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Consumer Outlook | Willing spirit, weak flesh

Consumer Outlook | Willing spirit, weak flesh
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First Published: Fri, Jan 01 2010. 01 15 AM IST

Updated: Fri, Jan 01 2010. 01 09 PM IST
It isn’t easy to imagine the sort of pressure on public goods when a billion people—mostly young, slowly getting richer—aspire for a better life, especially when infrastructure and public goods are already of poor quality and in short supply. This is the environment in which the great Indian consumer story will “live” for the next several years, shaping consumer behaviour and throwing up unique market opportunities quite different from those of the past two decades.
Toilets; affordable housing; healthcare; old-age homes; schools and colleges; power and water; police; garbage clearance; bandwidth; buses, trains and metros; playgrounds and parks, and many such improvers of life are just not available. Domestic tourism is burgeoning, thanks to more money, but there are no decent public conveniences. Next to premium Mumbai apartments with breathtaking sea views, the rocks in low tide are an unending public toilet for people living in nearby shanties—people who own mobile phones, watches and televisions. What does this do to consumers on both sides of this divide, in terms of setting their priorities?
Thus far, the Indian consumer has managed to buy products such as cellphones, Chinese nylon saris and fairness creams even while “slumming” it in basic living conditions. Not just in slums, but in any middle- and lower-income household, the quality of living is way below the standard of goods owned. Will this continue? Will material aspirations be matched by a corresponding rise in aspiration for improved living conditions? It would be surprising—and sad—if this does not happen. The interesting question is: What will consumers in this environment choose to buy next?
If today is any indication of the future, consumers are already spending more and more on privately available products that improve their lives. An entire township—Gurgaon—is doing just that. We are all, whether bus or car commuters, spending on toll roads and bridges. The poor are spending on private schools that teach children English and computer skills, and giving up on free government schools; everyone, rich and poor, is paying for tuition, generators and private power. Private water tankers are familiar sights in middle-class neighbourhoods. The poor pay surcharges for the amenities they use; a “borrowed” power line from a neighbour comes at a higher price than from the government, and being allowed to live on the side of the road requires regular bribes.
Projected forward, this trend suggests that more and more people will spend a larger proportion of their income on such life improvers to avoid any dependence on public systems. As the logistics of life become increasingly difficult, services will emerge to fulfil them. Given the lack of formal full-time jobs, these services will be dominated by individuals just looking for a livelihood.
The top 20 cities in India continue to account for the lion’s share of consumption, and many are already experiencing horrendous traffic—lack of roads, lack of road planning, lack of public transport, and rising car ownership. Will families increasingly prefer to stay at home and entertain themselves? Possibly. Or head to the nearest mall? Probably that too. But when it is impossible to park at the mall, it stops being fun, and the frequency will decrease.
The big-ticket items of this next phase of consumption will be healthcare, education, travel, communication, transportation, entertainment, productivity tools, nutrition, and infrastructure (inverters, water storage gadgets, collapsible cupboards, efficient furniture). “Do-good” products will sell more than “feel-good” ones. A luxury goods marketer from overseas asked me whether the lack of enthusiasm for expensive branded handbags in India was because women didn’t understand the value of brands. If so, when did I think that would change? I explained that there were so many real things we needed to spend on—not the least of which are tuitions to make up for bad teaching in schools—that branded handbags became a low priority.
Consumer India does not possess the surplus income to simultaneously improve life as well as move up the value chain to purchase “nice-to-have” non-core items. In this dilemma, life improving products win out. This is a consumer base which has consistently shown us, in category after category, that it would rather stretch for more (better features at a higher price) than settle for less (fewer features at a lower price). Suppliers need to be able to tap into this.
Trying to grow higher order consumption while leaving basic needs unfulfilled is akin to building a house that does not rest on a foundation. We think we have managed to pull this off so far because we don’t have data on how, over time, the share of the wallet in paying for basics is going up and how that is happening. The cellphone has become a must in order to get one’s work done. The bottled water miracle is a result of the lack of potable water from any other source and the fear of falling ill. Coaching classes survive because too few college seats are on offer. What more we can get the Indian consumer to consume, in this same vein, will depend on the imagination of suppliers to cater to this blockbuster need.
Illustration by Jayachandran/Mint
Rama Bijapurkar is an independent market strategy consultant. Respond to this column at feedback@livemint.com
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First Published: Fri, Jan 01 2010. 01 15 AM IST