PremiumMembers-only credit card bill payment platform Cred on Thursday said credit card spends on leisure goods and services and travel improved among affluent shoppers after lockdown restrictions eased in parts of the country once the second wave of covid-19 infections in the country started to taper off.
Cred analysed data from over 3 million well-heeled credit card users in Delhi, Mumbai, Bangalore, Hyderabad, Pune and Kolkata. It compared spends made between three periods—April 1 to May 31, 2020, that is, the first wave of pandemic, January 1 to March 31 or pre-second wave, 2021, and spends from April 1 to May 31, 2021 or post second wave.
“Spending on leisure was low all over the country during the first wave of the pandemic (14% of total expenditure), owing to strict lockdowns and restrictions. However, there was a sharp upwards spike across all six cities as the restrictions were eased and more people started going out. With greater mobilization, the demand for leisure goods and services increased as well and peaked during the pre-second wave period," Cred analysis said.
For Delhi and Hyderabad, expenditure on leisure was 19% of the total spend once the second wave started to ebb. Mumbai was at 18%. Those in city of Bengaluru diverted 21% of their spends on leisure. Kolkata spent the most on leisure at 23% while Pune stood at 17%.
In wave one, spends on leisure in the capital stood at 13% of overall credit card spends.
Leisure includes activities such as food including eating out at restaurants or ordering food via aggregators like Swiggy and Zomato. It also includes shopping both online and offline.
To be sure, India was in the grip of a serious second covid 19 wave in the months of April and May. Some states started lifting curbs partially only towards the end of May.
“The spending power of the affluent consumers in India is not usually hit by ups and downs of the economy," said Kunal Shah, founder and CEO of Cred.
During the first wave, expenditure was primarily led by a necessity to buy essentials. Consumers largely restrained themselves from traveling in the first wave of the pandemic.
“However, as the restrictions were lifted and travelling became easier…people spent majorly on domestic travel. The trend peaked just before the second wave hit (10% of all spends was on travel). Even the rising cases and increased restrictions did not deter people from travelling as travel expenditure did not take a dip (8%) in the post-second wave period indicating high demand," Cred said.
The company also monitored spending habits of younger credit card users—those aged between 18 and 25 years. Consumers in the age group 18-25 spent heavily on leisure rather than on travel and banking (making bank payments), it said.
“In fact, their expenditure on banking dipped considerably when compared to the first wave from 8% of their overall spends to 5% in the pre-second wave. This age cohort spent significantly on leisure— that is, 23% before the second wave hit. The trends are continuing post-wave two, it said.
Across all the three periods surveyed by Cred, digital wallet spends were high among individuals throughout.
Wallet spends include transactions used to add money to the wallet using a credit card. The money added to the wallet can also be used to spend on other categories like food, shopping etc.
This indicates high adoption and less apprehension towards contactless payments. Post-second wave too, there was an increased demand for fulfilling expenses using digital wallets. This was specifically high in cities like Mumbai and Delhi-NCR, and largely led by those in the 18 to 25 age group.
“The data gathered from the study indicates that the popularity of digital payments peaked during the pandemic’s first wave before gradually hitting a low pre-second wave and climbed up again to moderate usage post the second wave," it said.
Meanwhile, spends on utilities remained unchanged throughout the three periods covered by Cred, while remaining constant across all age-groups of credit card users.
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