Facebook and BCG on India's shifting consumer demands

As the Indian economy displays faint signs of opening up, Facebook and the Boston Consulting Group (BCG) have analysed changes in the country’s consumer market, and whether they are here to stay.

The two firms point to how the infection rate in India and has been slowing, prompting many in the government and the workforce to consider plans for gradual reopening. As things begin to flow again, businesses will need to be aware of how consumer priorities have shifted during this period.

The research comes against the backdrop of unprecedented changes to the consumer market during the first half of this year. Overall, the consumer market appears to have dampened to some extent. Well over half of the respondents in Facebook and BCG’s research expect that their household income will drop over the next half a year.

Before the spread of the crisis, it was a rapidly expanding middle class that was driving unprecedented growth in India’s consumer market. In fact, at the start of last year, Bain & Company reported that India’s consumer market could reach a staggering value of $6 trillion over the next decade.

However, this budding middle class has now been thrown into a period of financial strain due to the crisis, on the back of job or pay cuts across various economic segments. This remains a medium term impact on the consumer market, with expectations of a recovery as and when there is more income stability.

Locked up at home, fearful of the virus, and with an insecure income, few have been able to replicate their consumption patterns from before the crisis. Using activity in January as a baseline, Facebook and BCG report an 85% reduction in the number of public visits amongst consumers in May.

This has driven changes that the report refers to as ‘wildcard’ changes, which will revert back to normal once restrictions are lifted. For instance, most consumers currently only leave house to go to work, while other leisure activities such as entertainment and fitness are being observed indoors.

The report finds that people are keen to change this, with many itching to resume activities such as travel, eating out and going to the theatre. Other wildcard changes include an increased focus on the trustworthiness of a brand when shopping, which is also a product of the current anxiety around infection. Consumers are sticking to the basics for now, and chasing discounts, all of which might change once income security is restored.

New normal

Some trends, meanwhile, are here for good, according to Facebook and Boston Consulting Group. For instance, a growing share of India’s population was already embracing digital services and experiences before the lockdown, which is likely to become a permanent trend now. This not only includes online entertainment, but also extends to India’s booming ecommerce market. According to the report, it is unlikely that these changes will reverse in the post crisis period.

Other such permanent changes include a growing health consciousness in consumption, as well as overall consciousness. In what Facebook and BCG term the ‘rise of the smart shopper,’ consumers are likely to engage in a higher level of digital research before purchasing a product.

The two firms further found a set of entirely new habits and behaviours among Indian consumers. For instance, many have realised the value of remote working and living, and might well make it a permanent arrangement. Meanwhile, a consumer base that was traditionally heavily reliant on basic services has been forced to embrace a ‘do it yourself’ culture, which might also gain some traction. A new focus on cleanliness and hygiene has also emerged in the Indian market, breaking a previous pattern.

Due to the novelty of these changes, the report refrains from making predictions on how long they will remain a fixture amongst consumers in India. At any rate, the pair recommend that brands reevaluate their offerings in line with a changed consumer base, embracing the ‘new normal’.

Last month, McKinsey & Company released a large study on how covid-19's is impacting the preferences of consumers in Australia.