"Consumer" is the king; "consumer experience" is the priority

JUN 30, 2023

"Consumer" is the king; "consumer experience" is the priority

Companies should gear up to cater to an Indian buyer group that is value-oriented, health-conscious, and prioritises ‘Experience’

In brief

  • 31% of consumer prioritise ‘Experience’.
  • Consumers are willing to pay a premium for high quality and organic food.
  • 64% are feeling the pinch of the rising cost of goods & services.
  • 75% of Indian respondents will pay more attention to the environmental and social impact of their purchase in the long term.

In a world of multiple uncertainties, India is emerging as one of the most resilient economies. The consumer is adopting fast evolving trends like digitization, health orientation, quality consciousness and premiumization. A recent trend among consumers is the pursuit of new experiences, in a bid to make up for lost time during the pandemic.

Experience first

A consumer's preferences and expectations are unpredictable, and it has constantly been changing with the pandemic threat looming large. During COVID-19, we closely monitored and tracked the five key broad spending priorities of consumers – planet first, affordability first, experience first, health first, and society first. The most significant shift was witnessed in the ninth edition of the EY Future Consumer Index (FCI) as experience came to the top with the biggest increase, doubling in priority since 2020 and now assumes the greatest importance when Indian consumers decide on where to spend, while it was the smallest at the beginning of the pandemic.

The FCI findings bear testimony to the fact that "Experience first" is the priority segment now in India (31%), in line with the US (24%), France (26%), and Thailand (32%).

Quality over price; conscious customers

The pandemic-induced fear has led to the tendency to save more amongst people. But it comes as an incredible revelation that in the backdrop of insecurity toward job and income, and inflationary pressure, Indian consumers' buying behaviour is not driven by price as they are willing to pay a premium for high quality and organic food. Purchasing fresh food, household products, and grocery delivery continues to have the larger pie of spending for the household. At the time of the FCI survey, a dip in the COVID numbers was observed, yet people were conscious of their physical well-being and continued to take good care of their health. With the recent rise in COVID cases, health will undoubtedly remain a high priority for consumers who are not ready to rely on the brand anymore; but are questioning the impact of a product/service on the environment and their overall well-being.

Inflation and economic activities

The FCI survey shows an uptick in economic activities, with business gaining momentum despite the prevalent COVID fear. Though feeling the heat with ever-rising prices and inflation surging ahead, Indian consumers reflect a more positive outlook than their global counterparts on expected changes in a financial situation at 72%.

The survey, though, highlights that emerging markets are feeling the pinch strongly, with 62% citing affordability affecting their choices (South Africa 77%, India 64%, Brazil 63%, China 42%), compared with 45% of respondents from developed markets (US 50%, Canada 52%, UK 42%, France 40%).

Road ahead

Having set the tone for the future of business, the findings of the FCI survey indicate that the top priority for organizations is customer-centric solutions. For creating long-term sustainable companies, the leaders must focus on identifying and setting the agenda right.

  • Rapid innovation: The need for ‘experience first’ points towards the need to continuously innovate, reinvent, realign and at times repackage products and services. The past may have seen products use long term differentiators to create distinctive competitive advantage, but in the new digital world, continuous excitement for consumers implying rapid innovation comes out as an important capability to be inculcated by companies.
  • Leverage technology to stay ahead: The key to sustaining and staying ahead of the curve is by being the first to provide a unique experience. Today, the end goal is not the purchase by customers but their experience thereafter, which defines the success or failure of the product or service. Businesses can engage AI and relevant technologies and use data analytics, Big Data to decipher customers' buying preferences, frequency of their purchases, and other such details to create a better experience each time.
  • Personalize, customize and deliver superior experience: Organizations have to be agile and innovative in their approach. Each customer is unique and providing one solution to all is a recipe for disaster. Use data, analytics, and technology to build an ecosystem where every customer is regarded as superior, and preferences change, so be adaptive.

By Angshuman Bhattacharya

EY India, National Leader - Consumer Product and Retail Sector

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