You have made some very interesting observations in your research. You have said that about 62% of the people are shopping to stay trendy. I am surprised because people have been indoors for eight months. Where is the need to stay trendy?
One of the things which is interesting is what consumers say versus what they do versus what they buy. These are three different things. We see a move towards small luxuries as people have been cooped up for seven-eight months and they are saying what can I buy, what can I do to make me feel good about myself? That is why you see this move towards trendy rather than just functional.
What about information centred shopping? 85% of buyers are becoming more research oriented before making the final transaction unlike earlier? Also 57% have adopted time savings services.
So let me start with the first point which you have made. In our research, we saw the rise of what we call the smart shopper. The smart shopper is looking for solutions and product services which help him or her optimise on three things: Number one, get the best value that is there; second, make sure that time is being saved because close to 90% of Indian consumers say that they are strapped for time. The third is really research. As you mentioned, 85% of people research about the product service that they are buying and that is driven by two reasons: number one, much more information is available now than earlier; and the second is consumers’ trust in brands is reducing and therefore they want certainty or guarantee that they are going to get what they are paying for. Obviously, this is higher in some categories.
If you look at the research that people are doing in categories like durables, auto which is a high ticket item is obviously seeing higher research. Second is categories where the degree of involvement is higher even though the ticket size may be lower. It may be anything related to health, anything related to their kids.
Explain about the rise of females in the family as decision makers, influencing big transaction decisions. Are people now tilting towards more value rather than fancy premium brands?
Yes the single biggest long-term consumer trend that is right now going unnoticed is the rise of the women shoppers or consumers. Across all countries in the world, women are the dominant decision makers across most categories. But if you were to rank order, India comes at the lower end of that spectrum where on an average, across categories, women make the decision 52% compared to 48% by men.
One of the least under-reported trends is the fact that something remarkable happened in 2015-16 when in the percentage of enrolment in schools, girls overtook boys and that has long-term implications because if you look at five years or ten years down the line, you will have more women graduating and entering the workforce. That is a long-term trend. Over the last decade, decision making by women is slowly and steadily increasing across categories. So what does that mean in terms of implication for companies across categories? Categories that were originally thought of as being more women focused as in household goods but also in categories like mobiles, auto, financial services, the women consumer are decision makers in 50% of cases. Therefore companies need to address that segment in a focussed manner.
It cannot be only about saying okay the colour of the mobile is pink. That is passé and there is a need to think about the women consumers in a segmented manner. It is something which companies are picking up and that is probably going to be one of the biggest trends on who is going to win five years, ten years down the line.
How are consumers looking for value because there is a financial crunch and are local customised brands being preferred over overseas brands?
This is a fascinating thing. If you were to scan the headlines, one would think that the premium segment in India is the one which is growing the fastest and that is absolutely true. But regardless of whether you are talking about mobile phones or refrigerators or detergents or snacks, what is referred to as the value segment is also branded product but which are at a lower price point.
In the case of mobile phones, those costing less than Rs 10,000 account for close to 60% of the market. In the case of refrigerators, under 250 litres fridges make 60% of the market. In case of detergents, those costing less Rs 60 per kilo is 60% of the market. So in order to be of significant size in India, playing in the value segment is critical across all product categories.
If one is focussing only on premium, then depending on the category you are addressing only somewhere between 2% and 10% of the market and therefore market leaders in India in order to gain scale have to have a significant presence in the value segment or the mid segment which depending on the category is anywhere between 80% and 95% of the market. That is the most important segment in India.
And if you look at the demographics of India, what BCG refers to as the elite segment are people who have over Rs 20 lakh earning per household. That segment is increasing the fastest but in 2020, that is still less than 6% of the overall population, which accounts for 12% of overall consumption. So, the top end is growing faster but in order to get scale, it is important to win the value segment.
Our research has shown another interesting thing about Indian consumers that they are now keen to buy Indian brands rather than international brands. We have been charting this for the last decade for the same category for similar value functionality. Ten years back, Indians would prefer international brands to Indian brands 70:30. Today Indian brands are preferred more than 50% of the time.
So if you have to win in India, you have to build a business of scale and having large value-focussed Indian brands is the sweet spot to be in.