A study done by Kantar Millward Brown revealed that 80% of Indian homemakers said that their daily purchases were impacted negatively, while 66% of homemakers said that they reduced their purchases as a result of the surprize implementation. But as new currency flows into the economy, marketers are hopeful that the spending crunch will begin to ease.
Kunal Jeswani, CEO of Ogilvy & Mather India, echoed the experience of consumers: "November and December 2016 were tough across the board for India. People struggled to find enough cash for day-to-day expenses and demand fell for anything that was non-essential," he said.
While that was the case for most people, a minority were untouched. "There is a small segment of consumers who were already comfortable with mobile wallets, credit card payments, online payments and e-commerce," Jeswani noted. "This segment was almost entirely unaffected and continued to consume as they always did. For the rest of India, consumption slowed substantially".
Some brands have used the post-demonetization spending crunch as an opportunity to be more creative in their advertising, a development that Aditya Jaishankar, Planning Head – South at McCann-Erickson India, believes is a positive thing. (For more on the advertising sector's response to demonetization, read Warc's report: What will India's demonetization policy mean for brands?.)
"Demonetization came at a time when companies actually were ready to ramp up production, post-September. Especially, FMCG companies had to cut down on production and it was tense situation where they had to keep reviewing on a weekly basis and play a wait-and-watch game," he said.
"Adversity brings out the best in us and so it has been with some marketers," he added. "While the nation has gone through a cash crunch in recent times which dampened consumer sentiment, marketers/advertising professionals have released their creative juices to ease the consumer's pain and try and forge a deeper emotional connect with their audiences."
Data sourced from Warc