Not quick commerce but obsession for 10 min delivery is proprietary to India: KPMG Global Head Isabelle Allen

As disruption extends across the industry, how companies stay strong is what matters most. As technology and AI in particular gain a stronger foothold, one piece is the consumer piece. How this happens is fascinating but presents multiple challenges.

In conversation with BT’s Krishna Gopalan, Isabel Allen, Global Head (Consumer & Retail), KPMG International, Outline her ideas. Excerpts:

Consumer markets globally are becoming increasingly complex. What do you think about this?

I look at the world of consumer markets as four pillars. The first is the change in consumer behaviour, the second is the geopolitical environment and its impact in particular on supply chains, while the third is revolutionary technology including generative artificial intelligence. The last is being good, doing good, and the future of sustainability, ESG. So, what we’re seeing is consumers and retail colliding between these four.

You need volume growth to absorb those fixed costs plus you have a situation today, where a lot of companies are talking about moving to a premium. However, the pursuit of volume growth is increasingly becoming a holy grail for a number of companies – for a number of reasons, there are certain sectors where consumption is declining against the backdrop of the impact of demographics in certain markets and shrinking populations.

There are commonalities between the world and India. With inflation becoming a reality, there is job insecurity, and even in countries where there are jobs, the quality of jobs is actually much lower. So, there’s a lot of pressure on the governor in terms of where we spend. Consumer behavior is changing in terms of where they want to spend.

So, when you look at high-income families, of course they have a lot of money, but they spend on different things. They will not increase consumption of household staples and personal care because they already have all of that. And when you look at those at the bottom of the pyramid, there is pressure on income. Therefore, people make trade-offs and choices.

Let’s take a look at the geopolitical environment. I believe that the cost of doing business across borders has increased as friction increases at each step of the value chain. This means pressure on the top line because growth in sales through volume and price becomes more difficult. Moreover, all input costs have risen – look at commodities, coffee, sugar, cocoa and palm oil, all of which have been massively inflated into consumer products. Labor costs have also increased, and then you have this weight of compliance and regulatory obligations.

Express trade has been a big story in India. How do you see it?

I’ve lived in the UK and also spent a lot of time in Asia. Express Trade is not owned by India. But what’s special is the obsession with 10-minute delivery, which is honestly very baffling to me. In my opinion, I don’t think on a human level that difference is necessarily that important but we live in a world, where keeping time is getting shorter.

In the Indian context, express trade exists as a business and also as a channel. One must understand that fast commerce is a digital business. The digital product could be a restaurant reservation or a movie ticket. You’ll continue to see a lot of experimentation that they do because the DNA is in the idea of ​​experimenting, trying, failing, testing.

With that in mind, what is the role of consumer insight or market research?

We are seeing a lot of disruption in this area. In my view, market research is no longer about collecting hard data, but more about insight. Companies go back to market researchers to say so.

For many companies and brands, the premise has been that if you go direct to consumer, you will have private data about the consumer. This will be the key to making you successful in the future as it will bring you closer to a better understanding of consumer behaviour. The truth is, that journey proved to be very difficult. You can’t invent yourself as a direct-to-consumer business because that’s a different mindset.

How do you balance a consumer who seems fickle and full of choices against an organization that needs to think long-term?

I think listed companies face different pressures towards this change compared to entrepreneurs, promoters or family-owned companies. Often times, in the consumer and retail sectors, they need a business model shift just to be more visible. The questions in retail are very complex. On the one hand, you want to be a responsible business owner, and on the other hand, you know that AI will give you productivity gains.

People increasingly need to be served with expertise, and that’s not easy to do in a quarterly conversation. But if you know what you stand for as a company in terms of your values ​​or your products or your brands and the trust that you want to build in them, then these companies can take their investors with them by saying, “You know, this is what I’m trying to be in this environment and this is where I’m going to compete.”