2014 was a trendsetter for many industries. We looked at the top insights and trends that received maximum eyeballs and engagement this past year and here’s our pick of the most popular trends impacting the Indian consumer and economy in the coming year(s).
- The year saw the rise of the Rural Super Consumer, a set of highly influential consumers in rural India, who are both emotionally and economically engaged with brands across categories. They have better purchasing power and a propensity to premiumize. A ‘must have’ consumer base for any brand that wants to grow - ignore them at your own peril.
- When the going gets tough, the tough FMCG companies put up a fight and continue to thrive! With a focus on right distribution in both urban and rural India, reasonable pricing, continued innovation, and sustained contribution from their premium segments, these companies managed to turn tables, registering an above average growth compared to their peers, even in an economy that was slowing down.
- We also saw the retail landscape in India being redefined by the emerging shopping avenues. From traditional kiranas to large formats like super and hyper markets to chemists and the ubiquitous paan plus stores, channels to shop for fast moving consumer goods have grown exponentially in the past decade or so. Meanwhile, increasing penetration of technology, exposure to global platforms and brands, and changing consumer behaviour is giving rise to newer channels like E-commerce and M-commerce and specialty stores like Baby Stores.
- Enough and more has been said about the smartphone revolution… and we are not done yet! The smartphone surge in India continues with youth and users from Tier I and Tier II cities emerging as important market drivers. There’s also phenomenal rise in smartphone usage among the under 18 and 25-30 years age groups. With smartphone penetration rising at an unbelievable pace and the scope for content, apps and social media constantly increasing, it’s clear that this space is ripe with opportunity for marketers and advertisers.
- India's FMCG market will grow from $37 billion in 2013 to $49 billion in 2016. A stronger GDP and rise in employment are primarily expected to drive a spurt in sales and effect a recovery over the next few years. Though marketers cannot control all factors driving FMCG sales, the good news is that marketers can directly influence more than half of the key drivers of sales, through distribution, innovation through sachets & assortment, awareness, and value packs.
- We saw how ‘breakthrough innovations’ change the rules of the game and witness unprecedented success. They cut through the clutter by addressing an unmet consumer need with a distinctive market-ready offering and then they back it up with relentless follow through. We evaluated over 14,500 launches across more than 80 FMCG categories and found only 31 breakthrough innovations that emerged victorious. That’s a success rate of only 0.2%! These 31 innovations stood out because they not only exceled at being distinct and relevant, but also endured - a mantra for products and brands to achieve that elusive breakthrough success.
- We found that despite widening choice, Indian consumers prefer to stick with what they know and trust when it comes to investments. Among the less-chosen options, however, mutual funds represent a particularly lucrative opportunity for financial institutions. Mutual funds find more appeal with the affluent and 30+ age group, especially from the metro areas. Barriers to adoption include a low level of financial literacy, leading to caution and suspicion on the returns and risks associated with mutual funds.
- Increasingly, consumers care about corporate social responsibility, but does concern convert to consumption? We found that it does! More than two-thirds (67%) of respondents in Nielsen’s survey said they prefer to work for socially responsible companies and more than half (55%) said they will pay extra for products and services from companies committed to positive social and environmental impact.
From impacting FMCG sales, to investment patterns, to spends on different lifestyle choices, consumer confidence reflects the mood of a country and effects various aspects of the economy. The second quarter of 2014 saw consumer confidence in India soar to reclaim the number one spot on Nielsen’s Global Consumer Confidence Index after five quarters. The study is the largest quarterly study of its kind, which provides insight into current confidence levels, spending habits/ intentions and the major concerns of consumers across the globe. The index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. India continued to lead the index even in the third quarter of 2014, signaling general optimism amongst the Indian consumers.