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Consumer spending shifts adversely impacting non-essential categories

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Non-essential categories such as fashion and home improvement are continuing to be significantly impacted by the ongoing second wave of Covid-19 across India as consumers hold back on discretionary purchases and shift spends to health, food, personal care and hygiene.

Different kinds of fresh food products in cart

Unsurprisingly, ready-to-eat (RTE) and ready-to-cook (RTC) foods with value-added nutritional infusions are seeing higher sales. Pack size innovation is also offering opportunities for FMCG and food brands; smaller packs of Rs 5 and Rs 10 have witnessed a rise of up to 20 per cent across categories like biscuits, ketchup and jams, while the large and premium packs have been affected as consumers continue to spend cautiously, PTI said in a report.

“Spends have dropped in high price point and non-essential categories,” METRO Cash & Carry India MD and CEO Arvind Mediratta told PTI.

Excess inventory is the primary challenge for retailers in non-essential categories, including fashion and home improvement..

Earlier in May, Avenue Supermarts Ltd, which owns D-Mart, had said it is registering an “adverse and severe impact” on its revenues due to “significant disruptions” of its store operations from March 2021 onwards.

“We currently continue to receive a regular supply of goods from our suppliers. However, this time we may have a problem of excess inventory. An issue larger than the first wave,” the company had said in its post-earnings statement.

Earlier in May, Tata Group’s flagship retail arm Trent Ltd’s had said that non-food retail operations have been adversely impacted since mid-March due to disruptions caused by the devastating second wave of the Covid-19 pandemic in India.

“Our revenues from retailing of non-food merchandise have been substantially and adversely impacted. Nevertheless, the business has continued to incur committed expenditures especially with respect to our employees and other expenditures not directly linked to revenues,” the company said in an official statement.