Rurban Approach Will Yield Riches
The consumption story of India will only become stronger moving forward. Aspirations are rapidly converging between urban and rural India due to the advent of the internet and smartphones that have significantly bridged the information divide between urban and rural consumers. The convergence of aspirations in the digital age has been far sharper than what we had imagined. Additionally, at a given income level, both urban and rural consumer groups desire a similar standard of living, aspire for a similar set of brands and are equally comfortable with technology-enabled consumption. This indicates that consumption of branded goods with high quality, safety, nutrition and credentials will see an uptick, thereby opening up a window of opportunities for FMCG companies.
Therefore, the need of the future is to look for ‘many Indias within India’ with greater focus on distribution reach, innovating with low-unit packs, and trade and consumer promotion. Rural will be an important dimension of the next phase of growth for companies. The portfolio, reach, relevance, price point and convenience must resonate well with consumers in Bharat. This also entails a sharper understanding of users to know their demographic, typographic and attitudinal aspects, apart from media and shopping habits. Time, orientation and relevance of brands in rural markets should also come before a company starts investing in infrastructure.
Underlining the focus on rural doesn’t mean that urban is off the radar. Companies will have to adopt the ‘Rurban’ approach and tap into rural, urban and urban agglomerates. They need to get their physical and digital distribution right, keep consumers engaged with new offerings and drive the premiumisation strategy to adapt to the changing landscape. Changing food habits will drive innovations from companies and give consumers a larger numbers of SKUs to choose from. The pandemic has witnessed re-calibration of consumer wallets amid economic disruptions. It has brought about a major shift in consumption patterns with necessary purchases taking precedence over luxury spending. Certain terms such as health, immunity, safety, nutrition and trust have gained more prominence as consumers prefer “tried and tested” brands in these uncertain times. There is an increasing preference for quality, purity and hygiene associated with branded products. Increasing penetration and proclivity towards more credible, transparent, trustworthy and scientifically better modulated brands are going to be the norm. Companies will have to leverage their in-depth knowledge of food habits, nutrition, quality and safety to innovate and renovate and adapt to this new normal. They need to respond to the new demand, reset their defining relationship with consumers and reconsider their product portfolio to make products healthier while also allowing consumers to make pleasurable indulgent choices.
Organisations that will act in the interest of their employees, stakeholders and society at large will reinforce their expertise, leadership, trust and strengthen the bond they have with consumers going forward. Long partnerships strengthen trust and create an everlasting bond among stakeholders. The goals of all partners need to be aligned — to have a positive impact on people’s lives and create maximum value for consumers they serve.
Consumers are also going to be more digitally active than they were earlier and food companies with a strong digital-first capability are the ones that are going to hold consumers’ interest for a long time. There has been a clear jump in home cooking and searches related to food, from both an innovation as well as a nutrition standpoint, in the past year. As a response to this, we saw companies pivoting towards offering unique solutions for responding to the consumer behaviour that they were witnessing, and this will clearly be the way forward. By embracing technology through AI-enabled chatbots, and other facilities, companies are creating an experience through their websites, which can also provide information centered around nutrition and wellness accessible to consumers. This is especially important in the current times when access to experts and credible information is becoming more challenging.
While e-commerce was growing even before the pandemic, we have seen a strong acceleration in the channel on the back of Covid-19. There has been a baseline shift of the grocery user to online. This change in shopper behaviour will continue to aid overall channel growth. Targeted digital communication across brands to drive online salience and penetration will be the key. Companies must focus on introducing differentiated offerings to shoppers online through special and exclusive product propositions as well as a strong innovation pipeline. However, having said that, companies should accelerate their e-commerce involvement with the traditional trade also. I still believe kirana stores have lot more business prospects.
There has also been a rise in adoption of digital-first strategies across businesses — from distribution to supply chain and from manufacturing to supply partners. Companies are rolling out apps that would enable retailers to place orders digitally and launch digital logistics platform to optimise the availability, dispatch and resourcing of all logistics movements, both inbound and outbound. This will help optimise material movements across the country by using data and analytics. Company leaders also need to have a good understanding of technology to identify and leverage new-age digital-led business opportunities. They should have an understanding of business systems and design thinking in order to disrupt the frameworks used for creating future business outcomes that are both robust and sustainable.
Sustainability will be a key growth driver for businesses in the future. Climate change is and will continue to be one of the biggest challenges facing mankind. Addressing this will require a multi-stakeholder approach to collaborate and monitor progress, laying the foundation for a better world. Plastic waste is also a big menace. There are concerns around the quantity of plastic waste entering the natural environment and damaging our ecosystems. Therefore, sustainable food systems will be fundamental to ensuring sustainable development with three important goals — economic development, social development and environmental protection. This would ensure that we don’t take more than we need, so that our resources remain for our future generations. There will be an increasing need to act on sustainability as expectations on corporate responsibility are increasing and transparency is becoming more prevalent. Good intentions will no longer be enough. Organisations will need to join hands and work towards the greater cause.
The three attributes that will shape successful organisations in the days to come are resilience, authenticity and compassion. We also have to recalibrate the way we engage with our people and further enable decision-making at appropriate levels. Increasing penetration and proclivity towards more credible, transparent, trustworthy and scientifically better modulated brands is going to be the call of the consumer. The future will demand increased commitment from companies and their brands, making sure that businesses stay committed to communities, consumers and the planet. If the pandemic has taught us a lesson, it is to embrace humanity and make a difference with our lives for whatever time we have on the planet.
(The author is Chairman and Managing Director at Nestlé India)
