Reflections of one of the most dynamic, volatile economic periods in India

The most pronounced transformation has been India's accelerated adoption of the digital way

A few days to close what has probably been one of the most dynamic and volatile economic periods in India, the 2010s. A decade where the GDP and private consumption doubled (compounded 7 per cent growth over 10 years) creating a wide range of opportunities, new forms of competition and lots of investor interest. India’s demographic advantage has played well to the script — employment, the income pyramid and consumption per capita have largely kept pace with projections. Taking advantage of hindsight, here are a few of my reflections of the decade gone by many of which I think will show full might only in the next decade. 

The most pronounced transformation of the past decade has been India’s accelerated adoption of the “digital way”. BCG’s proprietary research shows that in India, digital behaviour is best predicted by your digital age (which is the time span since you picked your first device) and hence the wave will now be ridden by women, the not so young, and Bharat, than India residents. Consumers are actively influenced through digital & social platforms, purchase their desires online and fearlessly advocate likes and dislikes to often an unknown world. Of the many interesting examples is the omni-channel community of cure.fit, which represents a large community (of over more than 500,000  & growing), and engages deeply on a passion centered on healthy living and fitness with many monetisation levers.

The buildup of retail data over the past years, has also thrown open the world of analytics-led insights to discover the next wave of relevant products and communication. Acing this new world of digital marketing and social commerce with real time assessments is a highly sought after capability.

Rachit Mathur, MD & Partner; Head, consumer & retail practice BCG India

The past decade has been the lifetime for India’s e-commerce industry. The new standard of access, value and convenience set by the leading players has been nothing short of revolutionary. The industry can stake a rightful claim to a 2-3 per cent share of overall retail sales today, projected to cross 15per cent in the next decade. The question is when will profitability be achieved, especially given the entry of another large player soon. Brands need to work with these platforms to drive penetration and in parallel, strengthen the core brand promise on owned channels through exclusive assortment,personalised services and loyalty moves. Adidas and Nike internationally do a fairly commendable job on striking the right balance on this front.

In the recent years, affluence and consumption in India has gradually spread to a wider base of cities. Over a decade, the share of Tier 2, 3 and 4 cities in India’s consumption is expected to grow from 27 per cent to 34 per cent. This is reflected in a steady adoption by consumers of organised sector products and brands. Locally relevant, correctly priced, well distributed products coupled with improving affordability has given a steady double digit growth to a wide range of categories in FMCG, small appliances and home. We believe this will continue to be a key source of growth in many categories such as hardware, basic electricals, staple foods, furnishingsinto the next decade.

With economic and social maturity, we have also observed Indian consumers over time redefine what “value” truly means to them — the answer beingquite category dependent. Consumers are happy to trade up where they see clear emotional and functional advantage but prefer low prices in undifferentiated areas. In recent times, “value” has often been associated with a unique experience or service (for example, a great restaurant or spa)and sometimes also with the non-cost of ownership (rental economy). The evergreen imperative hence is discovering the “value codes” for your category and consumer using next generational “mindiscovery” research techniques. The dividends for companies who continue on the journey of contemporary discoveryof “brand codes” can be very handsome. HUL, who symbolise this way of working has added over Rs 3 trillion of market cap over the last decade which is higher than all listed steel players valued today. Strong brands-led FMCG is by far the sector with the highest earnings multiples in recent times.

Beyond the “value” quotient, Indian consumers are now showing an association with brands which have stood for being authentic, original and responsible. More often than not, they encompass some Indian themes of Ayurveda, natural, vegetarian, healthy and humanly considerate. Contrary to my growing years, Indians today take pride in local brands and products and are way passed the notions of foreign quality. brands such as FabIndia, Manyaavar, Patanjali and Indulekha have established in their metrics of success how consumer trust is built on Indian ethos.

In my experience, whenever global references are applied to India — the insights are only partially correct. We are different, our challenges unique, our pace of change is fast but our habits and behavioural change slow (ask Thums Up fans). The next decade is expected to be even more unpredictableand transformational, but one thing will not change — India will craft its own method and pace to adapt to the new world.