Cross Category Trends
THE YOUTH FACTOR:
As older Millennials start families and otherwise mature, focus is shifting to India’s large population of younger Millennial and Gen Z consumers. In total, Indians ages 15 to 24 make up nearly 18 percent of the country’s population, with their younger siblings ages 0-14 contributing another 27 percent of the country’s populace. As mobile-first, digitally native consumers, these young people are already driving their families’ household consumption in ways not seen in previous generations – for example, by initiating family orders on services like Swiggy and Zomato. They are keen to try – and quick to master – new content and gaming platforms like TikTok and PUBG, which have given young Indians a set of cultural references and sensibilities that are all their own. As is true of their older Millennial siblings, Indian youths are hungry for new experiences and wary of ownership, but are also distinguished by an even stronger social consciousness (which doesn’t necessarily conflict with a respect for tradition, though it sometimes does).
After years of thinking dominated by the urban-rural binary, companies have now realized that it is the places in between – the country’s second, third, and fourth-tier cities and towns – that offer the greatest pockets of untapped growth. Tech startups like Swiggy and Zomato have built much of their growth on hungry, underserved urban consumers outside of India’s biggest metros. In the brick-and-mortal retail world, brands like V-Mart and 1-India Family have grown rapidly after betting that smaller town buyers would flip for fashionable items at a value-conscious price; they are confident that this focus on affordability will help them withstand expansion pushes from Amazon and Flipkart, which are also eyeing India’s middle cities and towns. In truth, all brands should start moving their strategies beyond the metro and the rural. The demographic trends are undeniable: by 2025, in addition to its nine metro areas India will also have 31 fast-growing cities, 500 vibrant small towns with populations between 50,000 and 100,000 people, and 50,000 developed rural town with populations of at least 10,000.
From nearly every side, forces are conspiring to give Indian consumers more choice than ever before. Telecom plans and television channels are being unbundled and unleashed thanks to new regulations and greater competition. Online markets, booking sites, and delivery services have created infinite virtual store shelves. New foreign entrants like Ikea exist alongside rising Indian brands that offer heritage and innovation. And then, on top of the choices to make about what to own, Indians now also must choose whether to own at all, thanks to a variety of tech-enabled services like Uber, Ola, and Swiggy (why buy a car or certain kitchen appliances?). On the face of it, this may seem like bad news to brands, but in reality strong brands can win by helping consumers solve a new kind of problem: how to cut through and navigate this thicket of choices, by offering trusted solutions and useful information.
According to Kantar IMRB, the amount of time the average Indian adult spends outside the home has steadily increased, from 5 hours the beginning of the past decade to more than seven hours today. And while this may lead to changes in certain household rituals (for instance, a decline in home-cooked meals), the BrandZ™ performance of categories like household goods, home delivery, and food and drink continues to exhibit marked strength. That’s because although people are spending less time at home, the concept of home is still a highly treasured one. In fact, the value of home as a place of sanctuary and comfort become even more important for Indians in stressful, uncertain times. It’s no accident that some of India’s most important tech-services disruptors (from Amazon to Swiggy) help people to regain precious time at home by delivering goods to front doors. And when people are at home, they want to spend more time relaxing and connecting to family, and less time performing chores – hence the continuing importance of innovation in the growing household goods category, as well as the growth of at-home service platforms likes HouseJoy and UrbanClap. Because of this preference for staying close to home, consumers’ focus has shrunk from a “city-wide” range of existence, to a hyperlocal preference for getting everything they need within a smaller neighborhood radius.
NEW DIGITAL PLATFORMS
Smartphone usage has India continued to rise – user numbers increased by 18 percent in 2018, the fastest rate of growth in the world. This is due in no small part to the emergence of Jio, and a subsequent decline in data rates caused by renewed competition among telecom providers. And what are Indians doing with all this new, cheap data at their fingertips? Exploring new platforms for communication and entertainment. WhatsApp exploded in popularity in the runup to elections, while ad-supported streaming and new social media platforms like TikTok have captured the imaginations of younger users (albeit with some hiccups due to regulatory controls). Brands are still figuring out how to capitalize on these new mobile platforms, but it seems clear that they will have to balance social media’s capacity for intimacy and fun against the risks of misinformation and digital “piling on.”
SEARCH FOR STABILITY
“Disruption” has been the driving concept in Indian business in the past decade, and for good reason. Many of the brands on the BrandZ™ ranking owe their success to disruptive breakthroughs. But as India enters a new decade and faces no small amount of macroeconomic uncertainty, brands shouldn’t neglect the importance of stability in setting themselves up for future success. Disruption alone, or disruption for disruption’s sake, takes companies nowhere. Instead, even the most successful disruptors have built their brands upon stable infrastructural foundations of reliability and trust. Disruption and stability go hand in hand. This is also true in the realm of consumers’ needs and wants; although people thrill to trying new experiences and want to improve their lives, that’s just one aspect of Indians’ psychic profile. After a contentious national election year, and amid a global backdrop of strife and uncertainty, there is also a countervailing desire for nostalgic pleasures, familiarity, and reassurance. This is always the paradox: consumers crave change, but also seek out comfort and reliability. Brands should make sure that they provide Indians with both.
Just as brands should not forget stability in pursuit of disruption, it’s also true that they should remember their higher brand purpose. That purpose matters even today’s growth-obsessed age is not as much of a surprise as you might think: consider how the same young Indians who’ve grown up in this era of digital disruption are also a generation that exhibits a strong social conscience. Exhibiting brand purpose can take the form of large-scale corporate responsibility initiatives that aim to improve society, or simply a focus on making people’s lives better day to day – or both. BrandZ™ data for 2019 shows that companies viewed by consumers as having a strong focus on corporate social responsibility or improving daily lives outperform those that don’t in measures of brand value.
NEW FORMS OF TRUST
Trust, too, is a brand asset that should not fall by the wayside in the pursuit of disruptive growth. That said, brands’ paradigms of securing consumer trust should evolve with the times. In the past, it may have been enough to think of “trust” as the belief that a brand’s products would work safely and as advertised. Today, however, the BrandZ™ 2019 data for India shows that to maximize brand equity, this more basic form of trust should be supplemented with other forms of reassurance. These include concepts like integrity (the perception that a brand is open and honest); inclusion (the perception that a brand treats all as equals); and identification (the perception that a brand truly cares for its customers).
Cash is still king in India. But that shouldn’t obscure the genuinely exciting developments that have emerged in India’s payments space. The government-backed Unified Payments Interface system is up, running, and bearing fruit; the volume of UPI transactions have grown by an order of magnitude over the previous year, and now stand strongly alongside debit and credit transactions as an alternative to cash payments. Encouragingly, the success of UPI also seems to be a situation of “a rising tide raising all boats”; it’s been equally beneficial for established banking players as it has been for new FinTech startups and digital wallet offerings. In the near term, the goal for brands and retailers should be an “all of the above” payments strategy – enabling consumers to pay however they want, on demand.
According to GroupM figures, India continues to be the fastest growing major media in the world, with projected growth in ad spending expected to top 14 percent in 2019. For the moment, the question of digital versus traditional advertising is less of an “either / or” and more of a “yes, and.” This is in part because rising wealth has created bigger audiences for advertising across the board. While digital advertising continues to grow, and should reach an estimated 20 percent of India’s ad spend in 2019, television advertising is also growing strongly as well, thanks in part to audience expansion as rising consumers buy their first TVs. New rules from the Telecom Regulatory Authority of India should also lead to lead to better targeting options for TV advertisers in the coming years, while new platforms like gaming offer continuing areas for expansion and growth.