Financial results for the most recent quarter seem to confirm that the worst is behind for most companies including those that are engaged in consumer interfacing businesses. The recovery in consumer spending is visible across almost all the sectors including automobiles, consumer electronics and durables, information technology and communication, apparel and footwear, and leisure and entertainment. Major organised retailers too, even though collectively modern retail still accounts for no more than 5 per cent of total consumer spending in India, are reporting a rise in same-store sales data. There are laggards and poor performers in each of these sectors, of course, but that is always to be expected in good times as well as not so good times.
With the scare of deficient monsoons somewhat mitigated in recent weeks, and with an early festive season this year, the prospects for growth in consumer spending look promising for the coming quarters. Does this imply that it would be back to the heady days of the recent past when the Indian consumers’ optimism about spending was at an all-time high and just about every manufacturer and marketer could expand their capacity very aggressively? The answer is no.
While India’s own gross economic data may not reflect a serious impact on India of the recent global economic meltdown, the ripples have affected India and Indian consumers very perceptibly and it is quite likely that the Indian consumers’ behaviour would have undergone a subtle but fundamental change in just these few quarters. There are several global consumer trends that seem to be applicable to the Indian consumers too, notwithstanding their very different demographic profile compared to rest of the world. The first key trend is the “shift to thrift” and a redefinition of what constitutes “value” in the mind of the consumers. While consumption in terms of volume is still steadily increasing, consumers want to save money everywhere and hence are seeking lower-priced, acceptable-quality options all around be it apparel and footwear, travel & leisure, food & grocery, or eating out. This trend is applicable to all income strata barring the minuscule one at the very top.
The recent economic crisis (and the fear it has invoked in India) has brought to the fore the importance of family ties. Hence, Indian consumers are already spending more time on family and home-oriented activities and hence there are more opportunities for products and services that can be offered to the whole family such as value-priced travel and vacation packages, home entertainment, and home décor and furnishing.
In times of stress, consumers are increasingly looking for “small wonders” — essentially small (low ticket size) products to perk themselves up more frequently. These need not only be related to small packs of juices and chocolates and other food products but also a host of other items including skin and body care, gifts for self, apparel, books and music etc.
Indian consumers were never really brand-loyal to begin with. They are becoming even more fickle and this trend will be one of the more enduring ones for years to come, as they seek more options both for the products and for the retail channel they buy from.
Indian consumers, like their counterparts in more advanced societies, are also exhibiting light shades of “green”. The trend towards becoming more conscious to the ecology and environment is going to gather momentum.
And finally, while Indian consumers were already highly socially networked, technology (mobile and internet) is making this social networking even more pervasive and powerful.
What does this mean for manufacturers and marketers of consumer goods and services? The most important message is that they must “re-connect” with their consumers even if such marketers have been in business for decades. This implies investing more in understanding the consumer, accelerating product innovation and speeding up new product launches, reengineering product attributes and the retail channel to offer more value to each consumer segment, creating better interactivity with the consumers extending beyond traditional advertising and point-of-purchase touch points, and reaching out to them /listening to them through their social networks.
