Isabelle Allen, global head of consumer and retail partner at KPMG International was on her second visit to India this year. At a time when global markets are experiencing inflation and slowdown, India remains upbeat both in outlook and consumer sentiment. “It’s not going to be long before the Indian consumer probably develops new trends, new technologies, new ways of shopping and behaving which can be exported elsewhere,” she notes. In a conversation with Storyboard18, Allen talks about key consumer trends, new tech tools such as AI and Metaverse and the potential of social commerce in India.
Edited excerpts:
What are some trends which are unique to India?
With a population of 1.5 billion people, India is becoming such a big consumer story around the world. One can’t help but get overwhelmed by the growth mindset and the confidence level that exists at this moment in this economy. It is different from what we are experiencing elsewhere in the world.
The difference is even sharper than a few months back because the outlook for large parts of the western economy is much more negative than what I’m seeing in India. This gives an opportunity to India to really transform their consumer market. For example, covid-19 has resulted in the explosion of e-commerce in the country. While people have enjoyed shopping online, they are also enjoying being back in the retail stores. Going forward, we are talking to people in the retail industry about what is going to be their omni-channel retail strategy that they need to adopt to cater to the needs of the consumer population.
What kind of brand categories are growing in India?
Electronics, consumer durables and fashion continue to be the top categories of growth. Now, we also see personal care and foods that are coming up quite strongly. Overall, the message is very clear that India remains very different from the US or Europe. We can dub the sentiment here as ‘being cautiously optimistic’ because most companies in India when they are releasing their quarterly results they are being pretty cautious about their bottom line, the pressure around the competitive prices is taking its toll and the global situation has also taken some bit of a toll. So, we expect that the next 2-2.5 quarters will be slightly difficult but essentially the optimism still reigns supreme.
What would be the outlook for 2023?
I believe that April 2023 onwards India should do better than it did this year. The growth forecast has been dropped by a percentage odd point because of the delayed monsoons and the global pressure being released on businesses especially in the services side. As we go into the next year, there should also be respite in the funding which got really tight this year.
Are consumers gravitating towards environmentally conscious and ethical companies?
Environmental, social, and corporate governance (ESG) is a big trend which is impacting both the companies and the consumer. It is important to understand how sensitive consumers are or will be to the ESG agenda. Will being environmentally conscious be a driver in the way consumers gravitate towards certain brands? As we are seeing in the Western Europe because of the cost of living crisis and inflation, consumers are under price pressure and hence price remains their top motivation when it comes to choosing brands. In such a case, environmental concerns become secondary.
Will consumers’ craze for festive sales taper owing to environmental concerns?
I don’t think that time is now but in the medium to long-term outlook I do think it is going to be one of the considerations. From what we have seen during the sales in the US and Asia, there comes a point where the multiplication of these sales or mad campaigns reaches a ceiling. There might be consumer fatigue eventually but I don’t think it is going to be true for the India market in the short-term.
What role does artificial intelligence (AI) play for companies?
All businesses going forward, not just consumer and retail companies, would need analytics to understand their consumers better. Precise segmentation of customer base, understanding what they respond to and their pattern and frequency of spends will be critical. In various countries globally, there’s an equivalent of the festive season where you experience massive peaks in the consumer spends. It is critical for companies to understand what triggers them and how they can manage it. This is difficult to implement in a company because it requires a sophisticated and rigorous master data management. If you can successfully do that you can compare customer spends.
Do you think Metaverse will play a critical role for brands in the future?
Consumers’ experience – both physical and digital – remains critical. Metaverse is a place where brands could start the immersion of their consumers, or make the first contact with them before bringing them in the offline stores. How brands orchestrate the customer journey will be an interesting thing to see in the future.
What is the potential of social commerce in India?
It’s still the initial days for social commerce in India but it is picking up really fast. The whole trust element needs to be plugged to be honest.
Like e-commerce in the early days, people in India wanted cash on delivery (COD) because they believed their payment card details could be hacked during an online payment. Social commerce is in a similar phase. It has at least two years to become sizeable in India.