges have always been a contentious discussion from the point of view of customers and has been widely debated on social media as well as mainstream. While customers consider it to be a privilege that they receive a free delivery, shopkeepers, especially restaurants cite additional business costs for a safe and hygienic delivery of goods. Given the pandemic situation and with already spiralling business costs, it is practically impossible to offer “Free Delivery” for live food whereas the shopkeepers and Kiranas do not make enough profit margins to spare as part of delivery charges. Even the Food App Platforms as well as Grocery Apps offered free delivery as an inaugural offer and continued them for long only to ensure they didn’t lose customers. However, ever since the “lockdown” began in Mar. ’20, these platforms took it as an opportunity to charge customers for door delivery. This, plus a surge in orders from customers who have been avoiding eating out, has help them navigate their own margin crisis. Whether this (delivery model) is sustainable in the long term is anybody’s guess.
Tier 2 Towns
31% of respondents said that those who have moved to smaller towns, read: home towns prefer buying Grocery through e-commerce, perhaps a metro trend that is reflective due to reverse migration led by Lockdowns. However, locals in smaller towns are not very enthused; only 23% of the respondents said that locals are preferring to shop online but not through websites or apps, rather placing their orders through phone calls or by WhatsApp . Whereas 15% of the respondents said that locals are slowly moving towards online purchases for their day to day needs in smaller towns, perhaps purely from a convenience point of view. 31% of respondents, however said they prefer walking up to neighbourhood shops for their grocery shopping.

Bharath – India 2 or the semi-urban/rural India as we call is a very inclusive society. In all probability, the shopkeeper may be related to or a long known associate of the customer or their family. Therefore, shopping is just an extension of their social lives where they meet and interact with others in town which is how the fabric of our society is. Interestingly, there has been a large scale migration of people from Metro cities to their native towns, essentially Tier 2/3 towns who carry along their shopping an consumption habits with them. It is common to see a number of local E-Commerce Apps taking shape in these smaller towns, buoyed by the opportunity.Â
Mall Shopping
58% respondents felt that shopping at Malls would be an entirely different experience this year, due to increased measures of social distancing, Covid-19 appropriate behaviour at public spaces and higher sense of sanitisation and personal hygiene. 23% respondents felt that crowds would be back in Malls soon similar to what we witnessed between Nov. ’20 – Mar. ’21 while 19% of respondents felt that there would be more laxity this year due to a significant increase I the number of vaccinated people, who may feel entitled with a false sense of security.

While more footfalls at Malls is good news to Brands, Restaurants, Retailers and Mall Owners, it is in the best interest of all concerned in the ecosystem and a larger outlook on the society that we live in, that we tread more cautiously this time, especially since we saw the aftermath of the second-wave led lockdown which hurt the economy more than during the first wave. The recent lockdown (in 2021) has taken the Retail Industry behind by a good 1 year even as businesses felt until Mar. ’21 that they have overcome the fear and uncertainties of the Coronavirus Pandemic and were preparing for a better shopping season ahead.
Closed spaces Vs. Open areas for Shopping
22% respondents felt that Shoppers will prefer open spaces for shopping such as High Streets and Neighbourhoods since shopping would be spread all through the day. 32% respondents felt that there is a general tendency to avoid crowded shopping areas such as Malls and High Streets, due to a possible spread of the virus as well as for fear of claustrophobia due to air-conditioning. 46% respondents felt that shoppers will stick to their preferred places for shopping, be it Malls or High Streets.

While the majority of shoppers’ willingness to step out for shopping is an indication of a positive way ahead, footfalls at Malls could remain weak, especially with this particular segment of shoppers moving online for their browsing and shopping. Online buying is not just a convenience, but an addiction too. Over time, thanks to Artificial Intelligence and past shopping / browsing behaviour, websites and apps throw up possible options to users and this is somewhat cyclical and addictive. To shop at the comfort of their chairs or sofas, and to be able to exchange very easily, if the product doesn’t meet or suit their requirements, as compared to taking such a huge effort to visit a physical store, customers are getting pampered to buy everything from Colgate to Condoms, pet food to fashion or garden accessories and everything in between online. Offline Retailers, better watch out to these trends and respond.
Cinemas and Multiplexes
25% respondents felt that they would prefer to watch a movie at a Multiplex compared to a neighbourhood standalone cinema, perhaps due to higher and better hygiene standards. 33% of the respondents felt that the youngsters would visit Cinemas and Multiplexes like before, that is the period between Oct. ’20 – Mar. ’21. A good 42% of the respondents said they don’t think they would visit Cinema Theatres and Multiplexes until April 2022.

The youngsters, predominantly below 35 years would probably be the first ones to visit theatres when they open up as they have not been impacted much during the first and second wave of the pandemic. And those who have been tested positive have gone through the ordeal, followed it up mostly with vaccine shots and are well guarded with regards to managing themselves including social distancing and Covid-19 appropriate behaviour at public spaces.
We have presented the survey reports as a summary in this post. In subsequent follow-up articles, we shall analyse each of these findings in detail, while correlating to current trends as and when they occur.
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