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Sunday, November 1, 2020

A peek into the new Indian shopping basket

Motivated by health, home-bound life, the average Indian’s consumption habit is changing dramatically. Will it stick? The lack of certification or a standardized framework for new products is already beginning to show with altercations between firms and industry bodies

Over the past few weeks, Kriti Kakria, a 30-year-old Delhi-based human resource professional, has been noticing that her Amazon shopping basket is beginning to look a lot different than it did in February.There are more sanitisers in her cart than there are shampoos and creams, plastic glove cartons are often bought in bulk, bottles of Lysol floor cleaner, large packs of hand washes, and Colin surface cleaners have taken over the family’s monthly household budget. Detergents, on the other hand, are in less demand as the five-member household has fewer clothes that require a regular wash.

“There are multiple soap dispensers everywhere around the house,” Kakria said. “No one wants to make a dash to the grocery store any longer.”

Retailers like Nilesh Gupta have also been noticing subtle shifts. Gupta, Managing Director of the electronics retailer Vijay Sales, says items which until recently had a minuscule market presence like dishwashers are suddenly seeing brisk sales.

“I think dishwasher has now become an actual category,” he said. Voltas Ltd CEO, Pradeep Bakshi says the segment is witnessing a 200% year-on-year growth in sales. This has prompted the company to launch its first digital commercial for dishwashers, released earlier this week, Bakshi said.

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In a short span of four months, what India buys and what it doesn’t has undergone a profound shift. With prior behaviour no longer a good indicator of current spending, the consumer rupee is suddenly up for grabs.

A recent McKinsey survey found that an overwhelming 91% of consumers reported trying a new shopping behaviour. New product categories have emerged overnight. Several existing ones have new health and immunity claims.

The pandemic has essentially reset consumer behaviour globally. And, in India, companies are latching on to the health and hygiene plank to sell all manner of new items ranging from anti-virus fabric and UV ray sanitization boxes to immunity-boosting foods (even ice-creams) and special vegetable and meat washes.

“We are launching a new product every 15 days. We hope to maintain that pace in the next few months,” Sameer Satpathy, Chief Executive, personal care products business, ITC Ltd said earlier this month. The virus, said Satpathy, is giving households an opportunity to try out new categories such as vegetable washes that, in a normal scenario, companies would take years to launch, pilot and develop as consumer adoption and acceptance for such products in a value-conscious market like India is rather limited.

The most long-lasting impacts, however, may unfold in the realm of household appliances. Only 14.3% of households in India own a washing machine. Penetration of refrigerators in the country stands at 34.1%.

“Adoption of new categories, which were held back not because of access or affordability but because people had household help to do things, is going up,” said Nimisha Jain, Managing Director of the Boston Consulting Group. Jain has been closely researching household behaviour across India’s large and small cities since the pandemic began.

“DIY is becoming very big, be it home beauty kits, cooking on your own or household chores. That is translating into depending on people’s affluence levels sales of all kinds of domestic appliances like washing machines and dishwashers,” she added.

Quantifiable shifts

Hopes of a sweeping change in adoption patterns are of course riding on the back of sudden, quantifiable shifts which have already happened in other segments. For instance, less than 2% of Indian households had previously used hand sanitizers. On an average, roughly 200,000 new households got added every week to the liquid hand wash and hand sanitiser consumption map over the past few weeks, according to market research firm Kantar.

The consumer rupee is also noticeably moving toward branded packaged staples and hygiene products, even as other discretionary expenses face cutbacks.

To be sure, some of these shifts primarily driven by the urban middle-class consumer could just be trial balloons and consumption patterns may shift right back to where they were before covid-19. But experts tracking India’s consumer goods market are certain that some of these new habits will be irreversible.

“I think the situation in the last three to four months has created sort of a need for us to be more hygiene-focused. And that as a behaviour may continue to exist with people irrespective of what happens in the coming six to eight months’ time,” said Venkatesh Vijayaraghavan, Director and CEO at packaged consumer goods company CavinKare.

Vijayaraghavan, who is part of the company that pioneered the sale of shampoo in sachets among Indian households, said that while some hygiene-related habits were latent in the market, “they were not forced upon the consumer. But today, I think it warrants us to be able to look at them more closely.”

The current changes in consumer behaviour are also not being driven by immediate utility alone, according to Amita Baviskar, a Sociologist at the Institute of Economic Growth. “The fear of the pandemic is making them (people) buy these products as they make them feel in control of their lives,” she said. And that may be another reason why the trends which are underway may be more sticky over a longer-term.

New products

Last month, a Columbia University study suggested that certain wavelengths of UV light could be effective in killing more than 99.9% of coronaviruses found in airborne droplets. “…far-UVC light (207–222 nm) efficiently kills pathogens without harm to exposed human tissues,” said the authors of the report.

Inside Gurugram-based Signify Innovations India Ltd (which was Philips Lighting earlier), a race began to turn these scientific results into profits. A collaboration began in earnest with scientists at the Boston University’s National Emerging Infectious Diseases Laboratories in order to launch a range of new appliances.

For starters, the company has launched a household product—an appliance which emits UV-C light to disinfect all kinds of products.

“From fresh produce like fruits and vegetables to keys, wallets and laptops, it can disinfect anything in a few minutes,” said Sumit Joshi, Vice Chairman and Managing Director, Signify Innovations. The appliance comprises a box which comes in three capacities from 10 litres to 30 litres and is priced at between Rs 8,000 and Rs 13,000. The company is also launching solutions for public spaces like offices and the metro rail.

There are other innovations in the works too. After launching a no-touch, sensor-based dispenser for hand sanitizers, Noida-based Kent RO Systems Ltd, is now working on an appliance to disinfect masks and gloves with the help of ozone gas, which is released into a 10-litre box.

“You will not need to throw away cotton gloves and masks after use. You will be able to disinfect them,” said Mahesh Gupta, Chairman at the company that is popular for its water purifiers.

Interestingly, Kent RO had launched a vegetable disinfectant eight years ago which also worked by releasing ozone gas. The company used to sell about 500 units per month. “But with the pandemic, we have sold 5,000 units last month,” said Gupta.

With several new products hitting the market in a sudden flood, there is also a gaping regulatory vacuum for items like UV boxes and anti-viral fabrics. In the coronavirus-induced wild west, all manner of claims can be made without any fear of regulatory pushback. There is no regulation for UV-based surface disinfectants, for instance, as they currently do not come under the purview of regulations meant for medical devices. For fabrics too, there are no standardized India-specific guidelines.

“There is nothing from a standards standpoint for a lot of these new products. It is falling through a governance gap,” said Sachin Taparia, Chairman and Founder, LocalCircles, a community social media platform that hosts online communities on consumer issues as well as standards feedback. “Companies are taking advantage of the gaps,” he added.

Taparia is of the view that anything to do with covid, which is a non-medical consumer product, needs some sort of certification from a single point of contact.

This lack of certification or a standardized framework for new products is already beginning to show with altercations between companies and industry bodies. For instance, Zodiac Clothing Co. Ltd’s digital ad campaign for its anti-viral range of shirts came under the scanner of the Advertising Standards Council of India.

The technology, the firm claimed, has proven effective against SARS-CoV-2. The advertising watchdog said it was examining claims to ensure they were adequately substantiated.

However, Rahul Mehta, Chief Mentor and past President, Clothing Manufacturers Association of India, views the new anti-viral launches as another marketing opportunity to push sales. Mehta supports the idea of some form of regulation from the government that he says should set minimum standards for such fabrics, which will in effect boost consumer confidence.

First-time buyers

Dabur’s CEO, Mohit Malhotra has been spending days on end attending virtual meetings managing sales, marketing and research and development functions. For Dabur, new product launches touched a record high in the last few months, including a rechargeable battery-operated Odomos Mosquito Killer Racquet, apart from a range of personal hygiene products such as sanitizers, soaps, air sanitizers, vegetable wash under the Dabur Sanitize brand.

On the preventive healthcare side, the company put out Tulsi and Turmeric drops in the market and a Dabur Giloy-Neem-Tulsi juice along with several other products.

The products in the immunity booster category are here to stay, says Malhotra. Sales of Dabur’s Chyavanprash have zoomed up 400% in the March quarter alone.

“The demand dynamics in the marketplace has already changed,” Malhotra said. “We are seeing preferences shift with consumers seeking Ayurvedic healthcare products, particularly for boosting their immunity and fighting illnesses.”

For all the ongoing flux in the market, Dabur’s Malhotra feels the changes are likely to sustain. “To meet growing consumer needs, we have already invested in expanding our capacity for these products,” he said.

While the main thrust behind these new shifts is the urban middle-class consumer, smaller towns which have been less affected by the effects of the virus have emerged as category movers in their own right. The local arm of the Japanese consumer goods major Panasonic has been paying close attention to such shifts in shopping behaviour in small-town India. “First-time buyers have emerged in small-town and semi-urban areas,” said Manish Sharma, President and CEO of Panasonic India and South Asia. “This is a situation that will continue (through the year).”Sharma added that the pandemic has also accelerated Panasonic’s timelines to launch more smart connected devices.

For middle-income households, more energy-efficient products are in the offing as consumers spend more time indoors.

“Internally, we are asking, how do we create products which will further improve their lives and help them multitask? It means building smarter devices and sensors.”

“The home has suddenly become the nerve centre of all activity,” said Amit Adarkar, CEO, Ipsos India. Companies have woken up to this and the next few months are going to see exciting takes on what an average Indian consumer wants and needs, he said.

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