After fighting a long battle against inflation, Indians bought gold, artworks and other valuable items which pushed the gross domestic product (GDP) growth to a high note during the second quarter (Q2) of 2021-22, according to reports.
According to a section of economists, the 8.4 per cent GDP growth in the last quarter was a good sign which relived the stress that the informal economy witnessed, amid the ongoing Coronavirus pandemic.
Talking about the items that were purchased by consumers during the second quarter of the fiscal year 2021-22, it crossed the Rs 1-trillion mark, the first-time phenomenon in recent history.
"Over the past two years, the liquidity infusion by all the central banks around the world has given impetus to overall spending and consumption patterns in consumers globally. The market performance over the past 2 years has added to this. The rise in inflation in luxury goods in 2021 and the increase in input costs indicates the sharp rise in demand and consumer spending," said the Co-founder of Zlade, Mihir Vaidya.
Now, while talking about the expenditure on these items, it stood at Rs 1.2 trillion which is a rise of 183.28 per cent year-on-year (YoY). Notably, valuables increased by 170.54 per cent as compared to the same period of the pre-COVID-19 year of 2019-20.
"The pandemic has resulted in a change in consumer behaviour as there is a growing trend to purchase more aspirational goods rather than just functional goods, the pent up demand which was the result of the lockdown led more people to move towards luxury and aspirational goods and services, this can be seen in the demand boost to valuable goods. As we enter the third wave, this trend will continue as again regular demand will get curtailed, which will then come back in the form of pent up demand," said Co-Founder of WiZ Care Reetesh Dhingra.
The development or growth pace of valuables was higher at 456.13 per cent during the first quarter of FY22. Be that as it may, it was predominantly a result of an extremely low base of Coronavirus instigated lockdown during the Q1 of 2020-21.
Sector-wise, the Founder of Arrivae, Yash Kela said that several industries including the interior design industry transition through a number of channels for delivering every single project with varying needs. "To get the desired look of a project the designers leverage their design strength and cohesively align diverse material categories and furniture to meet the unique customer requirements. The interior design industry thus has the potential to contribute 5 per cent of the GDP," said Kela.
Amid the ongoing pandemic and scare of the Omicron variant, Indian consumers are going to spend on luxuries like clothing, air travel and vehicles, according to a recent survey by Deloitte. Meanwhile, this also indicates that purchases will further contribute to India's GDP growth.
According to Vaidya, this trend will continue in 2022. The pandemic has accelerated the adoption of e-commerce globally. There has been a substantial shift in the personal grooming segment from brick and mortar retail to e-commerce in the US over the past 5 years with new age D2C men's grooming brands taking the lead. We see a similar pattern emerging in the Indian markets as well.
"FMCG D2C too has seen growth in the top end and the bottom end value pyramid, as demand for basics continues to grow along with high-end valuables, this again will continue at least for 2022 as money for curtailed industries like travel, tourism continues to flow into shopping for valuables and luxury goods," said Dhingra.
The peak of pandemic and strict lockdown restrictions made people more concerned about creating multifunctional spaces for managing offices, schools, and more from home. The trend we see taking 2022 by storm is of creating dedicated and customized working corners, study space, and more made-to-order storage solutions to save space, added Kela.