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Rural markets drive India’s post Covid economic recovery: Kantar, GroupM study

Construction sector in rural India is expected to see a bounce-back with consumers expected to spend on building houses and undertaking smaller construction works in the next six months
Rural markets drive India’s post Covid economic recovery:  Kantar, GroupM study
Rural markets drive India’s post Covid economic recovery: Kantar & GroupM study (Representational Image: Shutterstock)

Kantar, the world’s leading evidence-based insights and consulting company along with GroupM’s rural and experiential marketing unit- Dialogue Factory Wednesday released its 2nd edition of the Rural COVID Barometer Report. This report explores rural India’s concern about the impact of the second wave and how it alters consumer behaviour and purchase patterns. The research was conducted with Kantar’s strong data and insights network and Dialogue Factory’s rural marketing intelligence in 18 Indian states, across rural adults with representation across gender, New Consumer Classification System (NCCS) and age groups.

Key takeaways from the report

Rural India is highly concerned about the Covid situation in second wave. Concerns are higher amongst females (91%) as compared to males (85%) and within the higher age bands (55+ years old’s). These concerns are mostly driven by Covid’s impact on day-to-day life and functioning (most for 25-55 years old’s), fear of falling sick and the overall need for financial planning. As a result, rural consumption and shopping patterns have witnessed a major shift.

While consumers are concerned, most are also positive about economic recovery once the situation normalises. Nearly three in four rural households have received some form of assistance from the government of India schemes, thus providing the much-needed financial cushion to consumers.

Rural consumers are saving 25% of their income. Southern India (except for Tamil Nadu) is saving more in comparison to other parts of the country. As expected, expenses are higher on personal care, hygiene and cleaning products while spends on indulgence and beauty products have been deprioritised.

With respect to retail channels, consumers prefer local village shops for purchasing groceries (56%), personal hygiene (49%) and cleaning (45%) products. Even big-ticket items like consumer electronics (50%) and durables (46%) are preferred to be bought at these local shops.

Digital: Transforming rural consumer behaviour 

The deep-rooted penetration of 4G internet through smartphones is bringing in critical changes the consumer behaviour in rural India. Today in the hinterlands, online is the most consumed media after television.

With respect to online content consumption, music/ audio (69%) leads the pack followed by news (49%) and gaming (33%).

Usage of video / OTT apps are driven by YouTube at 87% (most in Rajasthan, Andhra Pradesh, Telangana, Tamil Nadu and Bihar) followed by Disney+ Hotstar at 30% (highest usage in Uttar Pradesh, Tamil Nadu, Gujarat, Kerala).

WhatsApp and Facebook are the most used social media and messenger platforms at 87% (most in Rajasthan, Andhra Pradesh, Telangana and Karnataka) and 66% (most in Odisha, Uttar Pradesh, Gujarat and West Bengal) usage respectively.

PhonePe is the most used digital payments application with 19% of rural consumers having used these services in the last 6 months. Usage of PhonePe is driven by Karnataka at 46% followed by Rajasthan at 38%.

Rural market forecast 

Growth in the consumer durables and automotive (2-wheeler) sectors are likely to slow down in the next 6 months. However, the smartphone category is expected to see fast growth in the near future.

The construction sector is also expected to see a bounce-back with consumers expected to spend on building a house and undertaking smaller construction works in the next 6 months.

Highlighting the report, Dalveer Singh, Head of Experiential Marketing- APAC, GroupM Dialogue Factory said, “The pandemic has evolved the rural consumers’ decision-making process. They are watching their spending and prioritising their buying patterns by the need of the hour. There is a positive acceptance of the vaccination. The upper- and middle-class rural Indians are being more proactive in financial planning to deal with Covid constraints, which make these markets a significant place to introduce investment and savings products. To sum up, there is a deep sense of uplift on the subject of India’s economic future.” 

Speaking on the report, Puneet Avasthi, Senior Executive Director, Insights Division, Kantar said, “With a highly concerned rural consumer, rural India is planning finances better and inclined towards a savings mindset. This offers significant headroom for growth to savings and investment products such as insurance and even mutual funds. Additionally, we are witnessing a significant rise in digital payments as an important mode of transaction. This offers a robust platform for rural financial inclusion, as also for suitable hyperlocal promotions. With the change in consumption priorities in favour of health and hygiene products (a trend that has held since the first wave), FMCG marketers should leverage this trend for planning their innovation pipeline.” 

Sample Size

This is a semi-annual survey jointly undertaken by Kantar and GroupM Dialogue Factory. The report findings are based on a sample of 3,855 rural adults (18+ years old) surveyed across 18 Indian states with representations across gender, NCCS (New Consumer Classification System) and age groups. All socio-cultural regions (SCRs) are covered within each state to meaningfully reflect the variability that exists. The migrants that have returned to their villages were also covered in the study.

Read more: Tata Motors partners with CSCs to strengthen rural outreach

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The Changing Face of Rural India