how India’s top 1% spent their money

the pandemic affected everyone’s physical and mental health. it felt like a never-ending test that people had to endure. even if it was the right thing to do, staying locked indoors was difficult. and everyone was eager to step out of their house and hit the beach or head to the hills. anywhere but here. anything to escape the monotony of this new “normal”.

as the second wave subsided, everyone heaved a collective sigh of relief. for CRED members from Delhi, Mumbai, Bangalore, Pune, Kolkata and Hyderabad, this sigh of relief reflected in their spending. it’s no surprise then, that the total share of how much CRED members were spending on leisure and travel out of their total spends, grew from 14% to 21% during April and May 2021.

CRED’s study reflected many such insights into consumer behaviour. it was conducted between — April 1, 2020 to May 31, 2020 (the first wave of pandemic), January 1, 2021 to March 1, 2021 (pre-second wave), and April 1, 2021 to May 31, 2021 (second wave). 

some key findings:

people are spending more on self-care

1. the leisure industry is often condensed to the acronym REST — recreation, entertainment, sports and tourism. if you purchased a Netflix subscription, sportswear, or camping equipment, for example, it would count as a leisure spend. such spending had dropped to a low 14% of total spends during the first wave, before bouncing to a peak of 21% during the pre-second wave period. during the second wave, it was at 19%, indicating the desire to indulge was on the rise again.
   
2. in the first wave, travel spending almost came to a standstill. however, with restrictions and mandatory testing lifted, it surged to 10% pre-second wave and dipped little, commanding 8% of total spend during April and May 2021. many workplaces got in on the act as workcations and staycations became a trend. who wouldn’t want to end their workday on a beach in South Goa?

digital wallets continue their growth

1. it was hard for people to go to ATMs, especially due to restrictions. this prompted Indians to rely on contactless digital payments. during the second wave period, spending through digital wallets averaged close to 61% of the total. this is below the first wave period (67%) but higher than in the pre-second wave (58%)
   
2. the number is likely to have jumped higher last month, as UPI set new records for transaction volume (2.8 billion) and value (INR 5,47,373 crore) in June.
   

youngsters are spending less on banking and travel, more on leisure

1. among those aged 18-25, the contribution towards banking decreased across all three periods, from 8% to 6% and then to 5% of the total spend in each period. however, during the first wave, online banking services saw major adoption (13%) amongst this age group.
   
   a similar trend was observed in the age group of 30+ in pre-second wave (10%) and during the second wave (8%) periods, with people spending more towards digital banking services.
   
2. consumers in the 18-25 group instead spent more on leisure goods. a lot more. the share of leisurely purchases out of the total spend rocketed from 15% during the first wave to 22% pre-second wave and 21% during the second wave. why say no to the little pleasures in life?
   

live and spend for today became the mantra 

1. after the second wave, as vaccinations ramped up, the youth spent more on today than tomorrow. for those below 30, expenditure on healthcare and wellbeing took a complete backseat during the second wave.
   
2. seasoned travellers have missed their hotel stays. amongst people above 30, there was generous expenditure (10% of total) on vacations and entertainment, primarily hotel bookings, in the same period, which coincided with the resumption of flights.

here’s what Kunal Shah, founder, CRED, said about the findings of this study, “affluent consumers are relatively insulated from economic headwinds. While CRED members - a community of financially responsible Indians - curtailed spending in the first wave, they were more confident spenders during the second wave as they increased or maintained consumption before and during this period. it is clear that as consumers, especially older, get comfortable spending online, merchants with strong digital operations, offering experiences and smart payment options are well-positioned to capture these spends.”

enjoy responsibly

while the worst may be behind us, this still isn’t the time to throw caution to the wind. not completely, at least. so, as you go on that long awaited dinner date in your favourite restaurant, remember to mask up, stay safe and follow all the rules.