EMERGING INDIAN CONSUMER: A 'LEAP' YEAR AHEAD
As another year yields to a new one, the race to grab the attention (and wallets) of emerging Indian consumers, heats up even more. Amidst the cynicism of double dip and optimism of robust Indian economy that is beating all projections to emerge as the third largest market in the world, the Indian consumer is at an inflexion point of consumerism.
The ‘optimist’ Indian consumer who was ‘celebrating’ in 2006 with mega-malls, buying super big homes, bigger bikes and watching cinema in style is sort of gasping for breath at the moment. It is time for the Indian consumer to pause and reset the direction before the next race commences.
(INSET: Mini-Vending on 2Wheels: India Needs More Platforms: Photo: Manoj Kothari)
In the year that saw ‘Jasmine’ in full bloom from the Middle East to India, mobile phone customer base that rose to 800 million and Internet connections to 12 million, consumer awareness and articulation has touched new highs. Sensex has been flirting around the 16000 mark and the government is routinely getting cornered on the issue of corruption. These developments have caught the public fancy. Single brand FDI is now allowed 100% even as 60% of malls in India lie vacant leading to fears of a supply-side glut in the orgainsed retail sector. This in turn has sparked fears of a retail bubble with profitability mirage thrown in for good measure. Car launches in the country are about to touch the figure of 50 a year, as a direct indicator of what this market means for the global carmakers. Legendary innovations that are being discussed as case studies in many colleges abroad like Tata Nano, the ultra low cost (ULC) car and chhotu-cool refrigerator of Godrej are not selling as they should have been. Maruti is still the king with several lakhs of Swift cars being booked well in advance with a huge waiting period, while India centric innovation by Toyota (Etios) is yet to catch consumer fancy. These signals are mixed. But I clearly see the Indian market entering its Phase-3 of the post-liberalisation consumption. Here are the phases-
PHASE-1: LINK & LEAP: After the Western companies discovered the size and hunger for new consumption post liberalisation, they rushed to dump their ready inventory into the Indian market, leveraging existing network of local companies and distributors. Several collaborations took shape of which very few survive today. Indian companies learnt the game of scale, while their foreign counterparts learnt the tricks of handling complexity of Indian market and they parted ways. FIAT & TATA JV survives till date but may not be for long!
PHASE-2: BAZAAR-AZAR: Second phase saw the rise of home-grown consumer companies that took advantage of increasing consumption and scaled up their operations in the times of less competition. King of Indian retail, Future Group led the trend leaving the early movers like Shopper Stop far behind. Some touch of Indian habits like open-grain retailing within air-conditioned Bazaar were some touches of localisation of the new formats. Launch of Tata Nano car falls in the same category. This phase made use of Western best-practices but most of the output in this phase resembled prototypes rather than finished products. Late entrants in online retail like Flipkart is one such example as well. It will be a while before Nano as an innovation, or Tata as a brand, catches the fancy of Indian consumers as Maruti did years ago. Several layers of operational perfection are long overdue. Mind you, it is not the lack of INNOVATION, but diligent attention to details thereof.
PHASE-3: BRAND BOULEVARD: After the BazaarIT phase, the next one is about springing up of small chains which will fill in the gaping holes, in the quality of delivery left by larger companies in BazaarIT phase. Innovation would be still at similar levels as in the previous phase but greater seamlessness would be evident in the consumer experience. More personalisation and a touch of more tolerant Indian hospitality will be visible across products and brands in this phase. One can already see that FabIndia as a brand is creating visual fatigue in its loyal customer base. Malls selling the same brands all over at the same price are now left with only location or food court as advantages. Brand Boulevard will open up opportunities and vistas for smaller, better-integrated and better-designed brands in such a scenario, either to collaborate with bigger ones or to establish independently. I anticipate this phase from now till the end of 2015.
PHASE-4: PERMA-NATION: Real power of Indian innovation will unfold only in the period 2015-2020. In this period, the biggies would have optimised their operational glitches and smaller players would have chalked out the expansion path. In both the cases, a mature Indian consumer would have driven home the point about judicious choices. Disruptive, frugal or just adjacent innovation; the consumer wouldn’t care less. What would matter is innovation which makes him/her more efficient, buoyant about life and provides a sense of permanence. More clues on Innovation for India which will blossom during this phase are in my TEDx talk- http://www.youtube.com/watch?v=RUuIu2KvNCE
The ‘optimist’ Indian consumer who was ‘celebrating’ in 2006 with mega-malls, buying super big homes, bigger bikes and watching cinema in style is sort of gasping for breath at the moment. It is time for the Indian consumer to pause and reset the direction before the next race commences.
(INSET: Mini-Vending on 2Wheels: India Needs More Platforms: Photo: Manoj Kothari)
In the year that saw ‘Jasmine’ in full bloom from the Middle East to India, mobile phone customer base that rose to 800 million and Internet connections to 12 million, consumer awareness and articulation has touched new highs. Sensex has been flirting around the 16000 mark and the government is routinely getting cornered on the issue of corruption. These developments have caught the public fancy. Single brand FDI is now allowed 100% even as 60% of malls in India lie vacant leading to fears of a supply-side glut in the orgainsed retail sector. This in turn has sparked fears of a retail bubble with profitability mirage thrown in for good measure. Car launches in the country are about to touch the figure of 50 a year, as a direct indicator of what this market means for the global carmakers. Legendary innovations that are being discussed as case studies in many colleges abroad like Tata Nano, the ultra low cost (ULC) car and chhotu-cool refrigerator of Godrej are not selling as they should have been. Maruti is still the king with several lakhs of Swift cars being booked well in advance with a huge waiting period, while India centric innovation by Toyota (Etios) is yet to catch consumer fancy. These signals are mixed. But I clearly see the Indian market entering its Phase-3 of the post-liberalisation consumption. Here are the phases-
PHASE-1: LINK & LEAP: After the Western companies discovered the size and hunger for new consumption post liberalisation, they rushed to dump their ready inventory into the Indian market, leveraging existing network of local companies and distributors. Several collaborations took shape of which very few survive today. Indian companies learnt the game of scale, while their foreign counterparts learnt the tricks of handling complexity of Indian market and they parted ways. FIAT & TATA JV survives till date but may not be for long!
PHASE-2: BAZAAR-AZAR: Second phase saw the rise of home-grown consumer companies that took advantage of increasing consumption and scaled up their operations in the times of less competition. King of Indian retail, Future Group led the trend leaving the early movers like Shopper Stop far behind. Some touch of Indian habits like open-grain retailing within air-conditioned Bazaar were some touches of localisation of the new formats. Launch of Tata Nano car falls in the same category. This phase made use of Western best-practices but most of the output in this phase resembled prototypes rather than finished products. Late entrants in online retail like Flipkart is one such example as well. It will be a while before Nano as an innovation, or Tata as a brand, catches the fancy of Indian consumers as Maruti did years ago. Several layers of operational perfection are long overdue. Mind you, it is not the lack of INNOVATION, but diligent attention to details thereof.
PHASE-3: BRAND BOULEVARD: After the BazaarIT phase, the next one is about springing up of small chains which will fill in the gaping holes, in the quality of delivery left by larger companies in BazaarIT phase. Innovation would be still at similar levels as in the previous phase but greater seamlessness would be evident in the consumer experience. More personalisation and a touch of more tolerant Indian hospitality will be visible across products and brands in this phase. One can already see that FabIndia as a brand is creating visual fatigue in its loyal customer base. Malls selling the same brands all over at the same price are now left with only location or food court as advantages. Brand Boulevard will open up opportunities and vistas for smaller, better-integrated and better-designed brands in such a scenario, either to collaborate with bigger ones or to establish independently. I anticipate this phase from now till the end of 2015.
PHASE-4: PERMA-NATION: Real power of Indian innovation will unfold only in the period 2015-2020. In this period, the biggies would have optimised their operational glitches and smaller players would have chalked out the expansion path. In both the cases, a mature Indian consumer would have driven home the point about judicious choices. Disruptive, frugal or just adjacent innovation; the consumer wouldn’t care less. What would matter is innovation which makes him/her more efficient, buoyant about life and provides a sense of permanence. More clues on Innovation for India which will blossom during this phase are in my TEDx talk- http://www.youtube.com/watch?v=RUuIu2KvNCE
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