The DNA of Consumer India will remain unscathed after covid-19
Demand Drivers

The DNA of Consumer India will remain unscathed after covid-19

Investors are well-advised to track the supply side as carefully as they are tracking the consumer side CoronavirusCovid-19 Marketers and investors are increasingly wondering how consumption will change post covid-19 and the lockdown. The obvious answer is that everyone is going to be less well off, and consumption will shrink. In an earlier column we modelled the amount at risk. People will spend on necessities first (could include replacing a broken phone or refrigerator, not just food and school fees). For getting a piece of the “nice to have but can do without” expenditure, there will be a fierce cross category battle (buy an iPhone now, paint your house next year or downsize the wedding and give the newlyweds a car instead). The Indian consumer toggles seamlessly between ‘stretch’ and ‘settle’ behaviour—in good times, “whatever I can afford plus one price-performance level up” (stretch) and in bad times “let’s stay […]

May 11, 2020 0 Comments
Only half of India’s household consumption will come through post covid
Demand Drivers

Only half of India’s household consumption will come through post covid

  The so-called middle class, which is actually India’s richest 20% of households, accounts for 36% of consumption expenditure. The ongoing discussion on the prognosis for consumer demand is currently based on extrapolations from supply-side data and macro-economic variables. This column aims to supplement it by providing household-level data on consumption, a “people-view” of those who cause this demand to happen. India’s household consumer demand, the jewel in its gross domestic product (GDP) crown, is vulnerable and skittish because of dismal occupation demographics, lowly paid and uncertain livelihoods for most; and because most Indian households have very little “surplus income”, money remaining after covering their routine expenditure, leave alone their non-routine requirements and emergencies. Consumer demand commentators have been generally reluctant to link the dismal occupation demographics to consumer demand, beyond monsoon-dependent agriculture and, after demonetization, small business owners and their employees. The covid-19 pandemic has forced us to acknowledge […]

April 20, 2020 0 Comments
Demand Drivers

Bridging the income gap

By: Rama Bijapurkar and Rajesh Shukla Inequality in India has reduced in the last decade but the key to reducing the still yawning spread in incomes is supporting an entrepreneurial ecosystem with gusto. (Illustration: Ajay Thakuri) ABOUT: Among the keenest watchers of Indian consumers, Rama Bijapurkar and Rajesh Shukla are co-founders of People Research on India’s Consumer Economy, a not-for-profit research centre on India’s consumer economy and citizen environment. Bijapurkar has served on boards of several Indian companies and is author of We Are Like That Only and A Never-Before World. Shukla, formerly director at NCAER Centre of Macro Consumer Research, is author of How India Earns, Spends, Saves.  The discussion inside India on inequality has become very complex and fragmented. Lost in the maths and the economic theory, the ideology and the international comparisons is the “people view”. It’s the tower of Babel and the championship of siloed thinking out […]

January 4, 2015 0 Comments
Can Narendra Modi evolve from COO to CEO?
Demand Drivers

Can Narendra Modi evolve from COO to CEO?

There is something seductively reassuring about operational performance improvement (OPI). Narendra Modi’s speeches at business forums have been all about it and he offers himself as an OPI-delivering chief operating officer (COO), with a successful model demonstrated in one pilot state, ready to be scaled to the rest of India. This resonates deeply with Corporate India, which has improved margins and taken advantage of the rising tide of ‘automatic’ GDP-driven revenue growth, for the past 15 years, on the back of an almost maniacal focus on building a lean, mean, efficient, scalable supply machine that could make maximum hay when the sun shone. Given how flabby and dirty the government machine is, there’s clearly a lot to be tangibly gained by the citizen-shareholder too – as is the case with investors in India Inc – and they may well elect him for that reason. Given all the case studies he […]

April 14, 2013 0 Comments
End of Ride-the-Wave Growth
Demand Drivers

End of Ride-the-Wave Growth

Consumer demand is still a large pie, and the bigger share will go to agile consumer-centric businesses Is consumer demand alive and well, even after the Budget? Prices will go up, driven by service tax and excise duty increases; cost of fuel, freight and utilities, and EMIs too, have shot up. India Inc will most likely take a one-shot price correction and pass on even past-absorbed cost increases to consumers in for a penny, in for a pound being their logic. And, in any case, the stock market is too woebegone to react too much. Of course, the absolute truth is that when prices go up, demand comes down, and it is tempting to conclude that consumer demand is heading for the ICU and tough times lie ahead. However, business logic should not be as simplistic as that, and before FY13 business plan targets are slashed, consider this: the total […]

August 24, 2012 0 Comments
Solving the Income Data Puzzle
Demand Drivers

Solving the Income Data Puzzle

The problem with Income Data in India Income data in India has always been a contentious issue. There is a lot of intuitive discomfort that we have with the numbers, especially when you have to explain them to someone from overseas who is evaluating the potential of the Indian market with a view to investing in it. “How can any one who earns so little, afford to buy so many things, and still manage the living expenses of a family of five?”, they ask, puzzled! We can definitely vouch for the fact that the income data is generated by reputed, world class organizations, using rigorously designed, huge sample size surveys that would satisfy any survey data excellence standard, anywhere in the world. So, there is no “survey science” flaw on which to hang our discomfort with the data. Obviously something isn’t adding up. For example, consider the NCAER data (2001-02, […]

November 12, 2011 0 Comments
Calibrating SEC Classifications In Terms Of Relative Purchasing Power
Demand Drivers

Calibrating SEC Classifications In Terms Of Relative Purchasing Power

India is far too complex a market with multiple determinants of consumption behaviour, that no single consumer classification system works well for all kinds of product categories, and for all kinds of strategies. Income is one basic classificatory system which we have discussed earlier. The SEC (socio Economic Classification) system for classifying consumers is a favourite and, some would argue, more robust alternate system used by marketers and market analysts to classify consumers based on their propensity to consume. More robust because it is closely correlated with income, and easy to accurately elicit from respondents, no matter how poor or illiterate they are. The Urban SEC system (classes A to E) is based on the occupation and education of the head of the household, while the rural SEC (R1 to R4) system is based on the education of the head of the household and the type of house lived in. […]

September 12, 2011 0 Comments
Will Consumption Hold Up?
Demand Drivers

Will Consumption Hold Up?

Future income projections will show what we already know based on data of the last five and ten years: that between now and 2015, if there is no dramatic change in policy, past patterns of income growth will perpetuate and the top (richest) 20 percent of Consumer India will increase its income at a much faster rate than the rest of India and get even more unequally rich. We also know from past data that this group has a healthy income surplus, so, despite inflation, it will continue to increase its surplus. That’s why we haven’t seen any demand-led slowdown in expensive durables including cars, the stock market, in high-end smartphones and so on. That is why business class seats are not going a – begging despite ridiculous spot fares, because the opportunity cost of the buyers’ time to earn more is greater. Housing is never a good indicator of […]

April 16, 2011 0 Comments
Bharat Buying
Demand Drivers

Bharat Buying

In a previous column in this paper, I had suggested that what was more likely to upset our economy was, companies failing due to bankers’ reluctance to lend, than evaporating consumer demand. I had, perhaps naively, suggested that instead of the government spending good money to bail out consumer demand, they should spend it to incentivize banks to lend to those companies, which are otherwise fundamentally healthy, but suffering from a severe hangover, due to excessive expansion in boom time. This has elicited a sharp response from bankers who say they are not in the ‘bailing out’ business, and must evaluate lending risk even more stringently now than they did in the past. THAT IS A FAIR POINT; HOWEVER, THE RISK ASSESSMENT HAS TO BE SOPHISTICATED ENOUGH AND AT THE FIRM LEVEL SO THAT THE BABY IS NOT THROWN OUT WITH THE BATH WATER AND LONG TERM WINNERS HAVING A […]

December 30, 2008 0 Comments
The Prognosis for Consumer Demand
Demand Drivers

The Prognosis for Consumer Demand

After the last edition of this column about the human face of the economy, and its implications for economic policy, someone asked why a consumer markets person was writing about the economy now. That is exactly the point that was attempted to be made in my last column and re iterated again here – that The Economy is not just about invisible macro forces or numbers like exchange rates and indices of industrial or agricultural production; but that it is also about how different people or groups of people actually get affected, how they think about their situation, and the spending / saving / investment choices they make as a result of that. When conference rooms debate whether there is an economic slowdown, if they are B2C companies, they are speculating about the spending and saving / investment choices and compulsions of rich and poor individual people; and if they […]

July 28, 2008 0 Comments
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