Last year when the Covid-19 pandemic struck urban India largely and consumer sentiments were hurt, India’s economic recovery banked largely on rural areas.
But this year, the second wave has travelled through the interiors of the country. The Covid situation seems much more severe in rural parts, where a large number of deaths, lack of medical infrastructure and job losses, etc., have hurt consumer sentiment.
In such a backdrop, brands are worried about the grim situation and hoping for a quick curtailment of the second wave before things go out of hand.
Speaking to BestMediaInfo.com, MVS Murthy, Head, Marketing and Digital, Tata Asset Management, said if the current situation continues, the income disruptions will cascade into a need to save, cut expenses and delay purchases.
“The moment of time we are in, the picture in a snapshot appears grim. Care, protection, recovery, vaccination, etc., have taken precedence over everything and a nation of our size is vulnerable and a pressure trigger can lead to a domino effect. That is what we are going through now. To expect any of the above to take a back seat over consumption will be delusionary. The other aspect is the breaking of the employment-production-income-spend pipe. This is true across services and other tangible sectors,” he said.
Krishnarao Buddha, Senior Category Head, Marketing, Parle Products, said there is a concern as most brands were supported by rural areas last year. He said there is a huge concern this time as Covid is affecting rural towns and villages with a population of 50,000 and even below. Things are looking, however, better for the urban economy now.
“Yes, the rural economy being impacted will definitely have a bearing on my brand but at the same time I am relieved that urban areas are moving out of the challenges due to various reasons such as vaccination, herd immunity, etc.,” Rao said.
Shashank Srivastava, Executive Director, Maruti Suzuki India, said this year the geographical spread is much larger and the fatalities are much higher. The losses are much more personal this time and the medical infrastructure has been tested. All these factors have had a negative impact on the consumer sentiment.
“From April, we saw a sharp decline in the number of enquiries, bookings and details even in rural areas. We have 3,140 outlets and 2,500 are approximately closed because of lockdowns in about 27 states. Rural is important to us because about 40% of our sales are roughly from rural areas. There is an apprehension that rural sales will get affected,” he added.
Will this translate into ad spends being affected?
With most parts of the country dealing with lockdowns and low consumer sentiment, the growth in ad spends is expected to be slower. Brands are now hoping that the second wave gets curtailed faster and are looking forward to a normal monsoon to drive economic recovery.
Srivastava said the basic economic parameters such as the monsoon are normal this year and rabi crop sowing is 3% higher. The procurement of kharif crops in May is about 35% higher and government spending on rural areas is also strong, which indicates there can be a bounce-back.
Citing similar thoughts, Murthy said that if the monsoon plays out well and the collective drive to overcome the headwinds of the pandemic gathers steam, we could see a better situation in H2. “It may not be one of our best, but a recovery over the past few months will definitely help make the sentiment pinker, than being in the red.”
Speaking about if they are rethinking the ad spends, Srivastava said the overall spending might have come down but there is not going to be any massive changes in the planned spends. “It's been just a one-month phenomenon so far and we have good geo-tagging technologies. If the Covid situation improves, we might see an increase in our ad spends also,” he added.
On the other hand, Rao said they will continue to advertise despite the rural economy being impacted just like they did during the first wave. “We have found that consumers have expanded their investments with us. With expenses being what they are, those investing have brought in more funds. This trend has been consistent across the retail direct and digital business through the last FY and the trend continues. We have just launched our ATL brand campaign ‘#KhudPeVishwaas hai sabse badi investment’. This was followed up with an extension of the core idea to some of our funds. There is a positive skew in case of both the aspects we are discussing,” Murthy said.