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Saturday, October 24, 2020

An Auspicious Seed in a Fertile Land of Opportunity

From whatever angle you choose to look at the situation, there is one fact that is evident even to the most relentless naysayer, in terms of the crosswise impact the coronavirus pandemic outbreak has had on markets, industries, and consumers alike. Albeit on a global scale, the actions taken by each country soon proved to be of paramount importance in attenuating the acute effect the virus had on the population and contributing to flattening the curve. 

Though the more drastic measures such as lockdowns and shutting of borders kept the population safe, they came at a cost. If we rewind to the last few weeks of March, when a curfew was imposed on millions, the cost of India’s lockdown was noticed immediately. Plunged into a challenging economic scenario that had already been facing headwinds, the outbreak only escalated an already challenging situation. Especially since so many of its people live on a daily wage, food supply chains were compromised, and unemployment numbers escalated.

Fast forward to today and we see India slowly starting to return to a “new normal” with a relaxation of national restrictions and an end to lockdown. As the country resumes activities in the post-pandemic environment, the lessons learned during the confinement period are not to be overlooked and retailers need to re-evaluate their previous strategies and adapt their value propositions to accommodate a new reality.

Filling Up the Glass

The initial swift reaction of India’s government significantly limited the movement of goods and services along with the country’s 1.3 billion population. While limited to the first weeks of lockdown, it resulted in the closure of the majority of the country’s ports, food processing facilities, warehouses and shops, leading to an inevitable disruption of supply chains, with 90% of India’s trucking coming to a halt.

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FMCG companies were impacted the most by this sudden disruption, as they struggled to cope with the capacity failure of their logistics and production. This unique situation contributed to a levelling of the playing field, giving Private Brands the opportunity to obtain space on retailers’ shelves and increase penetration into households.

Private Labels are now emerging at a faster pace in India’s market and in categories that were previously ruled by FMCG. Looking at the evolution in Q1 from the period 2019-2020, the number of new Private Brand product introductions into the market rose by 29%, more than doubling the national brand counterparts. 

Retail chains and online pure players, the likes of Walmart and Grofers have now prioritized the development of their own brands, allowing them to take control of their supply and manufacturing. At the same time expanding their offer of essential and staple products to consumers and avoiding any future shortage of national brand supplies.

The Dawn of a New Consumer

Around the globe, as the ripple effect of the coronavirus pandemic engulfed economies and societies, consumers reacted by re-evaluating their lifestyles and reshuffling their priorities. Focusing more on essential rather than frugal items in so doing modifying consumption behaviors and patterns. 

Overall, in the first weeks of confinement consumer sentiment in India leant towards a positive outlook with 75% of consumers optimistic about a future recovery in a six-month period, and 65% of consumers anticipating a rise in their grocery purchases for the next six to nine months.

Despite the initial optimism, the recent period has indicated that 80% of India’s consumers are concerned about the coronavirus. The consumption patterns have now pivoted and more than 40% of consumers have indicated that they are buying significantly more fresh fruit and vegetables, personal hygiene products and household cleaning products. 

Consumers are seeking out retailers and brands which are considered safe and will improve their health. Health being a key driver, with an influence of more than 50% when it comes to product selection. This affords retailers the opportunity to take full advantage of Private Brand core values, by offering a more affordable and trustworthy solution to consumers, further entrenching their offer within communities, increasing loyalty and relevance in consumer’s lives.

Reclaim the Inner Force

For many of us, the times we are living in are unprecedented and life changing. All around the world, we have seen communities coming together in solidarity, appealing to the countries roots and cultural values. Such a phenomenon has awakened a feeling of unity with consumers becoming more conscious of the importance of supporting local brands and businesses.

Consumers are perceiving local products as more reliable, authentic, and ethically sourced especially when compared to imported goods. In India, more than 50% of consumers consider a product of domestic origin as completely trustworthy.

The sentiment of belonging gained traction during the confinement days and is expected to endure. Consumers will likely begin to actively engage with retailers and brands that embrace and echo the same values, opting for those that are transparent, ones with a clear purpose, are trustworthy, and connect with their lifestyle.

Retailers should therefore emphasize and nurture the focus on local appeal by ramping-up their own brand programs and building a bridge between local farmers, manufacturers, and communities.

Thriving in a Fertile Land

For a brand to prosper in the market ecosystem it needs to cultivate the right environment, under favorable conditions to allow it to flourish. Private Brands are no different. Before the outbreak, Private Brands were already gaining the attention and preference of both retailers and consumers. 

Private Brand development in India is still in its infancy when compared to Western markets. However, we have seen in previous periods of recession in other geographies, that the pandemic context served as an incubator to hasten the penetration of Private Brands into India’s households leading to more product trialing and future adoption.

Gone are the days when Private Brands merely related to products being perceived as a cheap doppelgänger which attempted to mimic national brand solutions. Nowadays, Private Brands represent the mission and values applied towards their customer base. 

The endgame is not to overcome competition but rather to create compelling one-of-a-kind solutions for customers to experience, enjoy, and return to for more.

www.daymon.com

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