Look Ma’m, No Consumption!

A pan-India empirical study involving urban middle class households shows that over the last year, the average monthly spending on apparel, eating-out, non-essential impulse buying, etc has come down by over 40%. Frequent lockdowns and the habit-changing WFH culture have reduced trips outside home and put a full stop on binge buying.

The situation in rural households is no different. A major study by Gaon Connection states that the rural households have changed their diet habits drastically – stopped eating outside food totally and become more vegetarian. Many are embracing simplicity and going back to the ancient heritage to stay immune to overcome the pandemic woes.

The latest GDP figures and the earlier RBI survey validate the above. The consumer confidence index fell to a record low at 48.5 (100 is the level that divides pessimism from optimism). Things are unlikely to change course till 2022. Further, the household spending has dwindled with essential spending showing significant moderation and non-essential spending contracting.

Even as we stare at an imminent third wave, it looks like consumers and businesses have embraced three words that were alien to them till recently: Moderation, Minimalism and Pragmatism. If this is the case, many sectors will find growth prospects challenged by non-consumption: Hospitality and travel, fashion, tourism, aviation, real estate, and automotive.

When private consumption drives as much as 60% of the GDP, won’t the continuing pessimism spell doom for India’s 5T dollar dream? The economists may propagate the Keynesian fundamentals of spending as the most critical factor for economic growth, but it doesn’t augur well with conventional financial wisdom of saving more for personal welfare.

It appears that the economists, while in agreement on large tax changes to move the economy, don’t have a clue on exactly how it works and how consumers respond to policy changes. Value judgements galore when policy issues are evaluated, and madam finance minister may want to invite diverse views.

Non-consumption is probably the biggest competition for most businesses now, and with frequent lockdowns as a result of poor vaccination drive, it will remain a huge challenge. Here are some thoughts on “opportunity hunting”, from within, and outside, in non-consumption irrespective or in spite of government policies:

· Garner insights on “jobs to get done”. Traditional market research has always found that what customers say might not represent what they actually do – In focus groups, they express preference for top-end fashion clothing but actually buy mass apparel. Observing them in actual usage situation will provide lot of insights. This can move into digital tech and combine it with advanced analytical tools to get more granularity. Consumers in lockdown, and/or scared to go out, can get things picked up from elsewhere via Dunzo at a fraction of efforts they would have otherwise expended. Your favourite restaurant now delivers a gourmet menu at your doorstep at competitive prices. ITC has created a Masterchef selection at very affordable price points. “Cash-on-delivery” was the result of an insight from customers who had a fear of either safety or product quality. A surprising number of kirana stores have started contact-less home delivery.

Use multiple methods to unearth insights – listen more to customers online as they chat, review in social media using such services as Hyve, Winkle and Google Analytics. Plan to co-create new products with customers in online platforms such as Innocentive, CrowdWorx or Synthetron. Hotels are re-purposing retreats for remote working, and offering “staycation” in metros for those who can’t afford exotic locations. FMCG giants P&G and Unilever have co-created shampoos and cleaning products – Tressemmé and Swiffer.

· Tune in to emotions. Remember how the PR gaffe at WnatsApp on privacy resulted in mass migration to Telegram a few months ago? Likewise, the Ladakh issue and the resultant ban on Chinese apps helped many startups to act quickly. Consumers express various emotions differently now – frustration, anger, fear, love and anxiety. These emotions are good routes to unearth non- or under-consumption areas in their lives. The existing offerings have not been able to address their needs and therefore an opportunity to disrupt. The proliferation of mobile wallets is an example of disruption brought out by the frustration of customers during the demonetisation. Research also shows that the emotions of customers can be measure and strategically targeted to drive behaviour. Recent spurt in cause marketing shows how consumers support issues close to their heart.

· Assess your opportunity portfolio. How many extensions your product has? Have you been re-engineering instead of retiring products? Are your employees consuming your offerings and what can b done to improve non-consumption? Are consumers opting for cheaper, simpler, “good enough” solutions? Consumers need to be excited to move out of the comforts of homes and choose your products. Companies do too much re-engineering and charge more when the need is for lower costs and reasonable performance. Recall how the MP3 players made the hi-fidelity Walkman history. Use new market uncertainties and newer technologies to drive your opportunity portfolio for the futures.

Aggregate resources lying unused. An opportunity to address non-consumption is in resources that are under-utilised. For instance, appliances need maintenance, and skilled labour is lying idle. Aggregating and training them to deliver cheaper and faster services will relieve companies of delays in servicing. Recall how cellular operators used kirana stores to sell pre-paid cards and recharge, creating a network closer to consumers, at very little costs. Banking services for the un-bankable is another example.

· Scout areas where consumers risk stretching the boundaries. Years ago drivers used to install anti-radar devices in cars to avoid speed tickets. Although illegal, the chance of getting caught wasn’t high and people who love speed took the risk. Counterfeit movie DVDs and books used to be a rage for many consumers until Netflix and Kindle became easily accessible. Remember also how music downloads changed the non-consumption. In the second wave of the pandemic, people bought oxygen concentrators and Remdesivir even though medical supervision was mandated for their use.