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Is consumer sentiment drooping?
Mon, 27 Aug Pre-Open

Worry time seems to be in the offing for the companies producing not-so-essential items as well as for the retailers if recent consumer survey by Ipsos, the world's third-largest market research firm, is anything to go by. The survey highlights that Indians are planning to curtail their spending on non essential items such as eating out, buying branded clothes and going on holidays.

The reason for all this is more than obvious. It is stubborn inflation. And it is not only the prevailing high price situation. With poor monsoon, people are equally worried for the future as well. So, they are being prudent and want to save for the possible rainy days ahead.

While it all looks so clear, many experts do not believe that the consumer sentiments are fizzling out. Some feel that overall consumer sentiment is still not negative. Some are more optimistic and feel that consumer sentiment in India continues to be strong. As a matter of fact, during this Independence Day week, retailers witnessed a huge sale. But, in our view, that should mostly be attributed to huge discounts offered by the retailers. Also, it may be the fear of further price rise that could have prompted this kind of huge response by the consumers.

However, one conclusion from all this is that there exists a great demand. And no one can deny the growing demand for essential as well as non essential goods by the Indian consumers. The only point is that consumers have now started looking for values in the prevailing tough situation.

As far as the business environment is concerned, it continues to remain volatile. The whole industry is waiting for many policy reforms such Foreign Direct investment (FDI) in retail and some other biils. However, considering the recent logjam in parliament, this wait would only be longer. There seems to be no respite from inflation due to a weak monsoon and high interest rate situation.

Now the important question arises what should companies do in this volatile economic environment. How can they address the existing demand or can create more demand? The idea lies in the focus on goods that consumers actually need. And then offer them at reasonable price.

Companies would do well if they reformulate their strategies as per the prevailing situation.

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