Companies need to deliver products that consumers want rather than what they are good at, says EY India

India will be the fifth largest consumer products market in the world by 2025 with a size of USD 262 billion, according to an EY India report. A strong economic ecosystem along with a favourable demographic will drive growth for the consumer retail sector in India.

While the growth trajectory for the industry looks solid, rapid changes in technology and the emergence of e-commerce & social media has meant that the large players now need to rethink business models and strategy to be able to cater to a consumer who knows his/her mind. On top of that, there is competition in the form of agile & tech friendly startups. These companies are able to innovate quickly and keep the consumer at the heart of every business decision. This is exposing the chinks in the armour of incumbent players in consumer retail sector.

So what does this new breed of consumers want when they go out shopping?

An EY India survey across cities, age-groups and income brackets shows;

A whopping 80 percent consumers are willing to pay up to 25 percent higher prices if they receive the desired value - showing a strong appetite for premium products.

Three-fourths or 75 percent of consumers surveyed chose to try a new brand because they thought it was 'better-for-them' - free from harmful ingredients, more effective or healthier.

Value-for-money continued to be a critical factor while making purchase decisions - it was the second most important reason for trying a newer brand.

60 percent consumers across age groups said that social media was an important influencing factor to try a new brand.

Now that we know how this breed of consumers think, are large consumer companies ready for the challenge? How do these incumbent players ensure that they are able to move fast to adopt technology, upgrade business plans and communicate effectively within this fast evolving consumer market?

To discuss this Shereen Bhan spoke to Zaved Akhtar VP at Hindustan Unilever, Sanjay Gurubaxani Global Innovation Lead at Mondelez and Pinakiranjan Mishra, Partner at EY India.

Akhtar said, "Typically you are operating in a mass market CPG industry, the change that is happening today is that there is much more bespoke need and requirement, so there are people who want huge amount of personalisation that is required. So your consumer understanding continues to be very important element of it, but you need to have a much more granular understanding of the consumer insights and enabling us to really create bespoke solutions."

"For instance - I would sell a detergent powder and I would create a detergent powder and sell it to the mass consumer for that. But today I am creating a detergent liquid that is designed for your fine cottons, silks and woollens. Now these are bespoke products for specific benefits, so hence you need to really have a sharper understanding so that you can personalise your solutions for these set of consumers."

Mishra said, "If you look at one significant lever that companies need to look at, probably would be agility and keeping the consumer at the center of their heart. Today, companies are probably delivering products that they are good at, I think they need to move to delivering products, which the consumers want rather than what they are good at and that is a big ask from the larger companies."

According to Gurubaxani, "Mondelez now is also extremely consumer obsessed. We are putting the consumer at the heart of everything we do. We have also built a digital strategy. We are going out to understand our consumers better and that is where we are learning about the consumer. Personalisation at scale is growing and that is what we are going after and growing across our company."