Impact of Covid : Is India the next global destination

The anxiousness is about disruption and the impact and not so much for the health. While we are expecting a quick recovery, the behaviours we are reflecting does not show this optimism. Scarcity and the financial impact of the lockdown and are becoming the main worry on how much the consumer spends and what they would buy, when they buy. However in the past we have always experienced strong brands recover faster than others and hence more for brands to be be genuinely conspicuous without being opportunistic during these trying times. Consumers who have been with these brands as loyat, expect them to do good during these times and appreciate the same. During this time, though its short term, consumers are spending more time on social media being relevant to the latest situation.

With the lockdown, E-commerce will see a surge, specially essentials and electronics. Despite logistical concerns e-commerce searches remain strong and many people who used this sparingly will get into the habit forcefully to make this the new way in life. When we slowly go back to our earlier ways of life, some aspects of consumer behavior and marketing will change and brands who recognize that would be prepared for that and come out successful.

In india, the consumer confidence index has been showing a steady decline over the later half of 2019. Some data points show that only 41% of the consumers believe they are financially better off over the last year. However only 21% believe they would improve their financial status in the next year. What is the larger concern is 92% of the Indian workforce is deployed in the informal sector. The stress levels of consumers has seen a major leap from 39% to 47% during the lock down period. This clearly will keep growing further each day of the balance period of the lockdown. Unlike the west, 87% of people lack physical and mental counselling due to unavailability of resources or knowledge for the same. The main reason for this sentiment is that we are not preparing ourselves for the upcoming recession. We are now more concerned on the current situation and hence the short term financial impact. Recession has not hit us in our minds yet. Countries to the west too show a similar pattern but recession has a higher mindshare there. One of the key factors influencing this is in India we feel we will overcome this crisis much faster than the others and would do it better economically as well. Well that’s true as per the current status report which will cover as you go further down. One of the key reasons we are able to take it in our stride is also demographically we are more community binded unlike the US and Europe who are much more rational. Due to this we are more informed and hence well prepared as well as ready to work harder and take this head on. We would stick together and though we keep demanding from all sources we are ready to toil. The sense of optimism and a community binding is what is helping us understand that the sense of insecurity is the same across the world but for us it’s a disruption and not a disease. While on social media we kept reading that Italy, Spain and US were crumbling with deaths and new cases, india shared on social when a successfully treated patient returned home. Our community believe and social media helped us learn more and grow stronger together. We believed in optimism and spread that with wild fire. I remember on a certain day twitter being abuzz with 800 deaths in Italy and 6.5k new cases while another handle was trending that the first case of Srinagar was successfully treated.

However though we have an optimistic attitude our behaviour is contradictory. We are stocking up stuff at home in case of a further crisis. While in the west we see them stocking up due to scarcity as in single digits 33% Indians to the contrary stock up. With a 21 day lock down furthering up this behaviour trait has seen a surge. Study shows we are not willing to live with less and in fact this has shown a 15% increase over the start and post 21 day period. The demand to ask for more and live for more has built further. One of the buying behaviour we see a change is people are more informed now on the origin of the products they are purchasing. We see nutrition products, food items, personal cleaning, antiseptic liquids, etc have a surge in the decision making in purchase of the brand basis the origin of the product. However products like packaged food, long shelf like products, ready to cook food, home delivery food apps, cosmetics, non-alcoholic drinks, etc all have shown a decline in trends irrespective of where they are sourced from or which brand. In the next two years we would see planned purchases take a back seat like the much needed vacation, automobiles, luxury items, real estate or home décor. Investments an insurance would take the drivers seat going ahead and be the new change to moving from a spending behaviour to a saving behaviour in the mid short term.

As per the Brandzglobal study we have seen in the earlier decade, high minded brands have shown a revamp 9x faster in the 2008 crisis. Top 10 brands showed a 317% growth and S&P 500 showed a 128% growth. It clearly shows the salience these brands showed during trying times played a big role in consumer decision making post the impact was over. During these times, brands should not advertise to gain share but are expected to show the new way to consumers and navigate them to the new normal in a positive way. If we read the studies of earlier epidemics we can find that they do have a short term impact but recovery is over a period of time. Eg. Sars outbreak in china 2003 saw retail sales dip from a 7%+ in March to 3% in May. However by august the epedimic was over and the market to stabilised. Similarly, Mers outbreak in south korea 2015 retail sales dipped from 4% in april to 0.5% in June and a rapid recovery was seen in October till it stabiised towards the end of the year at 4%. How fast one adapts to the new situation is critical. Change is inevitable.

IS INDIA THE NEW GLOBAL DESTINATION

I went through a study today and felt this is so true. I will share the excerpts of the study here. As now the global picture unfolds, clearly from an earlier stand of being careful but do business to no trust with China is unfurling across the world. However most had to do business with China. Ideologically China is communism faced while most of the others are not. Yet a lot of countries are now highly dependent on China. This can not be blamed on them as growth is based on consumerism which is work, earn and spend. Western countries need high production mechanisms now for a consumerism driven hunger which is always a high demand. China provided manufacturing and consumption both to all the countries. This has been a habit and difficult to change soon. However with the ethics in question and the way things have unfolded, its difficult to believe China will remain a preferred destination any further. This is where the question arises of who is the alternative in that case. Companies need a place to manufacture at optimised cost as well as a consumer driven market. India has remained an under estimated market for the west. They would now need to re-look at a long term approach and think of us as an alternative. While china was the production house, India was developing to become a back office. With the geo-political and demographic advantage India has shown it has the potential and willingness to develop the skill and scale that is demanded. India is the number one off shoring destination in the world with a 55% market share of the global services business. India has the worlds third largest startup eco system and also the second largest casting producer in the world. It also is the second largest steel and cement manufacturing country in the World. The real estate industry is expected to be the third largest in the world in the next decade. India is also the second largest manufacturer of mobile phones and also the third largest producer of Coal and the fourth largest producer of Iron Ore. Clearly all the products required for building a countries infrastructure are in India holding among the top 4 places in the world. It also is the worlds largest cutting and polishing center for diamonds and since 2017 has been exporting 75%+ of the worlds polished diamonds. Since the same year it is also the fourth largest auto market and already is the largest two wheeler and tractors manufacturer in the world. It also is the worlds 3rd largest heavy tractor and 4th largest personal automobile producer. In the current situation, China is a few years ahead of us but Its not too far for India to catch up. China grew gradually and India can do the same. For any county it is far more easier and safe to do business with and In India unlike China. India does not have massive geo-political ambitions. Neither does india have a global conquest hunger or an expansionist policy. Also India is a democracy and will never silience journalism or punish whistle blowers. India can be an alternative to the world to help reduce their over dependence if not exit from China. India should take this opportunity to make it the welcoming destination for all companies with an big eye on manufactuiring initially. India has an asset in its young population of <30 years which is its biggest strength today. India can help in becoming a key player for global growth. We have the potential and power to steer that growth. Apart from the US if there is any other country that can contain china, it is India. China started as a manufacturer of products and later became a consumer of the same products. India too should become first a manufacturer and then with the economy on a high can become the destination for consuming as well. Even China has been studying India for some time now on its competitive advantages and rise of india economy. Beijing based Anbound is in fact doing a study on the same. India is an ancient land with a growing young population and is for sure the next China for the world. It is wrong to say there is no alternative to China and the world should now wake up and see this alternative before its too late for them to get an entry. India will rise for sure and will make ourselves the alternative. It all depends on who takes the opportunity first and comes in.

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