2020 has been an unforgettable chapter of uncertainty and 2021 has become the year of change for businesses and consumers. Consumers today are more hesitant and cautious about their consumption habits, but are also willing to move on and adapt to changing times.
In any crisis, consumer spending turns to value and essentials. 2020 has seen a catastrophic reduction in consumption habits, but 2022 may tell you a different story.
Economic experts have predicted that Indian consumers will spend more in 2022. The International Monetary Fund has projected 9.5% Gross Domestic Product (GDP) growth for India in this fiscal year. In its latest 2022 macroeconomic outlook note, Goldman Sachs revised its GDP projection upwards to 9.1%, from an earlier estimate of 8%. The National Association of Software and Services Companies (NASSCOM) Quarterly Industry Review reports that India’s GDP is expected to grow by 8.5% in 2022.
Here are the trends expected to drive consumer spending in 2022 and tips to help you improve your experience.
Travel less, travel better
Despite the uncertainty, the travel and hospitality industry is buzzing with confidence. The sector is trying to stay positive by taking inspiration from returning tourists and backpackers.
This season, people who might have been limited to going out due to the pandemic can visit restaurants, pubs and malls. But they will be cautious and prioritize their safety while engaging in outdoor experiences. The brave traveler will be more aware and will not hesitate to pay extra for new experiences.
The advice here is to make sure you get the most joy when choosing an experience for yourself and your friends or family. Make sure it’s an adventure. Make sure it gives you more peace and more life experience all in one.
Choose durable goods: quality over quantity
Lifestyle change during and after lockdown, increased product awareness and digital access are directly responsible for increasing demand for durable consumer goods like electronics and home appliances.
Today, people choose technologically advanced and smart products that positively impact their lives and enable them to multitask. Surprisingly, the demand for high-end products is not limited to metropolises. Tier II and Tier III cities have done more to fuel this growth. Not to mention that the global semiconductor crisis is still ongoing. Durable goods prices are high and could rise further.
Metro people are also migrating to their hometowns to work from home, and they want technology that can help them stay connected, entertained, and engaged.
More importantly, consumers will spend money solving problems as they search for better, faster, and innovative ways to accomplish their daily tasks and buy products to do so, regardless of cost.
If you’re one of those cautious consumers who doesn’t mind going premium, the advice for you would be to do your research and make sure you’re buying a high-quality product that meets your needs, even if it will be slightly higher. on budget now, to save on maintenance costs over the life of the device.
Turn to uplifting products and experiences
According to a Deloitte Touche Tohmatsu India survey, Indians are focused on saving for the future and want to spend on experiences and physical goods or possessions. Robust vaccination campaigns and an increase in positive consumer sentiments are the main reasons for this change.
Workplaces are opening up, multiplexes are seeing an increase in attendance, and people are moving outdoors to abandon their virtual lives. New consumers armed with new behaviors will be more inclined to experiment with new experiences.
Forrester predicts that in 2022, consumers will turn to uplifting and enjoyable products and experiences that provide respite from the fatigue of lingering uncertainty. Consumers are improving their home technology and have higher expectations for digital experiences.
The pandemic has also encouraged more people to shop online and prepare for credit, which has directly driven demand for Buy Now, Pay Later (BNPL) services. Easy installments, fast loan disbursement and zero interest rate attracted more consumers to BNPL’s services. Consumers with tight finances have also appreciated BNPL’s services to meet their daily expenses and instant experiences.
The advice here is that you should do your search for experiences in the places closest to you. Start small, then start planning big. Find enjoyable experiences like a pottery class or a class to learn how to invest in stocks.
Prioritize personal mobility
According to a recent MX survey, transportation spending has increased dramatically for individuals in the post-Covid era due to intermittent but steady increases in fuel costs and rising taxi fares. However, this had a negligible impact on consumption and use.
Today, Indians are more concerned about their health and safety. People are more product conscious and more interested in advanced features. The same goes for personal vehicles.
Car consumers in India are more interested in features that will keep them safe while driving. Technologies like Hill Assist and Traction Control are some of the requirements that an average Indian customer looks for. We go beyond the age-old question: What is the mileage?
Meanwhile, the growing constraints of vehicle demand and supply have given rise to the used vehicle sector. This sector is fueled by the everyday value-conscious commuter who wants to avoid ownership costs or dislikes the long waiting period.
It’s safe to say that consumers adapt to changing times, but they also want their needs met immediately. Changing times dictate that we are also slowly moving towards sustainable means of transport.
The advice here is to prioritize personal mobility that is green and works to advance our collective being as a responsible society.
Adopt subscription models
Do you remember how many apps you subscribed to during lockdown? How many do you still use today? Many people don’t revisit apps after the first few weeks of downloading. Subscriptions are often associated with over the top (OTT) platforms, but today there are many subscription models that can support your travels, groceries, daily needs, health, among others.
According to a report by Bain & Company, the online retail market is expected to reach $120-140 billion by FY26, growing about 25-30% annually over the next five years.
As a breed, we have now spent a lot of time indoors during lockdown and were constantly looking for phone services or apps to keep us busy, honed, and provided with the necessities. People of all ages have grown to prefer convenience, customization, and an organized experience. These factors have driven the demand for subscription services, and we are always looking for more.
According to a global report by EY, ownership no longer confers status. There is growing interest in products and services that can be kept in circulation longer through rental, subscription or resale.
Our advice is to make sure you clean your phone regularly, try to see what’s happening to you each month, and see if there are new ways to improve your skills using the platforms of your choice.
Choose health and wellness
A recent report by NITI Aayog stated that India’s healthcare sector is expected to reach $372 billion in 2022, registering a compound annual growth rate (CAGR) of around 22% since 2016, especially as the pandemic opens several opportunities.
Indian consumers are now open to virtual consultations and order medicines online without hesitation. Of course, since Covid-19 has already changed attitudes towards personal health, hygiene, insurance and fitness. The average conscious Indian will spend to counter unexpected pandemic-like situations.
The advice here is that you need to invest in healthy food options one step at a time. Buying supplements for daily use and natural remedies is much better for your overall health and well-being than just taking action when you’re sick. Choosing to really observe and find the right place to shop and eat will also help you in the long run.
Conclusion
The year 2022 should help people rekindle their hopes and be optimistic. A direct implication of this would be consumer interest in travel, dining out and spending on durable goods, paving the way for an economic recovery.
Smart ways to spend could help you put your money to good use and also explore ways to maintain a financial corpus to use in case of emergencies during unexpected events.