As brand India prepares itself for the much-awaited festive season of 2020 after withstanding a series of national & local lockdowns, one can sense an air of optimism both amongst brands and consumers alike.
The first quarter has been nothing less than a complete wash-off for most brands, across businesses right from essentials to discretionary categories. While essentials battled the supply chain disruption and the ‘hard-to-forecast’ demand trends, non-essentials were opted out first by the policymakers and then by consumers in their choice basket. Amidst this chaos, there still have been winners, albeit a few, who led the consumer trends and delivered on the changing expectations, with seamless customer experience from availability to delivery.
Scarred by eroded bottom-lines, as India Inc. looks ahead with optimism for the coming festive 2020, there are lessons from consumers, emergent brands & the new-age business that seem to have overcome the onslaught of dipping demand trends & supply chain shake-up, with a laser focussed consumer-obsession of innovating solutions & adapting with agility to the only one thing that matters – ‘What sells.. survives’.
So are you ready for the new normal of festive 2020?
Here are the top 6 trends that are must-have in the ‘cannot-miss’ list of every brand strategy that aspires to emerge a winner amongst survivors.
- The ‘third place’ of battlefield: The festive 2020 wars would be fought neither in the offline nor the online space, but the ‘phygital’ space where the consumers have transcended during the pandemic. With e-grocery witnessing over 70% ARR (Annual Recurring Revenue), clocking 1.7 times GMV in June vs Jan this year and slated to cross the $3 billion mark, e-grocery has lead the fundamental behaviour change of disrupting consumer behaviour in favour of true omni-channelisation. From contactless deliveries, to ‘curb-side pickup’, to more evolved models of ‘OOPS – order online pick-up in store’, to the massive surge in the ‘out-of-store’ phenomenon fuelled by the gig-working economy for ‘solutions-at-home’ businesses, the battlefield has certainly transcended to the ‘phygital space’.
- The emergence of D2C digital first brands: In the $850 billion retail market, while most have slipped in Covid-times, there are few emergent brands that have quickly reached higher spots in the leaderboard. Traditional brands that have pivoted quickly to become digitally ready have witnessed 2x+ jump in sales as compared to offline only brands. Snacks and branded food which grew by 5% for traditional brands in pre-Covid, saw 75% growth in sales in June quarter for the digital ready brands, personal care grew by 24% as compared to 5% in pre-Covid, beverages by 50% and home utility by 11% as compared to 5-6% pre-Covid levels. While discretionary categories have seen a secular downtrend, the above growth has only been witnessed by few digital-first brands.
- Cracking ‘the middle-India’ code: ‘Middle-India’ described as urban but towns with a population of 1-10 lakhs, excluding rural centres & metros is one of the most critical-markets to win for festive 2020. Having quickly bounced back and returned to pre-Covid levels, it has seen unprecedented growth fuelled by many factors including the reverse migration of millions of migrant labourers back to their hometowns. With a representation of 40% retail sales, the ‘middle-India’ has remained resilient in demand through the pandemic times. With the growth of census towns in the country, increased levels of urbanization and much deeper pin-code serviceability of e-tailers, tier 2 and beyond will clearly drive the growth in the post-pandemic times. Having said, most brands have mistaken middle-India as a market characterized by down-graded, cheaper versions and smaller packs. Brands need to incorporate a holistic playbook leveraging on sharp, relevant products ‘made-for-middle-India’ rather than ‘repurposed-for-middle-India’.
- The ‘basket-affordability’ reset phenomenon: Pandemic times have brought a definite change in consumer behaviour, with a very strong trend for ‘basket reset’, weighted with ‘affordability reset’. Throughout the pandemic, consumers have either downgraded to ‘mass & popular’ offerings or switched to ‘value-for-money’ packs and products. Radical shift in the consideration mix towards ‘utility-driven’ has kept most brands puzzled around demand and supply chain forecasting. Consequently, a lot of ‘regional brands’ and ‘private brands’ have performed much better than the ‘national brands’, clearly indicating a strong ‘affordability reset’ phenomenon. A keen look at the consumer behaviour indicates inherent tension in the buying basket, which sways between ‘health & hygiene’ concerns and ‘product value proposition’ preferences, as the evolving consumer choices shuttle to reconcile between the existing and the emergent needs.
- Are you ‘last-mile ready’?: Leading retailers globally including Walmart, Tesco, Target have evolved over years in innovating the delivery experience from drone-to-curbside within a matter of a few months and accelerated early pilots to be festive ready. In India, the likes of nearer-home Spencer’s, Natures’ Basket, Flipkart, Amazon, Jio Mart, BigBasket all are gearing up for the $10 billion festive war this year. The most critical armour in the war is ‘winning-the-consumer-at-home’, consequently supremacy of ‘at-home’ reach is the key. With 95% pin-codes becoming serviceable, fuelled with rising non-metro demand, the level-playing field for democratized access and reachability has been played-down. From innovations like ‘rent-a-space’ in your existing shop, to ‘virtual-society-pick-ups’, to ‘retail-partner-programs’, which lures and leverages the unorganized retail to partner for enhanced demand generation, serviceability and income, the ‘last-mile’ playbook has been quickly evolved to become sharper and much aggressive.
- The ‘pent-up-price-war’ challenge: More consumers have become digital in the last 3-4 months than they did in the last 2 years. With e-grocery slated to become a $18 billion market in India by 2022, fuelled with exponential growth in the DAU’s of Ed-tech and OTT platforms, the festive war will witness the most excruciating war to acquire this ‘new digital native’, with months of pent-up demand, especially in the discretionary category spends. From mobile, to electronics, to furniture, to fashion, to home decor, everything non-food will be on war for brands for their kind consideration. With ‘availability & choice’ becoming neutralizers, the war can only be fought on price, but most importantly ‘the experience’. Brands who have still not patched-up with a seamless consumer experience would still risk to lose a lot, despite any price positions.