a quarterly report by - Technopak

53
perspective
a quar terly repor t by
Volume 02 / 2009
| Re-connecting with the Consumer
| Volume 02
Re-connecting with the Consumer
This article appeared in Business Standard on July 30, 2009
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% 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 of the recent global economic
meltdown on India, 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 the 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 thus, 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.