36% of Indian consumers to increase spending across categories in next 6 months: BCG survey

BCG’s 2023 global consumer sentiment study revealed India to be one of the most optimistic markets, compared to other global economies, with 5 out of 10 Indians exhibiting positive sentiment with regards to both macro-economic factors such as geo-political concerns, recession or inflation as well as micro factors such as personal finances and their future income outlook.

This positive attitude is translating into spending resilience, with 36% of consumers in India expecting to increase their spending in the next 6 months across categories, much higher than the global average of 17%. This positive spend outlook is being driven more so by young working adults, looking to spend on more experiential categories such as travel/leisure, entertainment as well big-ticket purchases like Auto and electronics” said Nivedita Balaji, Associate Director, BCG.

The research revealed that although macro concerns dominate the news and the noise, they are not the primary drivers of consumers’ spending or their ability and willingness to save. Rather, “micro” concerns—the more personal, close-to-home sentiments regarding individuals’ jobs, household income, and finances—guide consumers’ optimism or pessimism.

Less than 50% of Indian and Chinese consumers are worried about personal finances and income to more than 80% are worried in Japan, Argentina, and France. Consumer sentiment in the US rests roughly in the middle.

In simple terms, consumers may worry about economic and geopolitical matters, but they act and behave according to their personal situation.

Overall, 83% of consumer resilience is driven by micro factors—concerns closer to consumers’ personal situations and finances.

Where do growth opportunities await?

The spending outlook is relatively positive among young working adults—those who are 18 to 34 years old. Further, affluent and higher-income households continue to want to spend. Although these spenders are not super-affluent or high-net-worth individuals, they earn enough to position them as, at least, upper-middle-income consumers in the countries in which they reside.

Further, certain countries continue to see positive sentiment and a good spending outlook— particularly India, China, the United Arab Emirates, and Saudi Arabia. These nations will continue to be growth markets over the next one to two years.

Finally, consumers continue to prioritise spending on certain categories even when they have to cut back on others.

Nonnegotiable categories, such as baby food, fresh food, and packaged food, have demonstrated strong recent spending and are expected to see even higher spending in the future. Consumers refuse to compromise on quality in these important categories and are willing to trade up if necessary, even in the face of inflation.

It’s encouraging to see that sustainable products have also become a priority for consumers as climate change and global warming enter the mainstream psyche.

Additionally, consumers are still prioritising experiential items such as air travel, vacations, and luxury brands; investing in good experiences is seen as worthwhile, often to relieve pressure in their daily lives and to reclaim time lost during COVID. Interestingly, spending on insurance is also on the uptick—perhaps another legacy of the pandemic era.

On the other hand, spending is decreasing in categories that have been declining for a few years now, such as large electronics, which consumers see as one-time, big-ticket, functional purchases. Also, categories such as food delivery and alcohol, whose sales were inflated during the pandemic, are seeing decreased demand as a consequence of the post-COVID cooldown.

If we reflect on lessons for consumer companies, the following come to mind:

• Pursue growth in markets where consumer behaviour still trends toward spending, especially large, increasingly resilient emerging markets.

• Identify and support resilient consumers in your market. For instance, an affluent consumer base may afford premiumisation opportunities in your portfolio.

• Even in countries with poorer sentiment, growth can be found among some resilient, high-growth categories, such as younger consumers.

The survey was conducted from August through September 2023. The data was compiled by BCG’s Center for Customer Insight, which surveyed 21,000 consumers from 21 countries around the world.

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