"Tier -2 and tier-3 city consumers are more inclined towards contactless payment": KPMG Report

The survey was conducted with 2,376 respondents, across tier-1, tier-2 and tier-3 cities, amongst different spender types and age groups, between May 18 - June 2020.

KPMG has released its report titled, ‘Time to open my wallet or not?' - The new spending patterns emerging from a consumer’s perspective. The report aims to highlight gradual key changes that we are witnessing in the overall Indian consumer sentiment given the new normal.

The pandemic had brought in a major impact into the life of Indian citizens and has also acted as a game-changer for the consumer market sector. Consequently, COVID-19 has given abundance of new opportunities for retailers in India. As a result of the pandemic, consumer sentiments have been under the spectrum due to their evolving mindsets. While the new reality sets in, consumers are more aware than ever and have been reevaluating their priorities. The survey brings out the changes that have been observed among Indian consumers in the new normal. It highlights that a new consumer is emerging — one that is financially constrained, more advanced in their use of digital technologies, more thoughtful and selective in their decision-making, and keen to see COVID-19 as an opportunity to reset values.

The survey has been conducted with 2,376 respondents (of which 66 per cent were male and 34 per cent female). It was conducted across tier-1, tier-2 and tier-3 cities, amongst different spender types and age groups, between May 18, 2020 to June 7, 2020.

Key highlights from the report:

· Consumer spending habits:

o 78 per cent of the respondents claim to reduce on discretionary spending

o City Tier: Tier-3 is found 1.9X more optimistic on their spending habits than Tier-1, hence could be the next focus area to monitor the spending habits

o Consumer Age Band: Among age bands, the 20-30 age band is more optimistic on discretionary spending

o Gender: Spending habits reduced considerably among both male (76 per cent) and female (82 per cent) consumers

· Optimism for the future:

o City Tier: Tier -3 consumers are the most optimistic among all city tiers, as 22 per cent of them feel no impact on their routines and spending

o Consumer Age Band: The age band 20 – 30 is most optimistic across all age bands with respect to duration of impact on their routines and spending

o Gender: 36 per cent of women and 38 per cent of men feel that the impact will last 6-12 months (Women seemed more optimistic)

· Awareness of economic stability and safety among Indian citizens

o The driving forces for 70 per cent of consumers buying post pandemic are economic uncertainty and Fear of COVID-19

o City Tier: Consumers in Tier-1 cities are more concerned about maintenance of hygiene in supply chain than Tier-2 and Tier-3 cities

o Consumer Age Band: The age band 20-30 is 1.8X more concerned about maintenance of hygiene in supply chain than Age band > 51

o Gender: Male respondents are more concerned about economic uncertainty (M: 39 per cent, F: 32 per cent). Female respondents are more concerned about poor maintenance of hygiene in supply chain (F: 25 per cent, M: 16 per cent)

· Favorable discretionary spends among consumers

o North (32 per cent) and East (23 per cent) India consumers are more inclined towards spending more than INR 5000 across categories as compared to other regions

o City Tier: Consumers in Tier-3 cities are 1.4X more inclined towards spending on Apparel than Tier-1 cities for spending more than INR5000

o Consumer Age Band: The 41-50 age band consumers intend to spend 1.6X more than the 21-30 age band consumers in Apparels for spending more than INR 5000. However, the 21-30 age band consumers (65 per cent) are more attracted towards spending up to INR 5000 in Apparels

o Gender: Across all categories, Males intend to spend more than females in the spending range of more than INR 5000. 60 per cent of males intend to spend up to INR 5000 in skin care and cosmetics

· Incentivisation across physical stores:

o Organisation needs to embrace new practices to maintain the trust of consumers in physical stores

o With the combination of personalisation and ease, virtual trial rooms may emerge as the new face of innovative shopping experiences

o Consumer Age Band: Respondents between 41-50 are more concerned about hygiene at store (73 per cent) and social distancing (74 per cent)

o Gender: Female respondents (74 per cent) are more concerned about hygiene at stores

· Heading towards a cashless economy

o 85 per cent respondents have chosen contact-less modes over cash

o City Tier: Tier -2 and Tier-3 city consumers are more inclined towards contactless payment i.e. UPI and Online Wallets than Tier-1 consumers

o Consumer Age Band: Respondents > 40 years are more inclined towards credit/ debit cards than UPI/ Online wallets

Gender: UPI and online wallets are equally popular among male (50 per cent) and female (47 per cent) respondents

Attached is the full report:

Time to open my wallet or not.pdf