The future is never an extension of the present or a forecast of the past. So a new normal way of living is essential to sustain us collectively. Imminent complexities in consumers’ behaviour will mandate marketers to adhere to intensive foraging. Business segments that do not effectively remunerate the business will get removed. Since the pandemic has changed the way we lived so far, we should inevitably learn to live with changing consumption patterns and walk on the not-walked road map.
Different business strategies need to be evolved in the coming days to combat market disruption. Experts are exploring possible solutions to take care of more disruptions, if any. Pandemics are always with no historical data as these are ‘once in a blue moon’ incidents, like ‘Black Swan.’ So without any empirical evidence to combat future pandemics, it would be foolish to accept that there may be a low hanging solution.
The paradigm of consumer behaviour will, therefore, change cluelessly, manifesting many new characteristics. The market will soon experience a major shift resulting from the frugal spending compulsion of the consumer. Essential goods will be more in focus, avoiding impulsive shopping. Impulsive and emotional shopping will cease to exist as the EMI-driven market will shrink.
Banks will no longer be able to leverage the EMI market owing to changed consumer sentiments. This consumer behaviour change will deter the economy from moving ahead if this change is not perceived well in advance by businesses.
The Indian economy — colloquially known as the ABCD economy (Agriculture contributes 18% to our GDP, Bollywood 2.8% and Cricket (sports) 1.5% while Discount is an important catalyst that helps grow the business sentiment at large), is going through severe stress owing to the pandemic. Still, it is a very resilient economy, which will not take much time to bounce back to the original growth trajectory.
The rural economy is currently helping the market to start building hopes. FMCG products are being customised with rural SKUs (stock-keeping units) to leverage this opportunity. These far-flung locations have a lot of untapped potentials, which many companies never tried to explore. The rural market was neglected because of supply chain management (SCM) difficulties.
But the lockdown has brought them near to the rural market. Urban consumers oriented sales and marketing strategy may not work; companies have understood, at least now. Rural market sentiment is changing faster than the metro markets. Social media reach has abolished the difference in consumer behaviours between urban and rural consumers. Responding to this change, the market has accepted this challenge. However, some inbuilt weaknesses and threats need to be addressed.
Supply chain infra calls for an immediate improvement initiative for smooth logistic solutions through a much developed rail and road connectivity. The rural economy is fully dependent on logistic support, which can develop the market more extensively. If the pattern of rural consumers’ expectations falls in line with urban expectations, managing less SKU will reduce transport and distribution costs. Last-mile connectivity to mature a sale and after-sale requirement is a key concern currently.
To overcome this challenge, the logistics plan has to change; keeping in mind the pandemic disruption, SCM infra has to be business-friendly. A lot of private investments are expected in the SCM infra sector. A robust SCM would be conducive to reaching the original trajectory of a $5-trillion economy. With this modern and supple supply chain, companies may extend their shop floor directly to the consumers’ home.
The automobile sector also responded to the market the way FMCG reacted. Their business model was built around urban demand predominantly. This mistake overtly exposed their manufacturing downturn immediately after the pandemic started setting in. Their revenue model became doubtful. They started responding to the rural market immediately by changing their market strategy.
Their strategic shift was not so difficult as they already had a presence in tier-II & III cities, connecting to the rural economy. Automobile sales are comparatively low, but hope to get back soon, piggybacking on the rural economy. Urban market demands will take some time to bounce back, although there are some immediate recovery signals. Two-wheeler demands have peaked, and entry-level four-wheelers are hoping for a faster recovery. But sedan and luxury segments will need more time to bounce back.
There are indeed some positive indicators in the agriculture sector too, when the overall market is facing despondency. Like earlier, with good monsoon, agriculture robustly supported our economy during the crisis period.
In organised and unorganised segments, industrial sectors are struggling to stay afloat due to no significant demand. Promoting current business with further penetration is more important and should be on top of the agenda. The market needs essential items that are a must for consumers to survive through this pandemic.
New ventures should be paused and timed for a suitable opportunity when market response clearly indicates pandemic fear has gone. Therefore, new product development may be deferred. Currently, to sustain working capital pressure on a day-to-day basis, companies should focus on fast-selling opportunities. The government stimulus package did not help the industry as expected. Production capacities are barely used at the factory level.
As per the ‘Chaos theory,’ disruption takes us to the creative arena, where we are forced to create a solution using lateral thought processes and co-create a new solution innovatively with more flexibility than earlier. Consequently, because of disruption, creativity flourishes. This pandemic has taken us to a creative arena and forced people to think maverick and differently.
(The author, an IIM (Indore) & NTU (SGP) alumnus, is MSME Strategist & Mentor)