During Covid, a large number of people moved from metropolitan cities to smaller towns and villages, and this coupled with the increasing penetration of e-commerce, is changing the consumption pattern in the rural economy. Typically, rural consumption is driven by non-packaged food items while urban consumption is more towards packed items. Moreover, the consumption of hygiene and health products in the rural economy is negligible, but with the pandemic driven migration, the line between the rural consumption habit and urban consumer practices is blurring.
Dabur India marketing head Mayank Kumar said, “When people migrated from big cities like Bengaluru to smaller towns, they carried the habit of consuming healthy and functional foods. However, what has helped people in these places adapt such consumption habits is the reach of e-commerce. The penetration of e-commerce beyond the metros found the right consumers who had sampled such products and were now ordering them online. This helped consumers in smaller towns to sustain the habit of consuming functional and healthy foods.”
Now the people in smaller towns and cities like Satna, Jabalpur, Kanpur or Allahabad are demanding packaged food and hygienic products. A lot of professionals employed in sectors like Information Technology or Digital media who migrated to their hometowns to work from home (WFH) have disposable income to spend on items primarily consumed by the urban populace. When these people moved to villages and smaller towns, they demanded the same products and e-commerce companies saw an opportunity to deliver them.
Thanks to this amalgamation of increasing e-commerce penetration and work from home (WFH), the consumption of packaged food and hygiene products is going up in rural areas.
An ICICI Securities report quotes Colgate-Palmolive India, MD Ram Raghavan, as saying, “We are witnessing more blending of environment in terms of aspirations, behaviour, practices, product, categories, etc, between urban and rural areas.”
With the growing purchasing power of consumers, more and more e-commerce firms have opened centres in the rural markets. Many people who were earlier working in cities – and have some savings – but lost jobs due to lockdown, moved permanently to villages and took contracts for these centres or became employees.
Rural consumer spending is expected to remain strong given the fact that many companies have given permanent work from home to their employees – because it is a win-win. The employees save rent and other discretionary spending on urban living while the companies save electricity, office rent, and other operational costs. This means saving for both company and employee – especially in industries like IT and digital media in which all that needs is a good internet connection to work from anywhere.
Rural India is witnessing a resurgence, racing ahead of the urban markets in terms of growth in consumer spending on branded goods. The spending growth by rural Indians on items such as Salty snacks, talcum powders, sanitisers, toilet cleaners, and insecticides among other fast-moving consumer goods was in double digits in the rural market. One can see that rural India is resurging with the growth in connectivity – digital and physical – and government spending, and soon the brands would launch their products keeping this market in mind.
