In 2013, India will take some meaningful first steps into an economy that is truly driven by services, experiences, quality, and conversations. That will mean sweeping changes in the marketplace as the rules of engagement between brand, custodians and consumers get re-written
D Rajappa
Underlying some of the biggest developments that will impact the Indian economy in 2013 is the country?s unrelenting march towards greater technology adoption across various sectors and channels.
As 2012 draws to a close, the Indian retail sector has finally opened up to foreign direct investment (FDI). This is a watershed moment for India because the retail industry hides a lot of untapped potential for further growth. A recent study by the research firm IRIS estimated that the Indian retail industry will grow at a compounded annual growth rate of almost 19% over the next three years.
Having said that, the Indian retail industry however, continues to be also a heavily guarded sector with strong fears about large-scale changes to price, comfort, convenience, and familiarity preventing any major overhauls. Large domestic retailers find it difficult to balance feasible operating margins with the fickleness of the demanding Indian consumer. Many of these retailers are learning the hard way that a typical Western retail format cannot be transplanted into the Indian cultural milieu without substantial modifications. A different retail model, one which is forged on the basis of intimacy with the consumer and driven by technological innovation, will need to evolve over the course of the next few years.
For their part, international retailers are well aware to not rush into India without the necessary fitness to culturally evolve and adapt. As a result, in 2013, we may see a spate of acquisitions of cash-strapped domestic retailers, who will provide the much-needed cultural safe way to the Indian market. As this plays out the rest of the year, we will see minimal impact on the kirana store but significant changes to domestic retail chains. However, over time, large retailers will need to find the right kind of technology solutions to replicate the personalised experiences that consumers are accustomed to with their kirana stores.
Domestic suppliers?both front-end and back-end?will also face some immediate overhauls as they scramble to meet global standards and expectations of international retailers. This will introduce some beneficial discipline and rationality in not just the supply network but the entire services industry. Expect to see more widespread availability of free Wi-fi across coffee shops, restaurants, and lounges as these compete with global brands such as Starbucks.
In the meantime, mom-and-pop shops can use this opportunity in 2013 to upgrade and modernise their services and mimic best practices of larger retailers, without having to sacrifice their own value-additions to consumers, such as monthly credits, home delivery, customer familiarity, and so on.
Another trend to watch out for is the digitisation of broadcast media, which will be almost complete across the major metros of India by the end of 2013. This spells great changes for television content providers, suppliers, and stakeholders. It will unlock new revenue streams for the television industry, with positive impact on the broadband market due to the possibility of bundling TV with internet services. New digital platforms for advertising may open up with greater penetration across non-metro markets.
At the same time, there will be greater clarity on return of investment (ROI) of advertising messages and improved consumer targeting. Digitisation will also enable better data-gathering to feed into the marketers toolkit.
Finally, underwriting all these transformations are the dynamic web-connected technologies such as smart TVs, smart phones, and tablet devices.
2013 will see the blurring of boundaries between internet and television advertising consumption. We will see internet advertising spends grow at the highest rate thus far witnessed due to an increasingly integrated nature of information consumption. For instance, we have witnessed hugely successful viral phenomena beginning on the internet and then being picked up by advertisers and television channels. And, we have also seen the reverse, where television advertising messages have taken a life of their own over the internet.
Thus, 2013 will see the spawning of integrated digital marketing campaigns delivered over multiple channels, and the need for new rules of engagement between brands, custodians and consumers.
All of this is obviously contingent upon the broad-based availability and ease of technology access in the country, which given the scenarios described above in retail and digitisation, is bound to increase over 2013. We have already seen the effects of greater technology adoption in the travel industry, where a large portion of airline and hotel bookings now happen through online gateways. Stock market and equity trade portals are another example of the effect of greater technology adoption.
With the advent of smart mobile devices, the internet is now growing untethered and mostly in the hands of the young and the mobile. The implications of this are tremendous: Change in 2013 will be driven largely by the youth empowered by technology. The rate of this change of commerce, of transaction, and of communication is happening at lightning speed. Indian marketers will now focus on marketing truly for the young.
The Indian youth has a healthy consumption driven mindset, where the rate of use of a typical mobile device has gone down from three or five years to nine months to a year. The physical lives and virtual lives of the young Indian will merge increasingly with the untethering of the internet, which will mean that marketers will need to keep pace with the mobility and demands of the youth and also be present where the conversations are happening.
In 2013, India will be taking some meaningful first steps into an economy that is truly driven by services, experiences, quality, and conversations.
The author is president (India and Sri Lanka), Rediffusion Y&R.
