Insights from our Culture AI: India’s new codes of consumption, and action points for brands

In a world that is becoming increasingly complex and bewildering to negotiate, human beings tend to find it comforting to slot each other into boxes, to make their decision-making processes easier. “He’s a liberal.” “She’s a centrist.” “They’re baby boomers.” “Oh, and they’re Gen Y.” These labels are easy to apply, but they can be meaningless, because they often lack context and nuance; Gen X-ers all over the world can’t be deposited into one catchall box, for example, because they come from different countries and backgrounds.

Zooming In on the Gen Z Consumer…

Similarly, you would expect millenials and Gen Z-ers to have some unique characteristics in India, and you would be right. According to a survey carried out in 2019 by Deloitte, they differed from global respondents in that, among other things, they were more satisfied with their lives, more optimistic in their outlook on the world and more confident that business (rather than a university degree) was the solution to the world’s main challenges.

With an estimated 64 percent of its population in the working age group, India’s future is clearly in the hands of its youth. By 2030, its millennials (born between 1981 and 1996) and Gen Z-ers (born 1997 onwards) will form almost 77 percent of its population.

They will be highly individualized digital natives, born into a society experiencing non-stop technological and social disruption, with upheaval and disillusionment an integral part of their lives. Their personal narratives will shift away from traditional metrics of success, and we at Quilt.AI decided to find out how these shifts will affect their consumption behavior.

Our research methodology

In the Indian metropolitan cities of Mumbai, Pune, Ahmedabad, Bengaluru and Delhi, over a period spanning January 2016 to August 2020, we analyzed 522 million consumer searches around 16 categories (enumerated below) and 1,600 social media posts from millennial and Gen Z accounts.

Our anthropologists and data scientists then worked with our proprietary AI models to decode the meaning of each consumer trend, after which we identified the key areas that brands need to focus on when designing products for these young consumers.

The categories we studied were:

• Groceries/department stores
• Apparel shopping
• Consumer electronics/appliances
• Accommodation
• Dining
• Education
• Healthcare
• Health/beauty/medical supplies
• Home furnishings/furniture
• Movies/events/recreation
• Video streaming
• Gaming
• Transit/taxi
• Insurance
• Digital wallets
• Airlines (We did not find emerging trends here since the industry was particularly badly affected by COVID-19.)

Within these categories, we curated a set of English and local language keywords into trends and visualized their total search volume in the past four years as well as rate of change (ROC) in interest over the past year (2019–2020). Then we looked at the respective trends for the mass and affluent segments, and the respective demographic skews, to identify which segment which trend is most relevant to.

Our Findings

Across categories, two core factors were clearly evident: experience and comfort.

Under experience, the key questions were “What kind of experience am I receiving? Has it been made specially handcrafted for me, or am I joining an existing club?” With comfort, consumers asked “To what extent am I staying within my comfort zone? Am I going back to what is familiar, or am I breaking the mold and standing out from the crowd?”

Further, we discovered that consumption patterns could be sorted into four principal clusters. Using these, we arrived at measures that brands can use to build narratives in each cluster, in order to speak to millenials and Gen Z-ers.

Me, redefined

Consumers are optimizing aspects of their lives by actively pursuing radical alternatives to fit their needs. Both segments are showing increasing interest towards carefully curated content and products as well as a heightened focus on their personal health and well-being.

In the mass segment, this means things like the adoption of micro-finance credit services (“buy now pay later”) and à la carte, short term “sachet” insurance plans. This segment also saw a surge in online grocery shopping during lockdown, with a preference also shown for supporting local stores.

Affluent consumers, on their part, are taking to customized skin and hair care products, curated gift box selections, and clean, ethical eating, including growing their own fruit and vegetables in kitchen gardens.

Near and dear

Consumers are seeking comfort in everyday practices, with self-enrichment and rejuvenation as the goal. This may be through grounding in personal care rituals, or engaging in activities that uplift everyday personal routines.

In the mass segment, this translates to things like the purchase of comfortable, all-day loungewear, home improvement, healthy diets and self-care routines.

Among affluent buyers, this shows up in things like the buying of luxury loungewear and the use of holistic Ayurvedic products.

Contemporary collectives

Young Indians (particularly Gen Z-ers) are very attuned to how their actions impact the environment. This shows in a variety of ways, from making eco-conscious choices or adopting new technologies that improve their and their family’s well-being. These consumers are constantly adapting and evolving, making informed lifestyle choices for the greater good.

Mass-segment consumers are becoming very conscious about going plastic free, for example. They are also immersing themselves in multi-layered virtual environments, spawned by the popularity of multiplayer games like Fortnite and PUBG.

Those in the affluent segment are going down the eco-friendly and self-care routes in a significant way, by taking a more leisurely and minimalistic approach to life and by leaning towards organic food; they are also showing interest in electric scooters. Confined largely to their homes, millennial parents are connecting with their children through e-learning platforms like Byju’s.

Familiar flavors

Due to the current mood of pessimism about the world around them, millennials and Gen-Zers are craving nostalgic activities that offer a sense of escapism, as well as products that stand for purity and naturalness. They are reveling in long-established experiences that allude to a simpler, more grounded way of life.

In the mass segment, this manifests in activities like a return to playing retro video games and going on motorcycle trips, especially off road.

Affluent consumers are moving away from fast fashion and seeking out ethical fashion options, and switching to eco-friendly detergents and cleaning agents.

HOW SHOULD BRANDS ADAPT TO THESE CONSUMERS?

If there is one thing that brands need to be, it is flexible, because the needs, priorities and aspirations of millennials and Gen Z-ers are constantly evolving — inertia is not an option.

The core pillars of experience and comfort need to be catered to, but each brand touchpoint has to be built around their customers’ unique tastes and beliefs. This means that each cluster of consumption patterns needs a separate approach, as described below.

Me, redefined

Brands need to be sensitive toward these evolving lifestyle needs, and curate product offerings to enhance those needs.

Near and dear

Brands must take care to notice their customers’ small moments of everyday joy, and affinity needs to be demonstrated through personal acts.

Contemporary collectives

Brands need to call attention to their mission, and they have to actively engage consumers to be part of a wider movement, with fresh and innovative ideas.

Familiar flavors

Authenticity needs to be communicated through a wholesome brand origin story, with touches of nostalgia.

To find out more about our research projects, get in touch at anurag.banerjee@quilt.ai, or head over to our blog for more!