Consumer spending in India, which has so far fuelled its economy, has hit a speed bump.
Non-essential, high-end personal care, and home care products seem to have got the worst of this slowdown, according to a consumer survey report by UBS Evidence Lab, released on May 13. There is, however, a renewed interest in buying gold.
Cautious spending patterns are linked to less disposable incomes in the hands of consumers, due to lower agri-commodity prices in rural areas, and higher food and fuel prices in urban areas, said the think tank, part of the Swiss UBS Group.
The results were based on 1,711 door-to-door, computer-assisted personal interviews with urban Indian consumers in 15 key cities.
Personal care
In January-April 2019, median spending on personal care products was down by 10.5% year-on-year (YoY).
Only 41% of consumers bought deodorants regularly in the first four months of this year, down from 45% in the same period last year. Likewise, the share of consumers who purchased shower gel fell from 14% to 11%, in the same time period.
“Among new-age (personal care) products, those perceived as essential, such as toothpaste, are still holding up. High-end discretionary personal and home care products are showing secular declines,” said Sunita Sachdev, an analyst at UBS Evidence Lab. “Consumer preferences can be fickle.”
Herbal and ayurveda products, which got a boost with the entry of Ramdev-led Patanjali in 2015, are also threatened by tighter spending habits. Not to be outsmarted, FMCG majors like Dabur, and Hindustan Unilever (HUL) had launched their own herbal products in recent years.
About 44% of consumers did not buy herbal products in January-April 2019, up from 35% in the same period last year, the survey found.
Home care segment
In the home care segment, which includes products like fabric softeners and dish washing liquids, median spending in January-April 2019 was down 14.8% year-on-year, as “lower middle class” consumers penny-pinched.
Median spending on home care products by this category was down 17% YoY, according to UBS Evidence Lab.
Only 18% consumers bought liquid detergents regularly in January-April 2019 as against 27% in January-April 2018. Share of those who purchased dish washing liquid fell from 25% to 15% in the same period.
Gold an exception
Yet, led by millennials, more Indians are showing an interest in gold.
Around 49% consumers in the age group of 18-34 years and 51% in the age group of 35-44 years spent more on gold jewellery in January-April 2019, up from 42% and 35%, respectively, in January-April 2018.
Like their parents, millennials, too, see gold as a safe haven. Many are also shifting to digital gold.