Where is the Indian consumer today compared to 10 years back?
This segment is young, democratic in its thinking, and wants to “fit in”.
They will buy organic. They will also buy frozen for convenience. The frozen french fry at home costs Rs 10 – at McDonalds it costs Rs 30 – they see value in both formats.
Value for the customer of today is CONTEXTUAL. That’s the single biggest change.
Is consumption in India de-growing?
We are growing at 20%. Previously, growth rates of 30 to 40% were common. That does not mean de-growth.
In the last 5 years, countries such as Philippines, Thailand, China, Indonesia and India have seen similar growth rates in consumption.
In an Asia Pacific context – a 20% growth rate is good. Its very good.
Do you see the frozen french fry as competition?
Our reference point is the QSR category. People in India still eat out less than 8 times a week – versus 28 in Thailand. So we see immense market potential.
Are you surprised by the pace of consumption in India?
“I’m a DND man” – [DND = markets other than Americas, Western Europe and Japan]
None of the CPG categories are anywhere close to maturity. Take laundry. We went from cottage soaps to machine produced soaps, to whiteners and now to Comforters.
Different sub-markets in India are making this transition at different speeds.
Even where you have adoption, there is scope for growth from both penetration and from increasing the frequency of consumption.
Does government have a role to play in retail?
The government’s role is to encourage consumption.
This is only possible when they realize that
MORE Consumption = Good Development.
More consumption = More manufacturing = More Turnover = More Taxes = More Revenues = More Growth = More Consumer confidence = More Consumption. Governments role is to recognize this cycle.
Can you recall any legislation by the Government which catalyzed Consumption?
Indians have superior commercial instincts, once they have a framework, they don’t need the government to grow.
Is democracy a stumbling block to consumption?
Between 2003 and 2013 – Indians increased their eating out from 3 times a week to 8 times a week. IN Thailand its 42 times a week.
In China we are opening 300 restaurants a year. In India – its 30 restaurants a year.
Democracy has nothing to do with it. Its about growth and “tipping points”.
What will drive growth in emerging markets?
Market penetration in this category is low so you will see explosive growth. Markets like Thailand and Philippines consume 30x what India does in personal care …. Tremendous headroom.
The most relevant channels for this are Modern Trade and E-tailing so these channels will see high growth.
What we look at when we review a market is population, money, growth and most importantly consumer confidence. In India, the slowdown has not impacted money in the wallet as much as it has confidence.
What categories will drive growth in your business?
Other categories which see high growth are “occasion wear” and fast fashion.
Non retail channels – example birthday parties, and social media to recommend experience.
What’s so big about BIG Data?
Your ability to use “convergence” technology and mass customize the brand experience is what creates consumer relevance.
Customers are INDIVIDUALS. The experience of AAP (Aam Aadmi Party) shows that they want to be treated as individuals.
For us, BIG Data helps enhance our ability to understand shopper mission and answer the question of “who is the shopper in the ½ km catchment” – then target him with range, assortment and promotion.
Role of the small retailer
92% of retail is non-modern. To harness these, the key will lie with manufacturing. There is a need to focus on productivity and innovation in manufacturing to service this retailer – in the face of increasing cost of doing business.
Advice to young retailers?
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