The COVID-19 pandemic along with health safety issues brought another glooming problem to our faces, the economic crunch having a direct impact on the pockets of regular middle-class consumers of our economy. The pandemic situation in 2020 which no one calculated for had stock markets world-wide chasing lower circuits day by day, with the greatest fall on NSE and BSE recorded at ~14% in one single day, making the investors poorer by lakhs of crore, which continued for days. The situation was dire, at one end people and the country as whole was fighting a global pandemic and other end people were locked at homes, away from their businesses and jobs, with unemployment rates soaring high in tight finances. This double-edged sword had people question their spending habits and what is necessity of living within our means. The Indian proverb – ‘jitni lambi chadar utne paer failane chahiye’ had come into existence into every common man’s life all of a sudden. Just take a moment and think for yourself - Would you consider having your everyday Starbucks or buying a new car or any other luxury when you’re stranded away from your business and job, with no financial stability in sight?
Result of the pandemic on 2020 GDP growth
Impact Of Economic Crunch
Through a decade without any major economic slump since 2008, people had been lax with their spending habits and finances, buying luxuries out of their means on EMI’s eating away their hard-earned incomes and similar other reckless financial moves. When the economy came crashing down on common-man’s head in 2020, it made them even more diligent on their spending if anything. It made them realize how important it is to spent their rupee wisely. As the economy has started to recover from the havoc of pandemic and lockdowns, consumer spending has started to rise, people are not spending less to put it in loose terms, they are just fetching for more value-for-money propositions. The importance of discounts has come into limelight. Not just for luxuries, consumers have now started using discount offers on regular grocery shopping, even more than ever before, with sales of Grocery Chains – Amazon Fresh, Reliance Fresh, Jio Mart, Grofers, Future Retail Outlets, D-Mart and similar other chains soaring high, offering consumers more value for money. All these similar effects were seen after last economic recession in 2008. The ‘Shop Till You Drop’ philosophy has been forgone to an extent.
The recession has made people find their satisfaction in old
fashioned ways of savings and inner peace. The low-cost stock trading platforms
– Upstox and Zerodha have seen a massive inflow of new retail investor
subscribers on their platforms, yet another showcase that people are getting
interested in investing and savings. When there seems no way out, we surely
find ways to live within our means to survive. The flexible trees outgrow the storm,
whereas the non-flexible one’s crack.
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| Graph showing consumer spending rebound (U.S.) - Statista |
Challenge For Marketers
This change of consumer spending has marketers take a
different approach in promoting their products. Companies now will have to prove
their product’s worth to customers – whether the product is worth the customer’s
hard-earned money. Companies are also focusing hugely on discount as a move to
attract consumers and through cutting costs. However, cutting costs and
discounts is not a long-term solution, as it affects the profitability and
viability of business. Marketers as such are now focusing to prove the value proposition
in their products and why the product is necessary for a consumer.
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