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Time to open my wallet or not? July 2020 home.kpmg/in The new spending patterns emerging from a consumer’s perspective. The report aims to highlight gradual key changes that we are witnessing in the overall Indian consumer sentiment given the new normal.

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Page 1: Time to open my wallet or not

Time to open my wallet or not?

July 2020

home.kpmg/in

The new spending patterns emerging from a consumer’s

perspective.

The report aims to highlight gradual key changes that we are witnessing in the overall Indian consumer sentiment given the new normal.

Page 2: Time to open my wallet or not

Conte

nts Demography and research methodology

Global learnings and emerging business scenario

COVID-19: a window of opportunities

Key themes of our survey

KPMG in India – point of view

Acknowledgements

Page 3: Time to open my wallet or not

3© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Demography and research methodology

This survey was conducted by KPMG in India and covered various demographics in India

to analyse the changing consumer sentiment with respect to the COVID-19 pandemic

Based on City Tier Based on Age demographic Based on Gender

Tier-1 Tier-2 Tier-3

40%37%23%

20-30 31-40 41-50 >51

58%27% 11% 4% 66%

34%

Male Female

85%

27% 20%

Deep Pockets

Cautious Spenders

Tight Fisted

Based on Spender type

21%19%60%

Overall Number of

Respondents: 2,376

Survey timeline -

May 18, 2020 to

June 7, 2020

Collection Method:

Online Questionnaire

Page 4: Time to open my wallet or not

4© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Global learnings and emerging business scenario

Consumers are increasingly aware of the

brands they invest in, hence trust will play

a vital role for their purchase decisions.

Companies need to prioritise their needs in

terms of providing a safe environment for

shopping as well as provide easier and

convenient modes of payment. They also

may need to gear-up and realign their

supply chains, including logistics and

warehousing for a better consumer

experience. Such measures could help

induce brand loyalty among consumers,

which will serve as a long-term benefit.

Post COVID-19, Consumers will undergo a shift of patterns that are changing in three major aspects.

While the pandemic has set in a new

reality, the forthcoming situation will bring

in a new consumer mindset. Consumers

will be diligent in terms of their financial

stability and companies need to adapt this

new way of thinking in order for them to

re-evaluate and re-invent their

business models.

While several organisations have been

proactive in these trying times,

consumers have also been digitally

inclined and have adapted to a

complete digital experience. The

adaption of such technology for an

omnichannel offering is observed

across all age groups and

organisations must focus on the

digital enablement of consumers.

Pandemic aftermath Digitally savvy Trust

*Source: KPM G International - Consumer and the new reality

Page 5: Time to open my wallet or not

5© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

COVID-19: a window of opportunities

The global COVID-19 pandemic has had a deep impact on consumer behaviour. Consequential impact may be witnessed in quick and hasty decisions, emotional conclusions over rationalism, commitments which may or may not be required.

During this juncture of shifting priorities, it is wise to categorise into ones which are here to stay for long and the ones that have a momentary existence. Basis which, strategic decisions could be taken by organisation to cater to these priorities

Interestingly, the industry was already witnessing alterations in trends which have now accelerated and are here to stay. These include strengthening of omni-channel modes of operations, digital payment facilities, hygiene standards and need-based product preferences. A strong presence of hyper-local channel partners in urban centers has been observed recently, bringing consumer expectations to a different league. Kirana stores are adapting technology through contactless payments and offering doorstep delivery.

It is believed – “What is here to stay will stay - if you adapt, it becomes an opportunity…”

This survey highlights some interesting facts that we believe could find a place in every boardroom discussion, help give ideas to retailers and e-entrepreneurs to deal with the new operating procedures. It’s a window of opportunities and it’s time to capitalise. We hope you find the survey insightful!

Page 6: Time to open my wallet or not

6© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Key themes of our survey

A new consumer segment is emerging — one that is financially cautious, digital savvy and more thoughtful and wise to ensure correct

decision-making. The survey has captured consumer opinion in terms of – impact of technologies, spending habits, preferred modes of

shopping (online / offline), preferred payment modes, hygiene and safety requirements and others.

Unlocking through digital payments

we expect to see digital payments reinvigorated

with contactless payments on the rise due to

the pandemic. National Payment Corporation of

India (NPCI) announced the highest ever

transactions by UPI mode in June 2020.

Consumers have received a flavor of

convenience and are now getting habituated to

the new normal. Our survey indicates that UPI

and Wallet modes put together are 1.3X

more than card payments. Cash payments

were opted by only 15 per cent of consumers.

1 2 3The optimistic consumer

Overall 51 per cent of respondents feel

that the impact of COVID-19 will be

short-lived and normalcy is not far.

Surprisingly, Tier-2 and 3 cities are 1.9X

more positive than the Tier-I cities.

Possibly because of less fear of viral

spread – lower density of population, city

congestion is avoidable and community

transmission is slow.

The rise of ‘online’ shoppers

The new consumer is digitally savvy and

embraces interactions with organisations

through digital channels with ease. A

comparative of pre and post COVID-19

scenario clearly shows that preference to

online channels have increased 1.6X growth.

Our survey indicates that senior age

consumers have also chosen online

modes as a means to shop – possibly

keeping in mind safety and convenience

which otherwise remained unexplored.

Page 7: Time to open my wallet or not

7© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Survey - definitions

Particulars Category Parameter

Wealth Interpretation

Elite LSM Real estate + Four-wheeler

Established LSM Real estate

New Affluent LSM Four-wheeler

Emergent LSM Two-wheeler and none of the above

Particulars Category Parameter

Summary of

Wealth and Spent

Deep Pockets

All Spendthrifts

Elite LSM / Established LSM+ Average Spenders

Cautious Spenders

Elite LSM/ Established LSM+ Tightwads

New Affluent LSM+ Average spenders

Tight fisted

Emergent LSM+ Average Spenders/ Tightwads

New Affluent LSM+ Tightwads

Particulars Category Parameter

Spent Interpretation forward three months

Tightwads INR 0 -10000

Average Spenders INR 10001 -25000

Spendthrifts INR > 25000

LSM - Living Standards M easure

City Tier * City Name

Tier-1 Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata , Mumbai, and Pune

Tier-2

Agra, Ajmer, Aligarh, Amravati, Amritsar, Asansol, Aurangabad, Bareilly, Belgaum, Bhavnagar, Bhiwandi, Bhopal,Bhubaneswar, Bikaner, Bilaspur, Bokaro Steel city, Chandigarh, Coimbatore, Cuttack, Dehradun, Dhanbad, Bhilai, Durgapur, Erode, Faridabad, Firozabad, Ghaziabad, Gorakhpur, Gulbarga, Guntur, Gwalior, Gurugram, Guwahati,Hamirpur, Hubli–Dharwad, Indore, Jabalpur, Jaipur, Jalandhar, Jammu, Jamnagar, Jamshedpur, Jhansi, Jodhpur, Kakinada, Kannur, Kanpur, Kochi, Kolhapur, Kollam, Kozhikode, Kurnool, Ludhiana, Lucknow, Madurai, Malappuram,Mathura Goa, Mangaluru, Meerut, Moradabad, Mysuru, Nagpur, Nanded, Nashik, Nellore, Noida, Patna, Puducherry, Purulia, Prayagraj, Raipur, Rajkot, Rajahmundry, Ranchi, Rourkela, Salem, Sangli, Shimla, Siliguri, Solapur, Srinagar,Surat, Thiruvananthapuram, Thrissur, Tiruchirappalli, Tiruppur, Ujjain, Bijapur, Vadodara, Varanasi, Vasai-Virar City,Vijayawada, Visakhapatnam, Vellore and Warangal

Tier-3 All other cities

*Source: M aps of India accessed on 20 M ay 2020

Page 8: Time to open my wallet or not

8© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

1. Pandemic introduces a new dimension in habits of consumer spending (1/2)

78%

18%

4%

ReducedSame as prior toCOVID-19

Increased

83%78%

70%

14%19%

24%

3% 3% 6%

Tier-1 Tier-2 Tier-3

Reduced Same as prior to COVID-19 Increased

Majority respondents claim to reduce on discretionary spending, however 22 per cent are still optimistic.

Positivity has been noted in Tier-2 and Tier-3 respondents. Tier-3 is found 1.9X more optimistic on their spending habits than Tier-1, hence could be the next focus area to monitor the spending habits

Based on Spending Habits Based on City Tier

Page 9: Time to open my wallet or not

9© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

82%76%

16%20%

2% 4%

Female Male

Reduced Same as prior to COVID-19 Increased

21%14% 17% 19%

4%3% 3% 4%

20-30 31-40 41-50 >51

Reduced Same as prior to COVID-19 Increased

1. Pandemic introduces a new dimension in habits of consumer spending (2/2)

Among age bands, the 20-30 age band is more optimistic on discretionary spending

Based on Consumer Age Band Based on Gender

75%

83%80%

77%

21%14%

17%

19%

4%3% 3%

4%

20-30 31-40 41-50 >51

82%76%

16%

20%

2% 4%

Female Male

Page 10: Time to open my wallet or not

10© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

15%

37% 36%

12%16%

34%38%

12%

No Impact 3 to 6 months 6 to 12 months 12 months ormore

Female Male

2. Optimism for the future

No Impact

3 to 6 months

6 to 12 months

12 months ormore

16%

35%

37%

12%

Duration of Impact on routines and spending

51 per cent of respondents believe thatthe impact will not last more than 6 months.

9%

37%

42%

12%

18%

35% 34%

13%

22%

33%35%

10%

No Impact 3 to 6 months 6 to 12 months 12 months or more

Tier-1

Tier-2

Tier-3

Based on City Tier

Tier -3 consumers are the most optimistic among all city tiers, as 22 per cent of them feel no impact on their routines and spending

15%

37% 36%

12%16%

34%38%

12%

No Impact 3 to 6 months 6 to 12 months 12 months or more

Based on Gender

17%

39%

34%

10%13%

30%

42%

15%15%

32%39%

14%19%

26%

42%

13%

No Impact 3 to 6 months 6 to 12 months 12 months or more

20-30 31-40

41-50 >51

Based on Consumer Age Band

The age band 20 – 30 is most optimistic across all age bands with respect to duration of impact on their routines and spending.

Page 11: Time to open my wallet or not

11© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Economic uncertainty Fear of COVID-19 Poor maintenance of hygiene in supply chain Others

34%41% 39% 41%

33% 33% 34% 35%

21% 18% 17% 12%12% 8% 10% 12%

20-30 31-40 41-50 >51

3. Awareness of economic stability and safety among Indian citizens

Post COVID-19, A greater positive impact on consumer sentiment may be observed in the event of an economic stimulus.

Reasons that will affect consumer buying post COVID-19

11%

19%

33%

37%

Others

Poor maintenance of hygiene in supplychain

Fear of COVID-19

Economic uncertainty41%

35% 33%29%

37% 35%

23%16% 18%

7%12% 14%

Tier-1 Tier-2 Tier-3

Based on City Tier

The driving forces for 70 per cent of consumers buying post pandemic are economic uncertainty and Fear of COVID-19.

Consumers in Tier-1 cities are more concerned about maintenance of hygienein supply chain than Tier-2 and Tier-3 cities

Based on Consumer Age Band

The age band 20-30 is 1.8X more concerned about maintenance of hygiene in supply chain than Age band > 51

32%

39%34% 33%

25%

17%9% 11%

Female Male

Based on Gender

Page 12: Time to open my wallet or not

12© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

36%

64%60%

40%

Online Mode Physical Store

44%29% 36%

63% 56% 63%

Tier-1 Tier-2 Tier-3

Pre COVID-19 - Online Mode Post COVID-19 - Online Mode

19% 27% 27%

36% 39%31%

23%

61% 61% 58% 54%

20-30 31-40 41-50 >51

Pre COVID-19 - Online Mode Post COVID-19 - Online Mode

Based on Consumer Age Band

31 %25 % 22 % 27 % Typically, the >51 age band is the toughest to crack in terms of onboarding for e-commerce but has doubled from Pre-COVID-19 levels. Interestingly, from 23 per cent preferring prior COVID-19, the jump is as high as 54 per cent.

4. Omnichannel disruption to be relevant? During the pandemic, an increase in adoption and willingness for e-commerce purchases over physical stores has been noted.

The “Extra push": While e-commerce has been gaining for a while, the pandemic has provided motivation for consumers to engage in online shopping.

Safety and hygiene being a non-negotiable requirement, under online buying mode 84 per cent of consumers prefer Click and delivery over pickup at

store, where as under physical buying modes 67 per cent of consumers prefer standalone stores over malls

44%29% 36%

63% 56% 63%

Tier-1 Tier-2 Tier-3

Pre COVID-19 - Online Mode Post COVID-19 - Online Mode

19% 27% 27%

Based on City Tier

Tier-2 and Tier-3 cities are more inclined towards online buying mode almost 2X than Pre – COVID-19. 50 per cent hike noted in - Uttarakhand, New Delhi, Telangana and Punjab.

24 %

Preferred Buying modes

36% 36%

62% 59%

Female Male

Based on Gender

26 % 23 %

Pre-COVID-19 Post-COVID-19

24 %

Page 13: Time to open my wallet or not

13© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

85%

27% 20%

Deep Pockets Cautious Spenders Tight Fisted

5. Favorable discretionary spends among consumers (1/4)

In the next three months, 49 per cent respondents intend to spend a decent value up to INR5000, across categories which shows consumers are cautious about spending.

By Spending Range ( INR )

<5000

>5000

No Spend

North (32 per cent) and East (23 per cent) India consumers are more inclined towards spending more than INR5000 across categories as compared to other regions

30%

16%

20%34%

By Product Category

Furniture andElectronics

Apparels

Skin care andCosmetics

Fashion Accessories

Apparels, Furniture and Electronics have been in the limelight for quite a while and are the preferred segments followed by skin care and fashion accessories.

28%

46%

16%

38%

63%

42%

61%

28%

9%

9%

23%

34%

Skin care andCosmetics

FashionAccessories

Apparels

Furniture andElectronics

No Spend < 5000 > 5000

85 per cent of “Deep Pockets” are believed to spend an above-average amount on Furniture and Electronics of more than INR5000

85%

27%20%

Furniture and Electronics

> 5000 based on spenders

49%

32%19%

Page 14: Time to open my wallet or not

14© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

5. Favorable discretionary spends among consumers (2/4)

Consumers in Tier-3 cities intend to spend 2X than Tier-1 cities on accessories and skin care & cosmetics of more than INR5000.

Consumers in Tier-3 cities are 1.4X more inclined towards spending on Apparel than Tier-1 cities for spending more than INR5000.

56%

45%

38%

16% 16% 16%

39% 40%

34%

27%

31%

23%

36%

45%48%

64%62%

55%

26%

30%27%

66%

61%63%

8%10%

14%

20%22%

29%

35%

30%

39%

7% 8%

14%

Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3

Fashion Accessories Apparels Furniture & Electronics Skin care & cosmetics

No Spend Upto 5000 5000 or more

Skin care and cosmeticsFurniture and Electronics

Page 15: Time to open my wallet or not

15© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

56%

45%

38%

16% 16% 15%

39%40%

34%

27%

31%

23%

36%

45%48%

64%62%

55%

26%

30%27%

66%

61%63%

7%10%

14%

20%22%

29%

35%

30%

39%

7% 8%

14%

Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3

Fashion Accessories Apparels Furniture & Electronics Skin care & cosmetics

No Spend Upto 5000 5000 or more

5. Favorable discretionary spends among consumers (3/4)

The > 51 age band consumers intend to spend twice than of the 21-30 age band consumers in Skin care & cosmetics in spending more than INR5000.

The 41-50 age band consumers intend to spend 1.6X more than the 21-30 age band consumers in Apparels for spending more than INR5000.However, the 21-30 age band consumers ( 65 per cent) are more attracted towards spending up to INR5000 in Apparels

Clear preferences on discretionary spending across categories are being seen among all age bands

5. Favorable discretionary spends among consumers (3/4)

47% 50% 46% 42%

16% 15% 18% 17%

42%33% 34%

28% 29%24% 27% 30%

45% 39%39% 44%

65%57% 51% 53%

28%

28% 25% 39%

64%64% 61% 56%

8% 11% 15% 14% 19%28% 31% 30% 30%

39% 41%33%

7%12% 12% 14%

( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51 ) ( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51 ) ( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51 ) ( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51 )

Fashion Accessories Apparels Furniture & Electronics Skin care & cosmeticsSkin care and cosmeticsFurniture and Electronics

Page 16: Time to open my wallet or not

16© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

56%

45%

38%

16% 16% 15%

39%40%

34%

27%

31%

23%

36%

45%48%

64%62%

55%

26%

30%27%

66%

61%63%

7%10%

14%

20%22%

29%

35%

30%

39%

7% 8%

14%

Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3

Fashion Accessories Apparels Furniture & Electronics Skin care & cosmetics

No Spend Upto 5000 5000 or more

5. Favorable discretionary spends among consumers (4/4)

Across all categories, Males intend to spend more than females in the spending range of more than INR5000.

It is worth noting that 60 per cent of males intend to spend up to INR5000 in skin care and cosmetics.

52%46%

14% 16%

47%

34%22%

31%

41%

43%

67% 58%

25%

30%

70%60%

7%11%

19%26% 28%

36%

8% 9%

Female Male Female Male Female Male Female Male

Fashion Accessories Apparels Furniture and Electronics Skincare and cosmeticsSkin care and cosmeticsFurniture and Electronics

Page 17: Time to open my wallet or not

17© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

47%

38%

31%

Deep Pockets

Cautious Spenders

Tight Fisted

6. Redefining resilience in the new normal

Need to refresh strategy - Consumer experience will ride its way up through the priority list of retailers. In the New Normal – 68 per cent

respondents face a the new reality and continue to be sensitive towards the safety followed by pricing and promotion.

68%

59%

39%

36%

26%

Safety at Store

Pricing and Promotions

Proximity to home

Brand Loyalty

Reviews

Factors affecting consumer buying decision post COVID -19

71%

65%

55%

36%

27%

66%

53%

29%

33%

23%

68%

58%

30%

40%

29%

Safety at store

Pricing andpromotions

Proximity toyour home

Brand loyalty

Reviews

Based on City Tier

Tier-1

Tier-2

Tier-3

Post COVID-19, Congestion and extensive travel time are factors for Tier 1 consumers to prefer shopping from a near by store and will play a major role in consumer satisfaction

69%

59%

40%

35%

27%

67%

58%

39%

36%

26%

72%

60%

38%

37%

23%

58%

58%

30%

41%

20%

Safety at store

Pricing and promotions

Proximity to your home

Brand loyalty

Reviews

Based on Consumer age band

20-30 31-40

41-50 >51

Consumers in the 41-50 age band are prominently concerned about the safety at store compared to other age bands

73%

51%

43%

35%

22%

66%

62%

37%

36%

28%

Safety at store

Pricing and promotions

Proximity to your home

Brand loyalty

Reviews

Based on Gender

Female

Male

47%

38%31%

Page 18: Time to open my wallet or not

18© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

7. Incentivisation across physical stores

Retailers will have to walk the “extra mile” to retain consumers for their physical stores. Hygiene at store and contactless transactions serve as

the most important factors for a “safe” environment in physical stores. Virtual trial rooms is the emerging trend that assists consumers to ‘see’ how

the products appear on them. This feature can act as an incentive for consumers to visit physical stores and assist in their decision-making.

69%

68%

56%

29%

Hygeine at store

Social Distancing

Availability of contactlesstransactions

Virtual Trial Rooms

Consumer preferred measure to visit physical store

Organisation needs to embrace new practices to maintain the trust of consumers in physical stores - Check of body temperature, capping on Consumer entries, etc..

With the combination of personalisationand ease, virtual trial rooms may emerge as the new face of innovative shopping experiences

77%

71%

62%

29%

75%

71%

50%

30%

74%

70%

55%

36%

Hygiene at store

Social Distancing

Availability of contactlesstransactions

Virtual trial rooms

Based on City Tier

Tier-1

Tier-2

Tier-3

69%

66%

57%

28%

70%

70%

54%

29%

73%

74%

59%

32%

62%

66%

43%

27%

Hygiene at store

Social Distancing

Availability of contactless transactions

Virtual trial rooms

Based on Consumer age band

( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51 )

74%

66%

58%

27%

67%

69%

55%

29%

Hygiene at store

Social Distancing

Availability of contactless transactions

Virtual trial rooms

Based on Gender

Female

Male

Page 19: Time to open my wallet or not

19© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

14% 14%

39% 36%

47% 49%

Female MaleCash Credit card/Debit card UPI/ Online Wallets

Based on Gender

8. Heading towards a cashless economy

The sudden surge in the cashless mode of payments happened, post demonetisation – The talk of the town is, COVID-19 gave the agenda

a better push. Also, 85 per cent respondents have chosen contact-less modes over cash.

India’s path towards digitalisation and transformation: Companies are evaluating online platforms to boost their bottom line.

Due to increase in importance for safety and sanitisation, cashless transactions have gained more momentum now.

37%

48%

15%

Credit / DebitCard

UPI/ OnlineWallets

Cash

12%17%

13%

42%

35% 33%

46% 48%54%

Tier-1 Tier-2 Tier-3

Based on City Tier

Cash Credit card/Debit card UPI/ Online Wallets

Among which 26 per cent opted for UPI and 22 per cent opted for Online Wallets

Tier -2 and Tier-3city consumers are more inclined towards contactless payment i.e. UPI and Online Wallets than Tier-1consumers

12% 9% 14% 12%

39%44%

57% 58%49% 47%

29% 30%

( 20-30 ) ( 31-40 ) ( 41-50 ) ( >51)

Cash Credit card/Debit card UPI/ Online Wallets

Based on Consumer Age Band

14% 14%

39% 36%47% 50%

Female Male

Based on GenderConsumers in the Age bandof > 40 years are more inclined towards credit/ debit cards than UPI/ Online wallets

On the contrary, UPI/ Online wallets are more popular amongst consumers in the Age Band of 20-40

Page 20: Time to open my wallet or not

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KPMG in India - Point of view

Organisations will need to

reinvent their business and operating models. 22 per

cent consumers in Tier-2 and 30 per cent consumers

in Tier-3 feel that their spending will either increase

or remain the same as prior to COVID-19. Our study

indicates that Tier-2 and 3 consumers are more liberal in

their spending habits, hence these could be the next focus

area for retailers to expand their presence. Further, a

greater impact on positive sentiments could be expected

in the event of an economic stimulus

Approximately, 68 per cent

of respondents expect "Safety Precautions" to be

their primary priority following "Pricing and

Promotion“. Companies will need to assess their sense

of safety across the value chain and ensure it is

aligned to the new normal expectations of consumers.

Pricing and promotions will also continue to be a

significant driver for purchase decisions.

While 69 per cent of

consumers have claimed safety as a priority, social

distancing and availability of contactless transactions

as priorities are not far behind. For physical stores,

safety will continue to be play a key role in attracting footfall.

Tight adherence to social distancing and personal

safety, contactless transactions and virtual trial

rooms are options retailers could consider. Retailers will

need to identify ways to gain consumer trust and

confidence going forward

With the shift of preference

towards online, mainly due to the pandemic, companies

will need to develop their online and last-mile logistics

and delivery capability and manage supply chain

hygiene across all levels. Evidently, we know that for

India, providing a seamless journey for consumers

through a mix of digital and physical infrastructure will

require the backing of a strong supply chain.

86 per cent respondents

have chosen cashless modes as a

preference that comprises UPI, online

wallets and credit/debit cards. Organisations will

have to consider shifting to digital modes of payment.

Focus on new

emerging markets

‘Safe buying coupled with

pricing/promotions’ are key to purchase decisions

Get closer to your consumers

and create an experience in physical stores

Create a digital footprint

and close that last mile

Prioritise Digital

payments as security

COVID-19, in all its volatility and stress, has brought with it an opportunity to take a hard look at the entire consumer and retail supply chain to meet tomorrow’s needs.

This is an opportunity for retailers and consumer goods companies to demonstrate that they are committed to delivering on the ir purpose and their values either through direct or indirect actions (say by extended warranties/immediate resolution to queries) or indirect support (offering a COVID-19 helpline).

Page 21: Time to open my wallet or not

21© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Acknowledgements

• Harsha Razdan

• Nikhil Sethi

• Amit Bhandari

• Bijal Shah

• Shreya Bapna

• Shreyans Motani

Report Authors Contributors Design and compliance

• Dipesh Vasa

• Pratik Jain

• Anupriya Rajput

• Rasesh Gajjar

• Sameer Hattangadi

• Satyam Nagwekar

Page 22: Time to open my wallet or not

22© 2020 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Contacts

Harsha Razdan

Partner and Head - Consumer Markets and

Internet Business

KPMG In India

E: [email protected]

Nikhil Sethi

Partner – Management Consulting

KPMG In India

E: [email protected]

Amit Bhandari

Partner – Deal Advisory

KPMG In India

E: [email protected]

Bijal Shah

Director –Risk Consulting

KPMG In India

E: [email protected]

About KPMG in India

KPMG in India, a professional services firm, is the Indian

member firm affiliated with KPMG International and was

established in September 1993. Our professionals

leverage the global network of firms, providing detailed

knowledge of local laws, regulations, markets and

competition. KPMG has offices across India in

Ahmedabad, Bengaluru, Chandigarh, Chennai, Gurugram,

Hyderabad, Jaipur, Kochi, Kolkata, Mumbai, Noida, Pune,

Vadodara and Vijayawada.

KPMG in India offers services to national and international

clients in India across sectors. We strive to provide rapid,

performance-based, industry-focussed and technology-

enabled services, which reflect a shared knowledge of

global and local industries and our experience of the Indian

business environment.

Page 23: Time to open my wallet or not

Thank you

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although w e

endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it w ill continue

to be accurate in the future. No one should act on such information w ithout appropriate professional advice after a thorough examination of the particular situation.

© 2020 KPMG, an Indian Registered Partnership and a member f irm of the KPMG netw ork of independent member f irms aff iliated w ith KPMG International

Cooperative (“KPMG International”), a Sw iss entity. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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