Decoding consumption – savings trade-off for Indian middle class in the new normal

What the paper says

Purpose Middle-class consumption and savings preferences have significantly transformed after the global COVID-19 pandemic. Contrary to expectations, demand for non-essential and experiential goods/services is increasing rapidly in emerging markets. This research aims to explain this phenomenon by examining the psychological mechanisms underlying middle-class consumers’ savings and consumption choices in the new normal. Design/methodology/approach Thirty-eight middle-class Indian consumers were interviewed. The data were analysed using a grounded theory paradigm and thematic analysis. Findings People resolve trade-offs between consumption and savings by making extreme choices or balancing. Reduced self-continuity perceptions and a preference for materialistic happiness lead to increased spending on non-essential purchases. A propensity for precautionary savings and a focus on sustainable, mindful consumption drive preference for savings. Balancing consumption and saving is guided by status quo behaviour and scope sensitivity for specific product categories. Originality/value For middle-class consumers, savings and non-essential consumption are interrelated, so they continuously trade between the two. Hence, to understand middle-class consumption, their consumption and savings choices must be studied together. Post-pandemic, the consumer psyche regarding preferences for savings versus discretionary spending/consumption has changed. This study contributes to the marketing literature and practice by exploring the psychological mechanisms underlying the altered savings-and-consumption trade-off of Indian middle-class consumers. It provides theoretical and marketing implications for the post-pandemic new normal times.