FMCH( fast-moving consumer goods) and white goods(consumer electronics) are likely to lead the revival of the economy post-lockdown while real estate and auto sectors will be among the worse hit, according to a survey conducted by VMR, exclusively available to TOI.
VMR conducted two surveys. The first survey was conducted in January 2020 to assess the impact of the economic slowdown. The second was conducted in April 2020 to assess the impact of the coronavirus on consumer confidence and purchasing abilities. About 10,132 samples were collected randomly from across India.
As per the survey, 85% of the respondents across different strata of society indicated that spending will be directed towards FMCG products. A clear sign that the sector would be the first to show signs of revival as people stock up on essential goods.
Organised manufacturing is also expected to pick up with 7percent of spending directed towards purchase of home appliances, electronics and whit goods.
The real estate sector which witnessed a 27 percent fall in demand in January 2020 saw demand drop to as low as 3 percent in April 2020. Given the fact that a real estate purchase needs a larger ticket size to spend, the huge withdrawal from real estate clearly indicates that consumers feel the income as well as savings both are hit. Besides realty, spending priorities for the auto sector has also dampened to about 0.64 percent, adding to an already
depressed demand for fuel. Apart from these, the clothing and apparel sector is slated to take a hit with very nominal
Another significant finding of the survey is that savings continues to be a priority. To assess consumer confidence, the respondents were asked a hypothetical question, as to what they would do, if they were given a cheque of Rs 1 lakh tomorrow to spend as they wished and the respondents were provided with four choices – Clear existing Debts, Allocate to Spends, Keep aside for Savings and Investments, or simply Park for wedding and education expenses. To this, 55 percent said they would like to simply save the additional money they obtain after the lockdown, indicating low confidence in their future earning potential. However, this number is lower than the number of those who said the same thing three months ago, which was about 62%. This means there is a buying thirst that remains unsatiated during the lockdown, the survey noted.
The survey further reveals that Covid-led migration is also likely to impact the overall labour pattern in urban areas. The lockdown has stimulated a lot of migration away from the cities. The sentiment on returning to the city is split down the middle. Certain urban sectors that are heavily dependent on rural migrants, may either face higher prices of labour or simply its non availability. This could be a double whammy for not just the real estate sector, but also for sectors that are dependent on swathes of informal and unregistered labour like highway construction, railway development and electrification. Thus, spending on these sectors might not be able to immediately pull the economy out of the slowdown, because labour shortfall would remain a critical issue.
Across all population segments, about 36 percent said that their income has dropped by at least 20 percent, suggesting a further deceleration of consumer confidence. So for almost about half the population, the perceived income loss is anywhere until 40 percent.
The report also noted a greater thrust towards ‘Made in India’ products with 93 percent of the respondents saying that they would not buy goods that were made in China. Praising the recent pronouncements by Prime Minister Narendra Modi, people felt that Made in India would certainly work as a very good branding and marketing strategy. Times of India