Sudhir Sitapati, the Managing Director and CEO of Godrej Consumer Products Ltd (GCPL), has forecasted a recovery in the rural markets by Diwali, driven by good monsoon conditions and government measures.
Rural Consumption Insights
Sitapati noted positive signs for rural market revival and mentioned the government’s awareness of the need to boost rural consumption. He noted, “A lot of people are saying it and I’m also seeing a little bit of green shoots. Also the government is quite cognizant of reviving consumption in rural areas. I’m actually quite optimistic, the monsoon also seems quite good. So I’m quite optimistic of rural revival. For the last two-to-three years I have not been sure, but I think by Diwali we will see some good rural recovery.”
Consumption Growth and Economic Disparity
The GCPL CEO emphasised the critical need for rural consumption to grow faster than urban consumption, a trend observed over the past two decades. “That is what has been the case for the last 20 to 25 years. It’s not like rural is actually under-growing urban, it’s just not growing faster than urban like it was,” he explained.
He also highlighted the disparity between GDP growth and domestic consumption growth, stating, “GDP growth rate was 8% last year but domestic consumption was only 4%. Domestic consumption is often a measure of the income growth at the bottom of the pyramid. So 4% domestic growth has to go up. Consumption growth and GDP growth have to be in tandem. I’m sure that the government will take measures to spur domestic consumption.”
Economic Divide and Spending Patterns
Addressing the economic divide, Sitapati pointed out the varied spending patterns across different economic strata. “At the top of the pyramid, the top 20% of India, who hold 50% of the GDP, are experiencing a boom in discretionary spending. The next 80% are under stress, which even government data suggests. Consumption growth is 4% while GDP growth is 8%, indicating this disparity.”
Strategic Innovations by GCPL
In response to the K-shaped economic recovery, GCPL is adjusting its strategies for different consumer segments. Sitapati noted, “At GCPL we are constantly trying to innovate in line with the K-shaped economy. We are focusing on the top of the pyramid for e-commerce and modern trade and are also making products more accessible to the bottom of the funnel.”
Implications for the Jewellery Industry
For jewellers, Sitapati’s insights highlight the importance of monitoring rural market trends and consumer spending patterns. A revival in rural consumption could signal increased demand for affordable jewellery, especially in regions benefiting from the improved economic conditions. Additionally, understanding the economic divide can help jewellers tailor their marketing strategies to different consumer segments, ensuring that both high-end and budget-conscious consumers are effectively targeted.
