#91: The future of Consumerism in India
Elton PEREIRA
Business Head || The Retail Guru || GMG || Saks Fifth Avenue || Jashanmal || Al Shaya
'Go Corona Go'
The famous Indian meme. Lets bring out our finest silverware, bang it together and hope that COVID and China will go away! What a joke!
I hope this is not India's answer to tackling COVID and we are not stupid enough again to send our soldiers unarmed at the LAC!
Since the onset of June, India has been limping back to normal or so they say but as I move around, I see empty shopping malls and ghostly streets. Most retailers are reporting a drop in footfall of approx 70% and the sales are reflecting the same.
The main rationalisation for retailers queuing to open in Malls countrywide was the footfalls that they boast off.
Having said that, you have to understand that the main drivers in Malls are essentially food courts and cinemas. With these key venues shuttered, we have a situation of protracted de-growth in the making. Not even the so called industry experts cannot predict if and when things will ever return to normal.
As we move onto the streets, the story is the same. Open roads that lead to nowhere, no more hustle and bustle and many of the traditional markets bear deserted look.
Restaurants, pubs and bars mostly closed and even some of the exceptions that are permitted to operate appear empty.
We could almost be forgiven for thinking we have entered the Zombie apocalypse!
"Beside fear of the disease itself, a fear of the unknown has emerged and when coupled with pay cuts, job losses, this has accelerated the ride to the bottom of the valley"
This means that the ripple effect from Organisations to individuals has been tightening of the belt and with it the purse strings. So now you do the math!
The true test of retail, F&B and entertainment in general will be seen once we enter the traditional festive period starting Oct. The big question however is, "Will businesses be able to survive till then?"
If we get to approx 70% of historical sales levels by the festive season with a major caveat of 'no second lockdown', then there is hope!
As far as retail is concerned, there has been a lot of talk about a shift in shopping from offline to online, but let’s be honest. The online base of most retailers was very low to begin with so even if you account for 500%- 1000% growth in that segment, you still cannot compensate for the erosion of offline sales.
While E-com is definitely here to stay and grow, it will never be able to replace the human touch factor that we so need as a species. Even as spaces between offline and online get blurred, we will continue to see a lot of cross shopping across the channels and while brick and mortar concepts will evolve, they will never die.
A lot has been written about the phenomenon of revenge shopping in China post them opening up their economy and while retailers look for synergies in markets like India, this is has been restricted primarily to the Luxury segment.
The bulk of Indian consumerism lies in its 350 million Middle Class which has been the hardest hit so essentially I do not see any parallels to draw with the Chinese market.
As far as I am concerned, this year could as well be a write off but if we come out on the other side and live to tell the tale it will truly be something!
What are you seeing happen in India?
Do let me know in the comments below...
Proud member of the moderate BJP. "Kites rise against the wind, not with it! The only road to product success is to bully the MNCs on your way to the top!"
4 年The essence of economy is that the consumers need to earn to support their life which ranges from mere basics to absolute luxury. Whilst 80% of consumers live paycheck to paycheck, 19.50% of consumers earn well and create assets and savings whilst 0.50% have inheritances or businesses or great cashflow. The costs of treatment at private hospitals have shocked the 80%. Then the costs of the new medicines from 12,000 to 78,000 per person has put the fear into their subconscience. These 80% are now scrimping and saving. Many have lost their livelihood. Nobody knows what the vaccine will cost. The 80% are not buying. The 19.50% have seen the chaos, their equity SIP linked savings wiped out when the sensex touched 25,000 change. Some lost their jobs, many employers have terminated their fancy car rentals and this audience is thinking "conserve" cash. The iconic "French Farm" sales are dismal. The 0.50% cannot drive the spending the retail economy requires to sustain and extend. Your thoughts Elton PEREIRA
PMO, Commercial/Retail Fitout Expert, Finishes Head, Projects Head
4 年However optimistic we can be, unless the Govt. takes strategic moves with understanding to ground reality ( not the ghanti and lightings), we as traders and citizen plan accordingly and execute, the situation could get to worse.
Co-Founder and MD at FRDC, RDI Legion of Honour
4 年This is an obvious resultant of 80:20 formula which world economy runs on!