Food and medicines for the body, Subscriptions for the mind
Force majeure – an obscure clause in contracts that refers to an Act of God, which moved out of lawyerspeak to mainstream usage in a matter of weeks with the COVID-19 outbreak and lockdown. Overnight, Indians everywhere were forced to change how they work, play and live. The most creditworthy Indians had fewer avenues to spend, and more importantly, less inclination to do so, in the face of economic uncertainty. We looked at aggregate spending data to look for silver linings, and while the reality of steep drop-offs in discretionary spend is undeniable, with a (-51%) plunge in aggregate card spends from March to April, we saw the shoots of new behavioural patterns.
CRED members spent March preparing for lockdown. Across Delhi, Bangalore and Mumbai, we stocked up on grocery, insurance, medical, subscriptions, fuel and other utilities to tide us over. E-commerce spends on credit cards saw a marginal increase in Bangalore and Delhi (2% and 1%, respectively), while Mumbai spent a little less (-7%) in March as compared to February. Overall utility spends witnessed an increase in March followed by a drop in April.
Physical distancing in March and April forced us to look for new ways to spend time, and we turned to digital services to fill the hours with entertainment, learning and news. Spends on digital subscription services actually increased in April, reflecting that while food and medicines are essentials for the body, engagement is essential to our minds. Subscriptions saw a double-digit percentage increase in Delhi (18%) and Bangalore (11%) with Mumbai close behind (8%).
From groceries to food – Bangalore ordered in
Bangalore witnessed the highest spike in online spending on food and groceries as compared to Delhi & Mumbai. In March there was an increase in grocery spends and online grocery spends on credit cards across cities. Members preferred to order in as options for dining as the lockdown led to the closure of restaurants. Delhi and Mumbai increased grocery spends in March by 27% and 23% respectively, while Bangalore was flat. In the same period, online grocery spends in Bangalore increased by 44%, while the increase was 29% and 38% in Mumbai and Delhi, respectively.
Mumbai Prioritized Medicines and Insurance
Mumbai showed the highest spike in both insurance spends and medical spends in March with a 23% increase in insurance payments through credit cards as compared to 11% in Delhi and 9% in Bangalore, in March. Mumbai, on the other hand, perhaps as a precaution, saw credit card spends on medical expenses in March rise by 100% over the previous month, and fall by just -35% from March to April, in comparison to a much steeper drop in Delhi.
Travel came to a standstill, but Delhi tanked up
Delhi-ites, perhaps in anticipation, increased fuel spends on credit cards by 50% in March. Mumbai and Bangalore, interestingly, maintained the spending with no change from February. Travel spends across all three cities saw dips by -50% to -55% in March from February, and then undertook further cuts in April from March (-87% in Delhi, -86% in Mumbai, -85% in Bangalore).
How CRED arrived at the data
The data takes February spending as the baseline for month-on-month comparison to March. The first line indicates the percentage change from Feb-March, and the second line indicates the percentage change from March-April. The data is based on an analysis of aggregate credit card spends of CRED members located in each of the cities who consented to the analysis of their statements. This is NOT a percentage of spending but a percentage of change from February to March and March to April, aimed at providing direction on consumer behavior.