While it was clear that the pandemic had disrupted multiple facets of India’s consumption behavior, it was also interesting to note that the imperatives for winning consumers, in the long run, continued to very much be the same.
Post the lockdown last year, one could observe a shift in consumption trends, for example, the strengthening of digital channels and growth of health-led categories. The unexpected wave 2 caused a lot of emotional anxiety, but with supply chains operational, the effects accelerated marginally. In recent months, Indian shoppers have put aside fears of the next wave and indulged in discretionary spending which is on par with pre covid levels. Numbers from August and September indicate that store led fashion shopping is back with a bang while most appliance players are building inventory in anticipation of a bumper festive season. Projections show that in the next few months the primary focus of all players will be on structurally rebuilding innate consumer demand. BCG research suggests that there are three distinct imperatives for brands and retailers to jointly drive consumer traction and build relevance given the new shape of demand
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[padding right=”15%” left=”15%”]“The supply side needs to develop a deeper understanding of the current shape of demand, specifically from a category perspective”[/padding]
Post covid, across consumer categories, one can observe themes such as lesser and quicker shopping missions, higher bar on credibility of product source, higher value orientation, and the emergence of new occasions of usage (especially in-home). We believe that true insights around shifts in demand patterns are derived best when taking a consumption occasion view versus the conventional demographic or psychographic segment lens. For example, during covid it was observed that consumers made a shift from beer to spirits in the alco-beverages space. This was attributed to multiple factors such as non-preference of colder options, access, and affordability; however, this shift is best explained with an ‘occasions view’. Beer is a more social drink and due to curtailed out-of-home occasions and reduced occasions of social meetings, beer consumption did face a challenge. fell. By building this orientation choices around brand positioning, renewed marketing messages, alternate activation routes, and distribution get more specific and contemporary. With the value purchase per occasion increasing in double digits, this will become the new battleground for retailers and brands.
Secondly, players will need to clearly articulate their approach to establish and sustain a direct touch with their consumers. Covid has led to a distinct and positive shift in the number and nature of brand touch points. The challenge, as always, is to maximize ownership of the touch points but with the right economic model. Focus has always been on the touch point of purchase & sometimes after sales, but the spectrum of touch points has now widened. Today, a touch point can be on social platforms, marketplaces, mobile apps, brand-sites, exclusive and partner retail stores, wide range of media, out of home interactions, and even doorstep delivery. Each touch point comes with an importance index to the overall consumer and brand experience and is category sensitive.
Having the right metrics of common measurement of outcomes to assess where resources should be is a critical marketing task. Most pundits have declared a digital first approach as a bit of a templated answer to winning touch points. I agree only partially, and believe that the answer is much more nuanced. Yes, digital allows specific to target audience campaigns, clear view of full funnel metrics and a wide set of commerce enablement levers.
[padding right=”10%” left=”10%”]”Measuring the RoI across a wide range of consumer stimuli (both functional and emotional) is not always mathematical and requires a qualitative eye as well”[/padding]
With a rise in spot costs and OTT cost per view, digital spends may not always be the most prudent option. Many ‘digital transformations’ have struggled to deliver value and the learnings are well known. By focusing on organizational change management and prudent ‘light on feet’ technology investments, retailers are likely to have higher success rates of owning the consumer touch points digitally. Successful players will ensure that the business case and consumer metrics are logically and objectively defined and verified against numerical guardrails before disproportionately scaling digital investments.
The third opportunity we see is for players to believe in the ‘power of partnerships’. Significant ground needs to be covered to drive the consumer economy into an ‘always-on’ double digit growth trajectory and collaborations can make this journey faster and better. In recent years, the business world has become a lot more secular and it is no longer a privileged few that are scale or capability advantaged. Smaller growth tech companies now house next generational product and marketing capabilities, unique business model ideas, and tech innovations and platforms, while the larger players bring the power of scale of brands and distribution. There are myriad opportunities to partner and some of these have been capitalized upon by leading players in recent times. It is publicly known how ITC partnered with Dominos for the delivery of their FMCG food products during covid and with Amway to extend a premium range of health focused products. In fashion and footwear, players are happy to make exclusive distribution partnerships with the eB2B players to drive synergetic advantage. We truly believe that win-win partnerships will be very lucrative in the near horizon and can drive faster and more efficient growth.
Pursuing such strategies will require both a mindset and operating-model shift Proactive response along these dimensions will change the narrative from the perils of the pandemic to the opportunities it created for the next set of retail leaders.
About the author: Rachit Mathur is Managing Director and Partner and lead Retail and FMCG practice of BCG India
(Disclaimer: Views expressed in the article are personal)
