DR. PRADEEP SALGAONKAR discusses various consumption trends in the market and how businesses need to devise strategies to reach out to consumers.
A close family member of mine, a young working woman-fully empowered, was much excited about the annual event (and the fun) that they would be having at their work place shortly. The event was two weeks away and she had started her self-preparations for the same – which dress, which jewelry, which footwear to wear etc. The first thing she decided was to shop online. She browsed through the Amazons, Myntras and Nykaas of the online world and ordered all the stuff that she wanted for the occasion. All items got delivered in few days’ time and according to her expectations. She was happy. However, when she opened her wardrobe and tried to make place for the new dresses she had just got, she discovered something familiar sitting in the wardrobe. As she tried to remove that familiar dress, to her dismay she found that it’s a similar dress – one could call the same dress, like the one which is just delivered. Slowly her memory started telling her that this is the dress she had purchased a few months back for some other function, but had not worn it and it was lying unused in the wardrobe. Now she sat with two same dresses standing in front of the wardrobe mirror wondering ‘what next’.
This is a modern day consumer who enjoys the process of shopping and not really the end product. The joy of shopping is much more enthralling than the actual use of the product. With higher disposable income in hand, decision making is instant. Just like this customer, there would be so many others around who would buy products merely for the joy of shopping. Research has shown that people get high on shopping spree (online or offline), just enjoying the experience of browsing through merchandise, sensing it, feeling its characteristics and touch and trial, wherever possible.
The ‘Gen Y’ Impact:
The overall consumption patterns in India have changed over the years whereby consumers are consuming the experience more, rather than the product per se. So also the consumer spending has increased manifold, the figures at the end of fourth quarter of 2022 being over 22.2 trillion rupees across India.
The Indian consumer today, chiefly constitutes of the Generation Y (also known as the millennial) born between 1990- 2000 and Gen Z (born after 2000). India is witnessing a higher share of millennial and Gen Z as a percentage of the total population. As of 2021, the share of millennials and Gen Z in the country’s population stood at 52 per cent, higher than the global average of 47 per cent.
However, of the two, the Gen Y, numbering over 450 million in India, is the major consumer section today. The tech-savvy mindset, large size and sheer purchasing power makes them consumers of the day. Their consumption, as they are entering the workforce and starting families, is a big potential for private consumption in India and will play a significant role in India’s economic growth.
The Gen Y population, with a median age of 27 years, is more experimental by nature, enjoys experiences more than ultimate product, is more inclusive and like intermingling with different social structures and cultures. They are hard pressed for time, but possess purchasing power, having started to earn at a much younger age and hence more inclined to experimenting, experiencing and spending on more aspirational and better products providing value for money.
Though Gen Y are big ticket spenders, businesses should not expect loyalty from these customers. They are habitual switchers and are increasingly switching between brands and retailers with comparable price, quality, experiences and discounts. Brand loyalty or retailer loyalty is probably not something that they will stick to, because of the amount of choice that they have in front of them and the fact that most brands offer comparable features, quality, pricing etc. trying to give reasonable value for money to the customers.
Ever Growing Consumption:
There is continuously increasing urbanisation and rurbanisation (rural-urban overlap) owing to infrastructural development and increased employment opportunities. In 2010, 31% of India’s population was living in urban areas, which increased to 33% in 2018 and by end of 2023; about 38% of India’s population is expected to be living in urban areas. Urbanisation and ‘rurbanisation’ together are adding new consumers to middle class, majority of who are working and have increasing disposable income and an attitudinal desire to dress smart, feel good and look better. Thus their soaring aspirations are changing the dynamics of consumption, and many times leads to consumption overload.
Here’s Ramesh, 26 years and single, who hails from a remote village, across Goa’s northern border, far from urban areas, who was fortunate enough to get basic technical education (ITI) by staying at some relatives place away from home, and now having a decent job in a big company based in one of the developed industrial estates of Goa. Every month when he is to visit his home, he goes shopping. He picks up affordable trendy stuff like garments, footwear, personal care products etc. for self and other family members. He likes to be stylish, up- to-date with what’s new in market, buys and uses whatever that’s affordable and changes with new trends. Hailing from remote village does not stop him from consuming whatever he wants, he just wants to feel better, look better and be better.
This trend is not restricted only to working men and women, it is true with the entire family. Smart parents want their kids to be equally smart. Thus there is increasing consumption that is happening all over. Less is not enough, few pairs of trendy clothes is not sufficient, few pairs of footwear is not good, it gets repeated and they don’t like this, or the idea of someone else having a similar product in known circles is ridiculous and they don’t want to use that product anymore. In terms of sociologist Thorstein Veblen it’s called as ‘conspicuous consumption’. It means the consumer practice of buying and using goods of a higher quality, price, or in greater quantity than practical, specifically as a public display of economic power by people belonging to any economic class.
Well, this trend is certainly a good one for the industry and economy, and businesses need to take maximum advantage of this increasing market size and demand. Success of a business will rest in taking timely advantage of this trend. Companies need to devise strategies to reach out to consumers with their offerings, entice and persuade them for purchase action, and most important to enrich the entire shopping experience. At the same time companies need to ensure availability of appropriate trending merchandise mix, in adequate numbers to see sales opportunities are not lost owing to ‘inventory shortages’ or ‘out of trend’ reasons.
Today’s consumers – chiefly Gen Y and Gen Z, are out to experience life in their own manner and companies have to encash these business opportunities by providing not only differentiated products but differentiated and unique experiences. Feel and live the life of current customer and your business shall grow.