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The decade in consumer India

The decade in consumer India
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First Published: Mon, Jan 31 2011. 10 17 PM IST

Buying power: Consumption comfort is now here to stay, even more so because people realize that being a consumer gives them things that being a citizen does not. Pradeep Gaur/Mint
Buying power: Consumption comfort is now here to stay, even more so because people realize that being a consumer gives them things that being a citizen does not. Pradeep Gaur/Mint
Updated: Mon, Jan 31 2011. 10 17 PM IST
Buying power: Consumption comfort is now here to stay, even more so because people realize that being a consumer gives them things that being a citizen does not. Pradeep Gaur/Mint
The language of change in India is “slow burn”, “morphing”, creeping trends and “tipping points”, that is, of slow-paced, but steadily accelerating change, which eventually gathers critical mass and becomes the new reality. It appears like nothing much is changing—until we notice that change has happened already, almost by stealth. In addition, change happens when a lot of small changes, each insignificant by itself, occur together, causing a confluence or wave of change. Finally, change in any market is caused as much by what suppliers do (or haven’t managed to do). There have been many change waves and many tipping points that have occurred this past decade.
The confluence of change in Consumer India that started in 2000 has gathered force, and by the end of the decade has brought about profound change, when read together.
The “strong” India (productively occupied, incomes rising, access to life-enabling basic amenities) has gotten stronger, and is getting larger. The worry of 2000 that the strong India would be swallowed up by a weak and dispirited India several times larger than it is now no longer true. The creeping trend of the decade has been the 90 million people of Bihar leaving the realm of weak India. Road connectivity has improved in leaps and bounds— the data is there for all to see and experience—and large parts of the rural hinterland are now connected with roads and, barring a few states, very well connected indeed. Weak India has been connected firmly now to strong India, because where there are roads, interactions of all kind happen. The facilities that urban India has, the opportunities for money earning and avenues for money spending are now being “taken to” rural India.
Steady income growths have happened and on an average, an Indian household has improved its by income about 1.7 times. It is also a fact that the top 20% earners in India have between 2002 and 2010 increased their share of the income pie by close to 10% (estimate by the National Council of Applied Economic Research’s Centre for Macro Consumer Research). The income of the top 20% crossed the 50% of total income, both in rural and urban India, last decade. The income of the lowest 20% earners in India also increased about 1.4 times between 2005 and 2010, and more if one were to look at the entire decade—so it is not that the tide of economic growth is not lifting everyone with it. However, if one were to think about the share of the income pie, their share has declined by a little less than 1% in rural India and by 2% in urban India. For businesses, this means that serving the top 20% of urban and rural India, now mercifully a continuum connected by roads, telephones and television serials, is where serious growth in profitable consumption will come from.
Consumption comfort is now here to stay, even more so because people realize that being a consumer gives you things that being a citizen does not, including education, 24x7 power and clean water. The poverty effect is fading. The price discovery mechanism, thanks to all the sales of rural land, in recent times has shown even marginal landholders what the value of their assets are. Seeing more consumption fuels a desire for more consumption, and in the last decade, Consumer India has seen many new things. It has seen prices coming down and has seen new price-performance points, even if many of them were set by Chinese goods! The consumer has learnt how to learn—and is willing to adopt new ways of doing things, as long as they make sense. The liberalization generation has pretty much come of age—and though its impact on shaping new consumption patterns will be felt in full swing over this coming decade, its consumption comfort is at a whole new level compared with their parents. Both pragmatic consumption to improve the quality of living as well as “feel good” consumption will boom—at all income levels.
Sophistication levels and tech friendliness of Consumer India have exploded this last decade, in many interesting ways. When Indian Railways enabled online booking with a network of agents as well, it not only enticed people like you and me to go to places where planes didn’t go, but also explained the power of the Internet to a huge number of people of all ages and places in the social structure. In tourist locations, you see practically uneducated people handling sophisticated video and digital cameras with ease and not just nervously clicking on a specified button! The cellphone has made vast swathes of the country understand messages, pictures, music downloads, missed calls, and all the rest of it. The driver of a car had to explain to me how the sensor tag on the car worked, as it sailed through the Gurgaon toll road. He said that it is like a mobile phone; it has to be charged and it talks to the big phone, which is in the booth, by signal. New airports, new metros, sea links, malls, all have information imparting value, and make for more sophisticated consumers. There is no doubt that tech comfort and sophisticating of the masses are happening.
Perhaps, if one had to pick three things that have changed Consumer India for ever, it is the growth in visible consumption that will breed more consumption—what was the exception to own has become the norm; it is the empowered and discerning consumer, both rich and poor, who is saying, “I will not be seduced by low-grade marketing gimmicks, but I will unhesitatingly open my purse to hard reasoning.” And the good news is that with the blurring of urban and rural boundaries, physically and in the consumer mindset, we at last have markets of scale. Many of them, not just one, but then in India a small percentage of a large number is a large number!
Rama Bijapurkar is an independent market strategy consultant, and author of We Are Like That Only, Understanding The Logic of Consumer India.
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First Published: Mon, Jan 31 2011. 10 17 PM IST