Mumbai, December 31, 2013
It’s holiday season. The Oberoi Mall, in a far-flung western suburb of Mumbai, is decked for the occasion: golden bells are strung in the eaves; cotton floss circles the huge Christmas tree like vanilla ice cream. The well-lit stores in the mall are buzzing with jittery shoppers who are crowding the aisles but not the billing counters.
As the year 2014 dawns, the images it brings in its wake — the dark facets of economy such as joblessness, decreasing disposable incomes and trickling foreign investment almost alter the very basics of consumerism. The economy is roiled with low gross domestic product (GDP) growth of 4.8 per cent, sharp depreciation of rupee, high inflation at around 10 per cent, merciless layoffs, less disposable income, rural slowdown and low consumer sentiment. Consumer spending fell to 1.6 per cent in the April-June first quarter of the current fiscal year, from 3.9 per cent in fiscal 2013 and an average of about 8 per cent in the five years to fiscal 2012, according to a report this month by property consultancy Jones Lang LaSalle (JLL).
Arvind Singhal, CEO of Technopak, says, “Yes, the Indian economy definitely needs more private consumption in 2014. However, the reality will be another year of subdued consumerism on the back of high inflation and the overall economic scenario. Last quarter growth number was also not great. In the next one year, there is nothing that promises dramatic change.”
While retailers shut down stores, reduced number of categories, streamlined supply chain, FMCG and consumer durable players increased prices of their products, innovated, in an effort to become more efficient and attract elusive customers. Yet as the New Year tiptoes its presence, the retail experts and consultants are saying that the world would remain as ‘chaotic’ and ‘depressed’ with signs of subdued ‘consumerism’ in India looming high on the 2014 horizon.
Retail experts say, while the upper middle class, that account for at least 40 per cent of all spending, will step up consumption in the next one year, the rest will choose to lie low for a while. “I usually shop during the Christmas and New Year week, but this year, I find myself resisting any kind of purchases due to worries of home loan, rent, increasing cost of food and other sundry expenses. I don’t see things changing to a great extent over the next one year,” said Mark D’Souza, a Mumbai-based 25-year old student of Psychology in Mumbai University.
Govind Shrikhande, CEO of Shoppers Stop, says, “Given the current scenario, the consumerism scene for the next one year is not very optimistic. The uncertainty could persist over the next two-three years.” He said they are interested in tie-ups with foreign partners looking at the Tata-Tesco deal.
Santosh Desai, MD and CEO of Future Brands, part of Kishore Biyani’s Future Group, believes that the situation is still quite volatile and turbulent at this point of time. “Hence, we are looking at the future with cautious optimism. We will definitely see an improvement in 2014 over last year, but its unlikely to be anything dramatic,” he said.
Even as mayhem strikes the consumer market, the election campaign is drumming up excitement. India’s politicians are strategising new populist measures for the country. Both BJP and APP oppose FDI in retail. Analysts say a stable Narendra Modi-led BJP government could boost investor sentiment.
“Post election, the economy must see an upswing. While consumerism might not increase to a great extent, debit card usage will go up in the next one year, younger people will also cash in on purchases,” said Alpana Parida, president of DY Works, one of India’s leading brand design firms.
Consultants say industry outlook is muted by political outlook and policy led economic issues such as inflation. “Consumer spending is also governed by emotion. While some income segments are optimistic, some are not. All consumer players need to look at the way their businesses are done. There is enough potential for growth,” said Devangshu Dutta, CEO of Third Eyesight, a Delhi-based specialist-consulting organisation for retail and consumer goods sector.
Consumerism in India mainly started in the 1980s with the arrival of television sets in many households. After the economic liberalisation of 1991, consumerism took shape over the next two decades, on account of privatisation and the IT boom. The momentum increased manifold in the late ’90 with a high degree of consumer awareness, aspirations and very high disposable income in the hands of the middle class. In the times we are in now, we can see a clear demand-supply mismatch. Whereas there is a very high level of aspiration, there are not enough resources available to support those.
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