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

At a time when disruption cuts across industry, how companies remain sturdy is most critical. With technology and AI in particular gaining a stronger foothold, one piece is that of the consumer. How this plays out is fascinating but presents multiple challenges.

In a conversation with BT’s Krishna Gopalan, Isabelle Allen, Global Head (Consumer & Retail), KPMG International, outlines her thoughts. Excerpts:

Consumer markets globally have become increasingly complicated. What is your view on this?

I look at the world of consumer markets as four pillars. The first one is the change in consumer behaviour, the second is the geopolitical environment and the impact in particular on supply chains, while the third one is disruptive technology including generative AI. The last one is be good, do good, the future of sustainability and ESG. So, what we’re observing is consumer and retail at the collision of these four.

You need volume growth to absorb those fixed costs plus you have a situation today, where a lot of companies are speaking of going premium. That said, the quest for volume growth is becoming the Holy Grail increasingly for a number of businesses – for a number of reasons there are certain segments where consumption is going down on the back of the impact of demographics in certain markets and a shrinking population.

There is a commonality between the globe and India. Post inflation becoming a reality, there is job insecurity and even in the countries where they are jobs, the quality of jobs is actually much lower. Therefore, there is a lot of stress on wallets in terms of where do we spend. Consumer behaviour is changing on where they want to spend.

So, when you look at high income households, they of course have a lot of money, but they’re spending on various things. They are not going to increase the consumption of household staple and personal care because they already have all of that. And, when you look at those at the bottom of the pyramid, there is stress on income. Therefore, people are making trade-offs and choices.

Let’s look at the geopolitical environment. I think the cost of doing business on a cross-border basis has exploded with increased friction at every step of the value chain. That means pressure on the topline because growth in sales through volume and price is increasingly difficult. Besides, all input costs have gone up – look at commodities, coffee, sugar, cocoa, palm oil, all of whom have exploded in consumer products. Labour costs too have increased and then you have got this weight of compliance and regulatory obligations.

Quick commerce has been a big story in India. How do you see it?

I have lived in the UK and also spent a lot of time in Asia. Quick commerce is not proprietary to India. What is proprietary though is the obsession for that 10-minute delivery, which to be honest is quite baffling for me. In my opinion, I don’t think at a human level that difference is necessarily that important but we live in a world, where time retention is getting shorter.

In the Indian context quick commerce exists as a business and also as a channel. One must understand quick commerce is a digital business. A digital product could be a restaurant booking or a movie ticket. You will keep seeing a lot of experimentation that they do because the DNA is in the idea to experiment and try, fail and test.

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

We are seeing a lot of disruption in that space. The way I see it, market research is no longer about me collecting static data but more about the insight. Companies are going back to market researchers to say that.

For a lot of companies and brands, the premise was that if you went direct-to-consumer, you would own proprietary data on your consumer. That would be the key to making you successful in the future because it would get you closer to a better understanding of consumer behaviour. The reality is that that journey has proved to be really difficult. You can’t invent yourself as a direct-to-consumer business since that is a different mindset.

How do you strike the balance between a consumer who appears to be fickle and flooded with options against an organisation that needs to think long term?

I think companies that are listed experience a different pressure to that change than the entrepreneurs or promoters or family-owned businesses. Quite often in the in the consumer and retail sector, they need a business model transformation just to be clearer. The questions in retail are hugely complicated. On the one hand you want to be a responsible employer and on the other, you know that AI is going to give you productivity gains.

People increasingly need to deliver through experience and that’s not easy in a quarter- by-quarter conversation. But if you know what you stand for as a business in terms of values, products or your brands and the trust you want to build in them, then those companies can take their investors along by saying, “You know, this is what I’m trying to be in this environment and this is where I am going to compete.”