Non-metro markets will propel India's recovery: EY Survey

In the face of unprecedented economic disruption caused by the Covid-19 pandemic, non-metro markets are likely to recover faster than metro markets, an EY survey has found.

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The EY report, ‘Will non-metro markets propel India's recovery’, reveals a higher percentage of respondents from non-metro markets expecting to spend more than before on several categories compared to metro markets. It indicates that when the lockdown ends, green shoots of recovery would probably sprout faster from the non-metro markets.

The report was launched on July 23 with a panel discussion, in which the participants discussed insights from the survey. Shashi Sinha, CEO, IPG Mediabrands India; Krishnarao Buddha, Sr. Category Head, Marketing at Parle Products; Narayan Sundararaman, Head of Marketing at Bajaj Auto; Rajiv Dubey, Head of Media at FMCG Major Dabur India, and Phalgun Kompalli, Co-Founder of UpGrad, participated in the panel.

The survey covered a varied demographic mix of more than 4,000 respondents (2,000 each from the metro and non-metro markets) to understand the potential impact of the pandemic from the consumer sentiment perspective. It covered key aspects linked to the current and expected attitudes, behaviours and spending trends of consumers as they adapt to the new reality.

According to the report, non-metro respondents stated lack of knowledge of how to use digital services, absence of smartphones and fewer language interfaces as some of the obstacles they faced.

Fraud and data theft continue to be a major concern across metros and non-metros while limited knowledge of usage and lack of devices still impact non-metro markets.

Ashish Pherwani

Ashish Pherwani, Partner, Media and Entertainment Leader, EY India, said, “The Covid-19 pandemic has radically shifted our way of life. However, despite uncertain and challenging conditions, our research shows that non-metros express a higher degree of resiliency and resolve to bounce back quicker compared to metros. We may see long-term and even permanent changes in consumption patterns.”

The survey results reveal that the pandemic and the ensuing social distancing measures put in place have led to fundamental changes in how Indians are consuming media, necessities, luxury products, education and travel.

Some of the key insights from the survey include:

Health, hygiene and online services will continue to grow

While Covid-19 has impacted overall consumption, categories like health products, household products, hygiene products, vitamins and supplements and online services (gaming, home entertainment, online education and banking) are expected to benefit.

Non-metro market recovery expected to be faster than metro recovery

Categories like consumer goods, travel, entertainment, automobiles and white goods are all expected to see an increased and faster recovery of demand from non-metro markets after the lockdown.

Increase in digital adoption

Digital trials increased significantly during the lockdown period.  However, adoption was higher for metros vis-à-vis non-metros.  Some of the obstacles stated by non-metro respondents included lack of technological knowledge, absence of smartphones and fewer language interfaces.

halgun Kompalli

Phalgun Kompalli, Co-Founder of UpGrad, said that in lockdown tier I and II, cities had reacted equally well in adapting the edtech landscape.

He said the adaptability could improve if the access increases in those areas. “There is a huge opportunity for online education platforms to accelerate the demand and requirement of tier cities and towns.”

Kompalli said that the brand has changed and re-allocated its marketing plans for tier II and below markets.

Newspapers remain the most trusted medium

The report says newspapers continue to remain the most trusted news source. 42% of respondents in non-metro markets spend more than 20 minutes in reading a newspaper compared to 36% in metros.

32% of metro respondents and 65% of non-metro respondents are getting newspapers at home.

Shashi Sinha

Speaking on revisiting ad spends, Shashi Sinha, CEO, IPG Media Brands India, said, “Wherever sales come from, ad spends will be there.”

Narayan Sundararaman

Narayan Sundararaman, Head of Marketing at Bajaj Auto, said that from April to May, TVS’ advertising was zero as its sales was zero.

“I feel that there is a lesser focus on regional papers, but apart from regional, being smaller brands in front of HT or TOI (national), their quality of paper and print creates a difference in choosing,” said Sundararaman.

Rajiv Dubey

Speaking on a complete shift of FMCG to e-commerce, Rajiv Dubey, Head of Media at FMCG Major Dabur India, said, “FMCG would not shift to e-commerce as the medium has a lot to catch up. Brick and mortar and e-commerce both will play a major role in brand sales.”

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