Nearly 65 percent of households across the country plan to spend during the current festive season, while 35 percent will refrain from doing so.
The longest festive season in India, which begins from mid-September and stretches till mid-November, is currently underway.
A new survey by LocalCircles, states that riding on the festive spirit, manufacturers big and small are banking on higher consumer spending despite the high inflation and erratic summer monsoon.
The survey further revealed that of those who plan to spend, 49 percent are likely to shop from stores and markets, while 38 percent were likely to order online and get it delivered straight to their homes.
The first question in the survey focused on understanding how many household consumers are planning to spend this festive season.
"As a household, how much do you plan to spend during this festive season (spending beyond your regular monthly spending)?"
In response, it found that 35 percent of the respondents said that they "don't plan to spend anything this festive season".
Of those planning to spend, 3 percent households said they would spend Rs 1,00,000 or more; 9 percent between Rs 50,000-1,00,000; 15 percent between Rs 20,000-50,000; 6 percent between Rs 10,000-20,000; a much large number or 17 percent between Rs 5,000- 10,000; and 9 percent up to Rs 2,000.
Meanwhile, 6 percent of respondents said they will spend but were undecided about the amount.
As the data shows, one in three households are planning to spend over Rs 10,000 this festival season. It is common for families to plan their major purchases like homes, automobiles, and jewelry, during the festive season as many consider it to be auspicious.
Attention must also be paid to the 35 percent who said they do not plan to spend anything this festive season.
According to the report, it is likely that many of the respondents in this category are experiencing a squeeze with high inflation, loss of livelihood, or employment, and are just getting by month to month.
The other survey question was, "What among the following will be most important to you when shopping/spending during the upcoming festive season?"
To this, 31 percent of households said they were looking for value-for-money purchases and 31 percent were for quality products.
The break-up of data shows that as the prevalence of Covid has dipped, people's appetite for going out and shopping is on the rise which is clear with the survey showing that 49 percent of respondents are keen to visit physical stores and make purchases.
This is also largely the mode of shopping in Tier III, IV districts, and rural locations.
New technological advancements and the growth of the digital space have led various sectors to embrace innovation and adaptation. The fast-moving consumer goods (FMCG) sector, in particular, has rapidly shifted in that direction by joining hands with the e-commerce industry. McKinsey reveals that e-commerce sales in the consumer goods industry are projected to reach $1.8 trillion by 2025, a fourfold increase from the last decade. In the face of intense competition and a high turnover volume in the sector, Artificial Intelligence emerges as a crucial differentiator in helping brands stay ahead of the curve.
Artificial Intelligence plays a vital role in bringing consumers closer to the brand. An ongoing challenge within the FMCG industry is for accurate consumer insights to enhance data-backed decision-making. Insights AI combines advanced AI technologies like Emotion AI, Behavior AI, and Generative AI, to ensure brands get in-depth consumer behavior data. These technologies help brands understand the expectations and preferences of target audiences and provide accurate data for efficient decision-making.
As with any other industry, consumer needs and expectations in the FMCG sector are ever-evolving. AI's ability to access and process vast data sets allows brands to tailor their marketing strategies quickly and effectively in line with the requirements of the target audience. With the inclusion of Insights AI, the Indian FMCG industry could witness a significant improvement in the cost and quality of products and services.
One of the most crucial aspects of any FMCG product lies in its ability to resonate with the consumer. Here is where understanding the emotions and behaviors of the consumer towards the product becomes important. Insights AI plays a vital role in bringing these insights closer to the brand in several ways.
Insights AI can create exceptional value for the FMCG brands thriving in e-commerce. 29.1 percent of consumers believe that AI can be better utilized in providing personalized product recommendations, while 33 percent agree on its function to provide optimized search results. It can decode an individual’s purchase history and demographic information to create personalized shopping experiences for its consumers.
As one of the industries undergoing a major change due to Insights AI technologies, let us look at some of the ways it is creating a difference today.
1) Consumer Research: Insights AI can gather data and feedback on the path to consumers' purchase journeys- from looking at a product ad to completing a purchase on a website. It helps provide deep, unbiased insights, which ultimately provide a seamless shopping experience.
2) Marketing Communications: FMCG can benefit immensely in creating targeted and personalized campaigns that truly resonate with their target audience by understanding what consumers like and dislike.
3) Content and Media Testing: Brands can optimize the visual appeal and engagement across various content formats, such as ads, videos, social media posts, etc., by testing content and media pre and post-launch.
4) Pack Design and Shelf Placement Testing: FMCG brands can test their pack designs and shelf placements using Insights AI, which analyzes the shopper’s purchase intent, stopping, holding, and closing powers to make products stand out.
5) New Product Development: Validate your concepts, opinions, and ideas before a new product is developed to ensure that you are not completely relying on your gut instinct and guesswork.
While AI has a huge potential for FMCG brands to scale and improve, its widespread adoption also raises concerns about data privacy and ethical considerations. The heavy reliance on consumer data for insights also means transparency is a key priority in AI.
AI-led disruption in the FMCG sector is not just a possibility- it is already happening. From optimizing strategies to personalized recommendations, AI is leading the way for the FMCG sector to thrive- in the e-commerce space and beyond. With the continuous evolution of technology and fierce competition in the market, the need for products and brands to stand out is imperative, especially among FMCG players. As such, brands must remain agile, adaptive, and customer-centric in their approach toward AI to deliver meaningful experiences for the end consumers.
Ranjan Kumar is the Founder and CEO of Entropik – research integrated platform powered by AI. He is an engineer from IIT Kharagpur, has invested most of his time working with soft computing, neural computing, and deep learning. Ranjan has worked with distinctive firms like ONGC Ltd and ITC Ltd, after which he turned an entrepreneur with Oyeparty.com in 2012. He has also headed business at Citrus Payments, a fintech company, giving the division exponential growth under his leadership.
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