The recent changes in the world, whether in technology or ideology, underline the fact that emerging markets are a great leveller for businesses. They challenge even the most indomitable global champions with a new set of consumer circumstances that they have never encountered before. Emerging market consumers of today have a wider and better set of competitive choices, many of which were non-existent when the developed markets’ leg of the race was being run. And the consumption discourse today is totally different too, now that we are far more conscious of dwindling natural resources and ecological threats.
In fact, the newer markets of the world often create a “champion’s disadvantage”, because most champion companies are prisoners of their past success formulae. They are far too deeply vested in every way in the religion and the ritual that they have built so far and the risk of change is real. The same applies to western academia, who has built knowledge based on the experiences of global businesses. Their predicaments are understandable. But it is puzzling why Indian business executives and thinkers, who do not carry any such baggage, don’t think differently and originally.
Perhaps, we need to reflect on whether there is an incumbent advantage or disadvantage for reigning champions of the developed world. If they have an incumbent disadvantage, then the new kid on the block (Indian business) is not a challenger risking a bloody nose but a leading-edge innovator. It’s what C K Prahalad calls the “next practice”; and an investment banker entrepreneur we know calls “God has pressed the reset button”.
Many developed market businessmen and academics ask exactly the wrong question when they look at markets such as India. How long will it be before it gets to an acceptable level of ‘modernity’, how can it be dragged there faster? “Modernity” is implicitly defined by some notional benchmark of “like somewhere else”— often, the holy grail of modernity is seen to be the way things are in the US. Thus, in the early years of Indian retail, we debated when India’s car penetration would get to a reasonable level to enable “modern” retail to “take off”. The interesting thing is that the cell phone is to India what the automobile is to America (Shiv Vishwanath in Times of India).
The automobile became the central nervous system of America, thanks to a very aggressive car manufacturer lobby, and low prices of gasoline in the days when this central nervous system was being built. The retailing environment was built around this, and then evolved further from this base. It is obvious that the retail environment in which India, or indeed any emerging market operates from is quite different.
At a recent academic marketing conference in the US, the central question being debated was “what is stopping Indian retail from modernising [unsaid: into something that we recognise as familiar], when will kiranas die”. Strange, because the purpose of marketing is to satisfy customers’ needs and wants rather than to pummel them into accepting some arbitrary notion of modernity that marketers have!
However, we haven’t seen a whole host of new and innovative retail formats in India so far. In fact, there seems to be a weary wait for FDI rules to change so that the western retailers can come and modernise this market. Australia is proof that local retailers can and do own a market. Many malls in Dubai have a distinctive local flavour, leaving no doubt about which part of the world they are in; and there exist some very interesting formats like small single storied “local” destination modern malls. How come Indian malls seem determined to strip all cultural character away from them, in the cause of being “modern” retail?
Indian consumers have grown up in an era of high tech and high touch — think Jet airways, or your local video shop or bank branch head. They remember you via the computer but recognises you in person. American consumers had to trade in high tech for high touch, and have a far more transactional consumer culture. It is not altogether obvious that the present Indian model should be evolved into a higher being as it is in the US. It isn’t about decreasing costs, because customer attrition and new customer acquisition costs are huge.
In Asia, in many a 5-star hotel, you thoughtfully get a small hair grip along with a shower cap so that the job can be better done, and multi plug points are built in because people from different countries have different plugs. In California, in a very high end hotel, we found the plug adaptor stocked in the mini bar in the room priced at ten dollars! Is that modern best practice?
Yet another example: developed world marketers are now most concerned about green products and sustainable consumption. India has an opportunity to get there ahead of others by not starting down the bad road at all, because most of India is yet to seriously begin its consumption journey. The accompanying picture is from Bangalore, of a “fast food format” idli served in an ingenious container made of leaves, allowing sambar to be put on top of the idli and scooped out with a spoon.
It is the “global best practice” marketer who overplays and overuses plastic packaging, when in fact we have always been very frugal with our packaging due to cost considerations. If we have the courage to say that “made in India” packaged goods will be low plastic in their packaging, and if we can instead bring about a storage and reuse container revolution, then we can leap into the future on this count without going through the painful “modern” steps in between.
Why do airports and other high end public places insist on proclaiming their “modernity” by making women cleaners wear “pant shirt”? It makes them socially and physically uncomfortable and unhappy. Why don’t we have the confidence to believe that the salwar kameez is as modern?
The suggestion being made here is that marketers and retailers in India should believe confidently that they are as well positioned, if not better, than anyone else in the world, to create the modern Indian consumer formula; and rather than import ideas from elsewhere, should aggressively move ahead and build smart solutions to consumers needs and wants of today and for the future. The world might follow... or not!
http://economictimes.indiatimes.com/Opinion/Innovate-Indias-way-to-modernity/articleshow/5161809.cms
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