Marketers shift their focus from metros to cash in on the consumerist rampage
SPREAD out against the sky like patients etherised upon the table? Not evenings in Ludhiana. Scores of cars are heading towards Ghumar Mandi, the happening hang-out in this agricultural small town turned global knitwear, cycle parts and auto components hub. Teenagers cluster at ice-cream parlours and confectioneries like Lip-Lap Bakers, downing ice-cream cones and paying Rs 25 to Rs 50 per hour as sitting charges. The din is joyous and ear-splitting, the colours neon.
Sixteen-year-old Deepa Gupta glows when the conversation shifts to her 11 pairs of shoes. Monthly expenditure on wardrobe: Rs 4,000-5,000. Watch on the wrist: Rolex. Favourite perfume: Poison. Holiday destination: Switzerland. "My parents don't deny me anything," she says. Deepa belongs to the first generation of Ludhianaites who have seen neither Partition nor poverty to shatter any dreams.
At Cyclone Acoustics, owner Bhanu Ahuja is getting ready for the night. He came back to Ludhiana four years ago, armed with a management degree from Mumbai. As a hobby, he took to disc jockeying at friends' parties. Now it's a full-time profession. "Business is brisk," he says. "Every night, people have a reason to celebrate. The party never ends."
Ahuja could well be talking about the scene at The Wall, 1,700 km away, in Guwahati, where a bunch of teenagers are jiving away to techno music behind shuttered glass doors. "Help support wild weekends!" screams a slogan on the graffiti wall. "Save your energy from Monday to Friday!" "It's a birthday party," says Anupam Chowdhury, who started the eatery two years ago and now gets a dozen such party bookings every month.
And as Ahuja heads for posh Mall Road, and Chowdhury mulls over his expansion plans, in dozens of smaller towns across the length and breadth of the country, lakhs of people of all ages are settling down to serious conspicuous hedonistic consumption. In Indore, nouveau riche housewives are being driven to the eight-lane bowling alley at Sayaji Hotel. In Kottayam, Josco Fashion Jewellers' huge showroom, with separate sections for various ornaments, is overflowing with families of rubber millionaires grabbing anything in gold. Says K.T. Thomas, who has just bought gold worth nearly Rs 1.5 lakh: "The stockmarket is down; we've all invested enough money in real estate. We have almost every gadget and techno gizmo. What shall we do with our earnings? We buy gold, we go out to Kumarakom for a boat ride and we drink imported scotch." Two thousand kilometres away, in holy Varanasi, window shoppers throng the Benetton showroom.
Unnoticed by the metros, and the Bangalores, Hyderabads and Punes, small-town India is on a consumerist rampage. There's nothing sleepy about these towns anymore; today, they are markets on amphetamine. Something has happened here, something is happening. Centuries of abstemious lifestyle, high savings rates, underplayed wealth, extravagance only within four walls or at public occasions, are being swept away in a tidal wave of desire.
Guwahati, the quintessence of small-town India (and never mind the population figure of 12 lakh) where nothing but nothing ever happened till the early 1990s, today has 300 eateries, four clubs, an 18-hole golf course, 52 wine shops, half-a-dozen glass-and-granite shopping arcades and a host of boutiques and teen galleries. Coming up: a private 200-seat fashion designing institute. In Vadodara (50 Cielos sold in the last three months), heritage structures are being overshadowed by glitzy commercial and residential complexes like BBC Towers (BBC stands for Bhairjirao Baburao Chavan) and Camps Corner (after Mumbai's upmarket Kemp's Corner).
IN Ludhiana, businessmen with money to burn have refused to be deterred by the fact that Goa is 1,800 km away. Weekends see families, dressed appropriately, at "beach parties" beside private swimming pools. Also Hawaiian parties: grass skirts, aloha, the whole shebang. Says an Income Tax official: "A resident of Indore paid over Rs 60 lakh to the government as taxes under VDIS. Who says there isn't enough money here?"
"Money has lost its value. Now everyone has it," says Nandita Amin, a Baroda-based architect. "I first came to Indore in 1975 and the city has really changed since then. Now people here talk only about money," agrees D.K. Mitra, senior vice-president at Indore Steel and Iron Mills, as he tees off on a Sunday at the nine-hole Royal Garha Golf Course. The approach to the golf course is dusty and bumpy, but the green is well-mown and lush.
BUT here, cause and effect start getting blurred. Did marketers, faced with jaded and cynical metro markets, push into the smaller towns for survival, and cause the consumer boom? Or did small-town India suddenly start showing spikes in purchase and spending patterns, leading marketers helter-skelter into the new gold rush? Was it push? Or pull?
Well, consumer marketers have been having a rather grim time for several years. As global brand after global brand aimed their firepower at the metros, the end result was a fragmenting of the market with less than enough for every player. Competition has reached white heat. Take colour TVs, where the name of the game is undercutting. As Akai has unleashed wave after wave of incredible price-off and exchange offers, some savvy marketers have just moved on to more profitable terrain. "This extent of aggressiveness in the metros is putting pressure on companies to concentrate their effort on developing new markets rather then bleed to death fighting for marketshare in existing ones," says former Unilever marketing chief Siddhartha (Shunu) Sen. Smaller towns are safe havens from such cut-throat competition.
Besides, the metro markets are also bursting at the seams. "You only have to look at the rush-hour traffic girdle in Delhi to see the level of saturation in the metros," says Vinay Dixit, marketing manager, General Motors. In 1997-98, two-thirds of Opel Astra sales came from non-metros. When the car market went into recession two years ago, sales of mid-sized cars fell by 17 per cent in the metros, but only 6 per cent in the non-metros, suggesting that the numbers are coming from the smaller markets, points out Daewoo Motors CEO Shiv Gopal Awasthi.
And it's not just markets, customer minds too are saturated in the metros. Just consider the brand clutter in the skin care segment. Freya, Cadila, Samara, Nivea, Ponds, Lakme, Synergie, Coty Vita, Oriflame, Avon, Lancome, Elizabeth Arden and Christian Dior. In apparel: Lacoste, Levi's, Benetton, Mexx, Wrap, Lee, Lee Cooper, Wrangler, Nike, Reebok, Adidas, Woodland, Colour Plus, Proline and a dozen others. "In contrast, the customer in the non-metros has not yet been bombarded with so much so soon. He is also not yet entrenched in favour of certain brands. It's easier to tap him," says marketing consultant Arvind Singhal.
So there are enough reasons for the marketer to push hard into small town India, where global brandnames still light up eyes, where pent-up desire is looking for a hole in the dyke, where every dark alley does not harbour a marketing mugger.
But between acorns and oaks lie soil conditions. And you couldn't get land more fertile than small-town India.
First the money. Small town consumers may typically earn less than their metro and mini-metro counterparts but the cost of living is much lower. A household with a monthly income of Rs 50,000 in Mumbai would typically spend 50 to 55 per cent of it on housing alone, with another 25 to 30 per cent going on food, transport, children's fees and so on. Yet, a family in Dehradun might be earning Rs 30,000 a month, and have almost equal or even more wads of notes available for discretionary spending! And they have much more time to spend than their metro brethren can dream of.
The income pattern in smaller towns is also different from the metros. Most small towns have a sizeable population deriving fairly sizeable incomes from farms. In Ludhiana, for instance, about 30 to 40 per cent of the population are migrants from neighbour-ing villages. Now into jobs and industries, their urban income is supplemented by non-taxable agricultural income, which gives them far more cash in hand to spend on consumption. The other sizeable chunk of the population in most small towns is traders and manufacturers, again a class more likely to remain outside the taxman's net. This kind of an income demographic inherently makes for more impulsive and unplanned spending.
As the shop manager in the Park Avenue showroom in Ludhiana's Chaura Bazaar avers: "People in Ludhiana don't look at the price tag, they just pick what they like." He is echoed 2,500 km away, at the other end of India, by S. Muralidharan, owner of Quilon Radio Service, the largest white goods dealer in Kottayam: "Here people are sensitive to price in an inverse way. If you give them anything cheaper, they are suspicious of the quality. High priced goods move faster and if anything has a premium on it, it moves even faster." Kottayam citizens are quick to point out that Akai is not doing well here; rockbottom prices are a put-off in India's rubber capital.
TILL now, the rich from small-town India have been doing their glitz shopping in the metros, on periodic trips up to Big City Bright Lights. From Patiala and Gwalior, Aligarh and Jodhpur, the wealthy would drive to Delhi; from Quilon and Coimbatore, Pondicherry and Calicut, they would go to Chennai. Now they have the whole shop-till-you-drop world right next door, and they're revelling. With ostentation the leitmotif.
Peep, for instance, into the house that mill-owner Sanjeev Kumar Goyal has built in Ludhiana's Sarabha Nagar. Giant waterfall in the garden. "It's inspired by the Niagara Falls," explains Goyal. A gleaming granite-and-glass lobby leads to the living room, where draperies are golden taffeta, sink-in sofas are upholstered in golden and maroon brocade and armchairs in satin. Baccarat crystal, hand-carved Ganeshas and Shivas, waterslides snaking into the indoor swimming pool. "It'll take you 45 minutes to walk through the house," says Goyal's beaming wife Sangeeta. Oh, the smell of freshly-minted money!
Ditto for 23-year-old garment exporter Vikas Jain, just back from his honeymoon to Mauritius, Singapore and Malaysia. Six cars between him and his wife; two cell phones for himself ("just in case there's an emergency and the other one is engaged"). Wrist watch: Rado. Sunglasses: Emporio Armani. Shoes: Bally. Doesn't like Benetton T-shirts: "They don't change their line every spring and fall, the way we do for our export line."
Underneath the glitz, however, there are tremors that most of the nouveau riche refuse to feel. Sitting in a highrise on Race Course Road, architect Nandita Amin, member of Baroda's high-profile 'Jyoti Limited' family, reminisces: "Our family had a bungalow exactly on this spot, one among very many beautiful bungalows. A few years ago, we realised we were the only ones left as others had sold off their plots. It didn't make any sense having people from the neighbouring buildings watch you in your swimming pool, or children pelting your dogs. So we moved to a farmhouse 10 km away from the city."
THE rate of savings of the average Vadodaraite has gone down and there is a danger in this," says Ranjan Munshi, secretary general of Federation of Gujarat Industries. Hectic construction is fast turning the "city of banyan trees" into a concrete jungle. "The growth of the city has not corresponded with that of the infrastructure," notes Maharaja Ranjitsinh Gaekwad. Water-logging is now due to man, not floods.
Looking at the groovers in Guwahati, one would never guess that they live in a deindustrialised state groaning under an accumulated debt of Rs 6,000 crore, and where, according to a new study, 52 per cent of the population is below the poverty line. Consumerism here is fed by trading—and slush money. "If you tell me that 90 per cent of development funds for Assam is siphoned off, I won't disbelieve you," says Shantikam Hazarika, director of Assam Institute of Management. One pointer to this skewed prosperity: there are only some 500 'good' hotel beds in town and the last quality hotel came up seven years ago. "It's a case of easy money, easy spending, easy culture," laments filmmaker Jahnu Barua. "Everything looks illogical and confusing."
Real estate prices are going through the roof. In Guwahati, they've climbed 60 per cent in five years. "Land prices in Indore today are almost on par with Hyderabad's," says district collector Gopal Reddy. Commercial premises in Vadodara have leaped from Rs 2,000-3,000 per sq ft five years ago to even Rs 10,000 per sq ft today. Officials from VUDA (Vadodara Urban Development Authority) confirm that free land is no longer for sale in the city.
But who cares? When rubber prices touched an all-time high of Rs 60 per kg two years ago, the TVS car showroom in Kottayam actually had a long queue outside of people clamouring to book all kinds of vehicles. Says a TVS spokesperson: "Kottayam is one place where you are assured of a steady market. Whether it's Mahindra's new jeep or a Peugeot car, Kottayamites do not hesitate to buy because they don't buy anything with a long-term idea. The speed in which they discard the used ones is one of the highest in the country."
Indeed, the cognoscenti are beginning to move beyond the boom. Says T.K. Mathew, director of plantation firm A.V. George and Company: "We think it's infra dig to buy things from Kottayam. I buy my clothes either from Chennai or Bangalore. You must distinguish yourself from the rest. Exclusivity no longer stems from the brand but from the place of purchase." According to Mathew Kurian of Vembanad Wood Works, people often buy things from Kottayam but declare that they have bought it in Dubai or Bangalore or at least Coimbatore to retain their identity as a well-to-do individual.
"Identity", now that's a strange and fluid concept. Both for people and for towns.Especially small towns.