In the latest State of The Nation, Kiran Ramamurthy, Chief Operating Officer of Media.Monks India, explores a new India shaped by the dreams and aspirations of its vast population and rapidly changing media landscape.
Rising income levels. Increased access to technology. Changing social norms. A new India is being redefined on the basis of these factors. And it creates new aspirations. If there is one clear theme in India, it is that while dreams are getting bigger, more people than ever have the confidence that their dreams will come true. This article discusses four major factors affecting Indian consumers.
More exposure leads to higher value product purchases.
As information becomes more democratized and more consumers are exposed to different lifestyles and products around the world, premium and once considered niche products are becoming larger markets. Access to this information and these products is getting a huge boost from the growing e-commerce market.
With 200 million online shoppers and continued rapid growth, e-commerce has also enabled consumers to research products online and upgrade from plain vanilla to value-added products. This beneficiary can be seen across categories.
Consumer electronics consumers are moving to more advanced models that offer features such as energy efficiency, smart connectivity and automation. In fashion and clothing, consumers can discover new fashion trends and styles, and find unique and hard-to-find items not available in traditional brick-and-mortar stores. Up, I’m transitioning to professional hair care products.
There is a K-shaped economic recovery after the pandemic.
A sobering consequence for high-value products finding larger markets is the contradictory fact that there appears to be a K-shaped recovery in the post-pandemic period. While slowing, it shows that certain segments of the population have the means to buy more expensive products.
Two categories clearly illustrate this phenomenon. Looking at the passenger car market, four-wheeler sales are showing significant recovery in 2021 and 2022 after the past two years of weakness. However, two-wheelers are still struggling to recover from the plunge in 2020, and it looks like it will be a while before they reach pre-pandemic levels. Similarly, in the housing market, while low-end home sales have stagnated, middle-class and above homes (he $43,000+ homes in big cities) continue to grow.
Clearly, it will take some time for the mass market to recover. However, the growth we are seeing in the fast-moving consumer goods category is a silver lining, and this K-curve seems to indicate that it applies to discretionary and heavy spending rather than on-demand spending. .
Increased participation in financial markets
India’s middle class and HNWI are accessing financial markets at an increasing speed, indicating a growing desire to increase their wealth. Financial literacy has been at the center of this trend, driven by initiatives by governments and private companies. The most visible initiative is the ongoing campaign by the Association of Mutual Fund Players to get people to adopt the category.
The digitization of the sector has facilitated accessibility and further boosted adoption. The number of Demat accounts in India has grown from 7 million in 2010 to 106 million today, a 15-fold increase in just 12 years.
While participation in the stock market is growing, government initiatives are also leading to greater financial inclusion for more people. Jan Dhan Yojana, which aims to increase access to banking services for the unbanked, currently has nearly 479 million accounts.
3 big spending triggers
There are three big drivers for consumer spending in India. The season of celebrations, the season of weddings and, interestingly, the biggest cricket festival, the IPL. Festive seasons include Dussehra and Diwali. Diwali is perhaps the biggest buying season for consumers as people consider it auspicious to buy new things during this time. Online and offline sales were the highest during Diwali 2022, slightly surpassing pre-corona sales.
The “great Indian wedding” has become a metaphor for a reason. The cost of a wedding will most likely be three to four times her annual household income. It’s an event my parents have been saving money for over the years.
So is the IPL, the annual cricket extravaganza, although less likely to trigger spending. The IPL itself may not be the root cause of spending, but the timing of an IPL over the summer (hence the imminent purchase of household items such as air conditioners and refrigerators) and the “back to school” and the opportunities it provides. Massive reach to a large audience allows brands to communicate with new launches during this time.
