Starcom, The Key collaborate on study on impact of economic downturn

Starcom and The Key, a qualitative research company, jointly undertook a study on the effect of the economic downturn. Some of the important findings of the study include the fact that SEC A and B behave completely differently towards the downturn.  While only 30% of SEC B households say they have been affected, 70% of SEC A say they have felt affected. Also, the categories that affect the SEC A and SEC B are different.

Elaborating on the study, Sandeep Lakhina, MD, Starcom said, “As the slowdown is now gradually affecting India, we wanted to see how is it affecting the consumers and what are they planning to do in the future. The fieldwork was done in December and January. We spoke to about 500 odd consumers across key cities, both SEC A and B.”

The study is divided into two parts – Spend Drift and Senti Meter. Spend Drift tracks the actual behavioural change in the actual spending habits of consumers across 18 categories and Senti Meter gauges the overall mood and sentiment and outlines broad consumer behaviour trends in the near future.

The categories that will affect the SEC A segment include financial planning and investment, luxury goods, holidays, jewellery and automotive. The categories which will get affected for SEC B include food and beverage, telecom, consumer durables, healthcare and local travel. Says Lakhina, “SEC A is definitely a lot more affected. They are actively looking at where they can save costs. For SEC B, it is more about inflation than the downturn.”

The study also predicts the return of the small store formats. “We are seeing a generic fall in footfalls across the bigger stores. People are stocking up less. However, that won’t be long term. I think we are ready for modern trade,” says Lakhina.

Some of the other trends that were seen in SEC A include cancellation of vacations, postponement of buying things like automotives, people looking for dual income or extra source of income and people spending more time at home rather than going out.

Some of the predictions of Senti Meter include people going back to basics like investing in gold, bonds and Fixed Deposits as the risk factor is going down. Another projection is that self gratification will get reduced and people will look for more do-it-yourself activities and multi-task.

Lakhina adds, “The overall mood about the slowdown is that we are all in it together. Thus there will be a lot more community activity and a lot more chat shows on different media.”

The study also predicts that women are more optimistic about the recession ending earlier than men.