Re-ordering Life in the New Normal:
Perspective on Consumer Spending and Consumption

Nita Mathur

That Covid-19 is here to stay for an uncertain duration seems to be writ large now. Multi-pronged endeavours of national lockdown, tracing case history, extensive  testing, stay at home persuasion, forced quarantines and social distancing, among others, are expected to flatten the peak even as freedom from the virus continues to remain a frantic chase. Not surprisingly, economic growth has taken a nosedive due to lack of economic activities during the nation-wide lockdown. The adverse economic shock from the outbreak is expected to decelerate demand for goods and services. In such a situation, issues of consumer spending and consumption as major driver of the economy acquire a renewed significance. This column is a modest attempt to develop a perspective on consumer spending and consumption as driver of the economy in the new normal.  I examine three game changers: reverse migration of workers, imposition of safety norms by the government, and fall in income and consumer optimism closely and conclude with an overall understanding of the situation and charting a way forward.

Reverse Migration of Labour
Return of migrant workers to their villages signals significant decline in not only in employment but also money transfers and family income. Even as many workers are reported to have vowed not to return, hope and expectations from the city have taken a downturn. The drying up of cash from rural families will  result first, in rise of indebtedness to meet basic necessities of life; second, engagement with exchange of goods and services with some innovations though making the process more rational and complex; and third, adoption of a way of life centring around locally produced commodities. Additionally, in the absence of employment, many of them could seek initiation into traditional works of art and craft.

There is a likelihood that small factories, especially those in red zones, may not come back to life with full vigour due to shortage of both financial resources and labour. They may not be able to produce enough for spill-over to villages. Acute shortage of labour in cities largely in construction sector as also in factories, warehouses and distribution networks is likely to break the supply chain. Smaller business houses will find it difficult to sustain themselves both for lack of financial resources and shortage of labour. Consumers, already facing a financial crunch may not be able to afford commodities they were used to, available now at a higher price due to supply constraint generating losses for producers and marketers. It is, however, expected that health-care products and services will receive a fillip in both rural and urban areas.   

Safety Norms
Much of the retail store sales will depend on trade-off between long-term safety norms imposed by the government and consumer presence. Demography of consumers as also their demand, choice and mode of payment cannot be ignored. Social distancing is a new reality with which retail stores will have to cope. The new norm of maintaining social distance poses a major challenge to the retail industry as stores will have to re-design their landscape, incorporate online sales as an additional option or else they might have to pull down shutters. It is expected that senior consumers would keep diffident absence as younger ones remain at the forefront. Given the fact that companies are laying-off staff in large measure due to financial crunch and compelled to work from home as a safety measure, retail stores will witness unprecedented low footfall.  Omnichannel retail stores could expect greater success.   

There is no denying that life during lockdown has transformed consumer spending and consumption pattern. Surge in activity across e-commerce and social media platforms has familiarized people in the past few years with shopping sites and fashion parlours.  Importantly, significant increase in rural usage of the internet has been reported. This is likely to encourage and enable rural consumers to opt for online shopping largely propelled by a belief that online shopping is a shield against the virus and bring them closer to their urban counterparts. Of course, the retail industry will have to present a hugely differentiated line of products keeping in view choices, demand, and spending capacity of customers in both rural and urban areas. Online sales will be preferred also because there is increasing preference of remote payment options, mostly through credit cards, over cash transactions. One of the main reasons is that credit cards support the ‘buy now pay later’ option which keeps the immediate anxiety of payment at bay and allows the possibility of staggered payment.  This can be appreciated in light of the fact that there is limited cash flow in the economy. There is a likelihood that a portion of the discretionary spending including that on consumer goods will be digitally enabled.

Fall in Income and Consumer Optimism
The media is abuzz with the onset of prolonged and unabated economic slowdown. Exacerbated unemployment and severe pay-cuts are staring the country in the face. The cheer and optimism that sustain consumer spending and consumption is missing. Expectedly, discretionary spending will register a noticeable decline. Most affected will be, among others, tourism, and entertainment industries even as people will opt for virtual tours and online entertainment platforms. The other industry which will see a downturn is that of apparel and accessories. Not many will stockpile a daunting variety of apparel and accessories that complement them. The prominent practice could be to rent them. This will save money as also the botheration of maintaining them. More and more consumers will become price sensitive, hunt for discount deals, be ready to forgo non-essentials and settle for cheap variants. This does not, however, imply that consumerism will occupy a backstage in the lives of people. Somewhere along the way people will continue to celebrate consumerism, social media will continue to pursue consumerist influencers, and advertisements will continue to push products. The difference will be in terms of nature and scale.

In its new avatar, consumerism will be influenced by the moral discourse doing rounds in the social media. The idea that the pandemic is an outcome  of collective ill-karmas including over-exploitation  of   natural resources has convinced many.  This is opportune social situation to promote green consumerism. Brands that are eco-friendly and support a social cause will be preferred. Shopping decisions will be based on social values, price and durability.  Companies will be required to keep pace with consumers’ new demands. They will have to quickly come up with fresh ways of perusing social and economic situation of consumers in order to enchant them enough to make purchases.

Nita Mathur is Professor of Sociology at Indira Gandhi National Open University, New Delhi

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Frontier
Jun 1, 2020