Sunday, December 11, 2005
Consumer Discovery and Delight in India
A couple of recent news articles on India caught my eyes. The first one mentioned that the Fast Moving Consumer Goods, or FMCG as they are fondly called, is back on an upward trend and the figures for the month of October underscores this recovery. The second piece of news from Associated Press said that the number of Internet users in India is currently about 38.5 million users. This number is expected to double in the next couple of years, and one indication of that is in the explosive growth of cyber cafes or cybers or Internet cafes. In 2001 there were 18,000 such cyber cafes reports the AP, and it is expected that by this year end there will be more than 100,000 of these cafes. The report also pointed out that online shopping is on the rise in India.
There are various other statistics available about the retail sector, the real estate sector, automotive sector and other sectors. In each one of these sectors the arrow is pointing upwards, and each of these sectors is poised to grow in the next couple of years. These stastics are tidy numbers that neatly packages to help us understand the macro picture. If you disaggregate the strands and look at the reality on ground, what you see is a vibrant consumer culture. Consumers in India are going through a phase of discovery of new products, goods, services and slowly as the market matures this will be followed by consumer delight.
I was lucky enough to see the real picture in various parts of India because of my year long stay in various parts of the country. It was fascinating and absorbing to see how people's behaviour was being moulded and changed on the fly with each passing week. Viral marketing is at its best in India, and word of mouth acts as the best form of advertisement for new products and goods. This is true whether it is young school going kids, young adults, or home-makers.
Take cell phones for instance. India has one of the fastest growing markets in the world in this sector, and each month thousands of new cell phone users are added. Cell phones have become so common that many have more than one. While living in Bombay, we had to get our airconditioner serviced and got the recomendation of one from our general contractor Mr. Mistry. Mr. Mistry was the handyman for the building and could get you a carpenter, a plumber, a driver, or anybody else you needed to fix a problem in your apartment. Ram Saran, the airconditioner technician, who was an independent contractor, called on my cell phone and fixed a time-slot to come to our place. He took a look at the airconditioner, quoted a price, and got working. Within minutes of his arrival his cell phone went off, and after a couple of minutes, another cell phone went off, and I saw him pull a third one out to check an SMS. I was taken back, and wondered what logic dictated his posession of three cell phones?
When there was a lull in his cell phone conversation, I asked Ram Saran to explain why he had three cell phones? And his answer was simple. "Two phones are for business purpose. I only receive incoming calls in them. All incoming calls are free. I cannot afford to loose business, and if my first cell phone is busy then customers can call me on my second phone. And my third phone is for personal calls. I buy pre-paid card for Rs. 200 and use it to keep in touch with my family."
DVDs, CDs, VCS etc are a must-buy item for any family in India. Did not get to see the latest film? No problem, wait a few weeks and you get the film on a VCD for Rs. 150-200, and you can sit in the leisure of your home and watch it on a big-screen TV. I do not have the figures for the sales of these goods, but I would guess that the growth rates must be pretty high judging by the amount of money people spend on them. It is not uncommon to come across people who have huge libraries of their favorite DVD/VCD collection. Young school going children swap VCDs and DVDs of the latest games. When I go to India my young nephews let me know that they are not intrested in anything from the USA. Instead, they want me to give them their gift money so that they can buy a game of their choice in India. And between them they have a respectable collection of games and are always on the prowl to buy the latest title. Mind you, they do not have access to the Internet to gather the latest information. But what they have instead is access to instant information through their friends network.
Homes. Perhaps one of the biggest discoveries that I discovered is in the home furnshing and decor segment. Many people set aside a sizeble budget to buy furniture and other accessories for their homes. Quite a bit of money is also spent in upgrading the kitchen. People no longer want just a counter top with the stove. There is growing demand for modular kitchen cabinets, marble top counters, bigger capacity fridge, microwaves etc. When I spoke to a couple of kitchen cabinet outfits in Bombay and Bangalore they mentioned that they are unable to keep pace with the demand, but consumers are willing to wait to get their kitchen outfitted. The budget for kitchens start from the low thousands and goes up to a few lakhs. "A good, well-fitted modular kitchen adds to the re-sale value of my apartment," pointed out a home-maker in Bangalore, who was busy doing comparison shopping of various vendors.
Cars and scooters. The four-wheeler and two-wheeler sector is going through a boom, and this is evident in the crowded streets of various cities and towns of India. This is also evident in the huge automotive shows rooms that have become a fixture of many cities and towns of India. This is also evident in the attractive loan and interest rates offered by many banks. Recently, when Maruti introduced an upgraded version of their small passenger car called "Swift," demand outstripped supply. People who booked their orders in June/July could pick up their cars only in Oct/Nov time-frame in some cities. Recently a friend bought a Swift in Bangalore but pulling considerable strings with the dealer. SUVs or vehicles that look like SUVs is proliferating. You have the Tata Sumos, Toyota Qualis and Innova, Mahindra's Scorpio etc that cost anywhere from Rs. 6 lakhs (roughly about S12,000) and upwards.
Perhaps the biggest delight is in the new shopping malls that are popping all over the Indian landscape from Dehradun to Hubli, from Nagpur to Bhubaneshwar. It is impossible to get your foot in the door in any of these malls during the weekend, when people are packed like sardines in a can, but are happy to go about in their discovery of new perfumes, books, clothes, footwear etc.
The story is the same across the board in India. One of the most interesting changes was in the cinema halls. Gone are the old multiplexes. Instead, there are new ones with the latest technology. Take the PVR chain of theatres for instance. They have segregated their movie theatres into different classes like Gold, Europa etc. For instance for Rs. 500 a pop you can get to sit in a plush lazy-boy kind of chair in an exclusive theature in the Gold Class category. Before the movie starts you are presented a menu, and can order for food worth about Rs. 1450 from your seat. You can either order the ordinary popcorn, or choose to have a nice hearty soup or a slice of pizza. The steep price has not proved to be a barrier. People are willing to fork out the money for once in a life time experience.
This phenomenon is not confined just to the large cities, but can be found in other bigger cities and towns. An interesting development has been the market for second-hand goods. When our neighbour in Bangalore recently bought a new fridge and a cooking range, their domestic help offered to buy their old fridge and cooking range from them. "It is easier for me to cook and store the food in the fridge for a couple of days during the weekday," explained Parvathi, who bought the second-hand fridge and the stove.
While many researchers and analysts harp on India's IT and BPO industry, I belive the real story and growth is in the nascent retail and consumer market in India. This is where the real growth and money is.
There are various other statistics available about the retail sector, the real estate sector, automotive sector and other sectors. In each one of these sectors the arrow is pointing upwards, and each of these sectors is poised to grow in the next couple of years. These stastics are tidy numbers that neatly packages to help us understand the macro picture. If you disaggregate the strands and look at the reality on ground, what you see is a vibrant consumer culture. Consumers in India are going through a phase of discovery of new products, goods, services and slowly as the market matures this will be followed by consumer delight.
I was lucky enough to see the real picture in various parts of India because of my year long stay in various parts of the country. It was fascinating and absorbing to see how people's behaviour was being moulded and changed on the fly with each passing week. Viral marketing is at its best in India, and word of mouth acts as the best form of advertisement for new products and goods. This is true whether it is young school going kids, young adults, or home-makers.
Take cell phones for instance. India has one of the fastest growing markets in the world in this sector, and each month thousands of new cell phone users are added. Cell phones have become so common that many have more than one. While living in Bombay, we had to get our airconditioner serviced and got the recomendation of one from our general contractor Mr. Mistry. Mr. Mistry was the handyman for the building and could get you a carpenter, a plumber, a driver, or anybody else you needed to fix a problem in your apartment. Ram Saran, the airconditioner technician, who was an independent contractor, called on my cell phone and fixed a time-slot to come to our place. He took a look at the airconditioner, quoted a price, and got working. Within minutes of his arrival his cell phone went off, and after a couple of minutes, another cell phone went off, and I saw him pull a third one out to check an SMS. I was taken back, and wondered what logic dictated his posession of three cell phones?
When there was a lull in his cell phone conversation, I asked Ram Saran to explain why he had three cell phones? And his answer was simple. "Two phones are for business purpose. I only receive incoming calls in them. All incoming calls are free. I cannot afford to loose business, and if my first cell phone is busy then customers can call me on my second phone. And my third phone is for personal calls. I buy pre-paid card for Rs. 200 and use it to keep in touch with my family."
DVDs, CDs, VCS etc are a must-buy item for any family in India. Did not get to see the latest film? No problem, wait a few weeks and you get the film on a VCD for Rs. 150-200, and you can sit in the leisure of your home and watch it on a big-screen TV. I do not have the figures for the sales of these goods, but I would guess that the growth rates must be pretty high judging by the amount of money people spend on them. It is not uncommon to come across people who have huge libraries of their favorite DVD/VCD collection. Young school going children swap VCDs and DVDs of the latest games. When I go to India my young nephews let me know that they are not intrested in anything from the USA. Instead, they want me to give them their gift money so that they can buy a game of their choice in India. And between them they have a respectable collection of games and are always on the prowl to buy the latest title. Mind you, they do not have access to the Internet to gather the latest information. But what they have instead is access to instant information through their friends network.
Homes. Perhaps one of the biggest discoveries that I discovered is in the home furnshing and decor segment. Many people set aside a sizeble budget to buy furniture and other accessories for their homes. Quite a bit of money is also spent in upgrading the kitchen. People no longer want just a counter top with the stove. There is growing demand for modular kitchen cabinets, marble top counters, bigger capacity fridge, microwaves etc. When I spoke to a couple of kitchen cabinet outfits in Bombay and Bangalore they mentioned that they are unable to keep pace with the demand, but consumers are willing to wait to get their kitchen outfitted. The budget for kitchens start from the low thousands and goes up to a few lakhs. "A good, well-fitted modular kitchen adds to the re-sale value of my apartment," pointed out a home-maker in Bangalore, who was busy doing comparison shopping of various vendors.
Cars and scooters. The four-wheeler and two-wheeler sector is going through a boom, and this is evident in the crowded streets of various cities and towns of India. This is also evident in the huge automotive shows rooms that have become a fixture of many cities and towns of India. This is also evident in the attractive loan and interest rates offered by many banks. Recently, when Maruti introduced an upgraded version of their small passenger car called "Swift," demand outstripped supply. People who booked their orders in June/July could pick up their cars only in Oct/Nov time-frame in some cities. Recently a friend bought a Swift in Bangalore but pulling considerable strings with the dealer. SUVs or vehicles that look like SUVs is proliferating. You have the Tata Sumos, Toyota Qualis and Innova, Mahindra's Scorpio etc that cost anywhere from Rs. 6 lakhs (roughly about S12,000) and upwards.
Perhaps the biggest delight is in the new shopping malls that are popping all over the Indian landscape from Dehradun to Hubli, from Nagpur to Bhubaneshwar. It is impossible to get your foot in the door in any of these malls during the weekend, when people are packed like sardines in a can, but are happy to go about in their discovery of new perfumes, books, clothes, footwear etc.
The story is the same across the board in India. One of the most interesting changes was in the cinema halls. Gone are the old multiplexes. Instead, there are new ones with the latest technology. Take the PVR chain of theatres for instance. They have segregated their movie theatres into different classes like Gold, Europa etc. For instance for Rs. 500 a pop you can get to sit in a plush lazy-boy kind of chair in an exclusive theature in the Gold Class category. Before the movie starts you are presented a menu, and can order for food worth about Rs. 1450 from your seat. You can either order the ordinary popcorn, or choose to have a nice hearty soup or a slice of pizza. The steep price has not proved to be a barrier. People are willing to fork out the money for once in a life time experience.
This phenomenon is not confined just to the large cities, but can be found in other bigger cities and towns. An interesting development has been the market for second-hand goods. When our neighbour in Bangalore recently bought a new fridge and a cooking range, their domestic help offered to buy their old fridge and cooking range from them. "It is easier for me to cook and store the food in the fridge for a couple of days during the weekday," explained Parvathi, who bought the second-hand fridge and the stove.
While many researchers and analysts harp on India's IT and BPO industry, I belive the real story and growth is in the nascent retail and consumer market in India. This is where the real growth and money is.
