Indicator: even as India once again topped the 45-country survey with a consumer confidence index of 137, suggesting the highest optimism about the future, Indian consumers do not seem to be willing to spend much.
The country does not figure in the top 10 spenders' list for any of the categories, except for investing in shares and mutual funds, where it leads the world.
On the other hand, more than half the respondents from the country keep their spare cash in bank accounts, while they are in the lower 30th percentile when it comes to choosing holidays and new clothes. That's a very different pattern, for example, from the Russians and the Thais, who while scoring a lower 107 in consumer confidence, are on top of the respective lists when it comes to updating wardrobes and taking holidays.
India stands out again while factoring in "concern areas" as reflected in consumer confidence: apart from terrorism, the country does not appear in the top 10 list for any of the areas of concern.
Further, it is seventh in the list of countries that have no worries at all! The conclusions are mutually reinforcing: even though Indians are on a high, with minimum worries and high confidence about job prospects and the economy, they remain conservative when it comes to spending.
What does such consumer behaviour mean? One, despite the higher growth in spends by consumers in recent years, the continued conservatism shows that, in many areas, the market potential may only have been scratched at the surface.
The second implication would be that the higher consumer confidence could in itself be a reflection of the fact that they are conservative spenders. Because, while they are not free-wheeling shoppers, they also top the charts in savings in mutual funds and shares. There is a financial foundation on which their confidence is built.
What should companies be doing while targeting this special breed of consumers? The obvious answer would be to make brands more relevant for them. Smart companies are already doing this by regionalising their brands.
Second, there is the need to identify future growth segments and start building a knowledge base from this perspective. ITC has managed the transition in recent years from a company that mostly had an understanding of male preferences (cigarettes) to understanding the housewife as well.
Third, companies should ride on both well-entrenched trends as well as those which are yet to be established. The focus on health and well being is an emerging trend which companies like Pepsi (through Tropicana) are riding on. On the other hand, Hindustan Lever has identified "return to nature" and "increased social consciousness" as factors to tailor its communication for Surf.
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