A prolonged lockdown (longer than most other countries) spanning over four months has undoubtedly made India one of the slowest countries to bounce back from the coronavirus disruption (-8 per cent versus China which is at 5%). The good news however, is that FMCG consumption is almost back to pre-COVID levels, according to Nielsen's latest edition of 'COVID-19 Consumer Evolving Trends' report. The report says that the FMCG value sales index which was at 100 in March, prior to the lockdown, dipped to 75 during the months of April and May. However, June saw a revival with the index touching 98, just a few points lower than the value in March. The recovery has been faster in rural India, which grew from 84 points in April and May to 109 points in June. In fact, rural markets in June saw a higher growth than the pre-COVID era in March (103). FMCG consumption in the urban markets was at 100 during pre-COVID, dipped to 70 during the months of April and May and bounced to 94 in the month of June. The prolonged lockdown along with supply chain and distribution disruption had severely impacted FMCG sales.

With people forced to largely stay indoors, categories such as beauty and skin care had undergone a huge dip in sales. Most consumers didn't feel the need to use a skincare product or even a deodorant just because they had no reason to step out of home. Unlock 1.0, as per the Nielsen report, has made consumers accept a restrained way of living. But at the same time they also want to indulge themselves in the same way as they did in the pre-COVID era. Therefore, categories such as deodorants, hair colours and skincare products, as per the report, saw a sharp rise in sales in June compared to the complete lockdown months of April and May. A category like deodrants which had dipped from 100 points in March to 19 points in April-May, actually grew higher than the pre-COVID levels to 102. Similarly, hair-colours which dipped from 100 points to 43 during April and May, like deodorants, went up to 102 in June. On the other hand, hygiene products like floor cleaners and liquid soaps are no longer one-off buys. Sales of liquid soaps have grown to 200 points in the month of June (from 159 in March), while floor cleaners increased to 118 points (from 111 in March).

Unlock 1.0 has certainly brought about a change in the way consumers consume. With the economy getting into a recession and salary cuts being as high as 84 per cent, consumers, says the Nielsen report, are going to be extremely cautious about spends, especially discretionary spends. Around 70 per cent of the respondents said that they would cut down spends on dining-out, 60 per cent said they would spend less on luxury brands and 56 per cent said they would cut down alcohol spends. Over 64 per cent consumers said that they would cut down their travel spends, while 47 per cent would spend less on apparels. These trends are definitely bad news for companies which are in the hospitality and lifestyle space, but those companies which are in sectors such as food, education, personal hygiene and health would stand to gain. Around 64 per cent respondents said they would increase their spending on health foods, while 54 per cent said they would spend more on healthcare and 44 per cent said that they would spend more on education. In fact, mental and physical health, as per the Nielsen report, has emerged as a huge area of concern. This explains why consumers want to increase their spends on categories such as health food or even on healthcare.

The pandemic has also changed the shopping behaviour of consumers. The Nielsen report says that the number of consumers visiting a neighbourhood store has dipped from 74 per cent in the pre-Covid era to 65 per cent. The number of people visiting department stores has reduced from 50 per cent to 24 per cent. Similarly, neighbourhood stores offering home delivery service have gone up from 25 per cent to 34 per cent. Over 62 per cent intend to increase online shopping by 20 per cent, while digital payments has seen a 52 per cent growth.