Challenges and issues pertaining to consumerism

in India
Submitted by:

Submitted to:

Nachiket

Dr. Raju Rathod

INTRODUCTION

Consumerism is a social and economic order that encourages the purchase of goods and
services in ever-greater amounts. The term "consumerism" has also been used to refer to
something quite different called the consumerists movement, consumer protection or consumer
activism, which seeks to protect and inform
consumers by requiring such practices as
honest packaging and advertising, product
guarantees, and improved safety standards. In
this sense it is a movement or a set of policies
aimed at regulating the products, services,
methods, and standards of manufacturers,
sellers, and advertisers in the interests of the
buyer.
In economics, consumerism refers to
economic policies placing emphasis on consumption. In an abstract sense, it is the consideration
that the free choice of consumers should strongly orient the choice what is produced and how,
therefore the economic organization of a society (compare producerism, especially in the British
sense of the term). Also this vote is not "one man, one voice", but "one dollar, one voice", which
may or may not reflect the contribution of people to society.
The term "consumerism" has several definitions. These definitions may not be related to each
other and confusingly, they conflict with each other.
One sense of the term is to describe the efforts to support consumers' interests. By the early
1970s, it was the accepted term for the field and began to be used in these ways:

"Consumerism" is the concept that consumers should be informed decision makers in the
marketplace. Practices such as product testing make consumers informed.
"Consumerism" is the concept that the marketplace itself is responsible for ensuring economic
justice and fairness in society. Consumer protection policies and laws compel manufacturers to
make products safe.
"Consumerism" refers to the field of studying, regulating, or interacting with the marketplace.
The consumer movement is the social movement which refers to all actions and all entities
within the marketplace which give consideration to the consumer.
While the above definitions were being established, other people began using the term
"consumerism" to mean "high levels of consumption". This definition gained popularity since the
1970s and began to be used in these ways:
1. "Consumerism" is the selfish and frivolous collecting of products, or economic
materialism. In protest to this some people promote "anti-consumerism" and
advocacy for simple living.
2. "Consumerism" is a force from the marketplace which destroys individuality and
harms society. It is related to globalization and in protest to this some people
promote the "anti-globalization movement

CONSUMERISM IN INDIA AND ITS EFFECTS

Consumer in India had started its journey with a need to raise his voice against the quality
of goods as back as in 1969 through housewives at Mumbai .It took a shape of revolution at later
stage and one day our parliament passed an act for the welfare of consumers in 1986 .This
Consumer Protection Act 1986 had further undergone many challenges, criticism and even
question on its legal validity was also put before the honorable Supreme Court of India After
hearing all sort of accusation and constraints from the big business houses , our apex court held
this welfare act very much valid , legal and within the framework of our constitution .
Since 1986 and after three important amendments to the act ,scenario in the market has
drastically changed and consumerism in India is diverted to more of lust than limited to needs
.We are now easily confusing the things with what we need and what we want Its true ,if we
work hard ,we deserve nice things .But stuffing plenty of nice things which we really do not need
deprive the other consumers from the things they require for their survival .Keeping four cars
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for four persons in the family is ultimately going to affect others and also more consumption of
nations resources like petrol etc. our sense of entitlement can muddy the waters when it comes
to what you want and what you really need. The sizes of our houses are expanding as per our
income and resources irrespective of the fact what we had in olden days. People were having
more kids but still living in houses far smaller than were willing to settle for today. Now we
want a room for every child, plus a living room, family room, media room, and kids playroom.
And if we have to share a television, we are very uncomfortable with the idea..
This sense of entitlement is building commercial pressure on our children. Rates of
depression, anxiety and other mental illnesses have risen in the past two decades in the
children .A report submitted to the inquiry by the National Consumer Council found that children
in deprived areas were more obsessed with money and shopping than youngsters from better-off
homes. Poorer children wanted a job with a high salary compared with children from affluent
areas and they were the main victims of consumerism, as per the report conducted by the charity
The Childrens Society
Our consumption patterns are so much a part of our lives that to change them would
require a massive cultural overhaul, In consumer society of the day now, people replace their
goods with newer ones, use them and throw them away. The question of repair does not arise
People have money to purchase goods in plenty. In case, they do not do so, it leads to recession
massive unemployment. The success of a consumer society is measured with the rate of
production, purchase and consumption .The society is considered to be progressing if all above
elements are present there . The single most important measure of economic growth is the gross
national product (GNP), the sum total of goods.
But at the same time as per Richard Robbins, the production, processing, and
consumption, of commodities requires the extraction and use of natural resources (wood, fuels,
and water); it requires the creation of factories and factory complexes whose operation creates
toxic byproducts, while the use of commodities themselves (e.g. automobiles) creates pollutants
and waste. Yet of the three factors environmentalists often point to as responsible for
environmental pollution population, technology, and consumption consumption seems to
get the least attention. One reason, no doubt, is that it may be the most difficult to change;

A Consumer is the most important visitor on our premises. He is not

dependent on us we are on him. He is not an interruption to our work; he
is the purpose of it. We are not doing a favour to a consumer by giving
him an opportunity. He is doing us a favour by giving an opportunity to
serve him.

WHAT ARE THE EFFECTS OF CONSUMERISM?

Consumerism is appreciated in Western economies since a persons standard of living is
valued by his or her material possessions. There are certain positive effects such as:
Positive Consumerism Effects:

More industrial production.

A higher growth rate economy.
More goods and services available.
More advertising since goods manufactured have to be sold.
Increased production will result in more employment opportunities.
A variety of choice for goods and services
More comforts for a better living style.

.
Negative Consumerism Effects:
The main cause of the current environmental crisis is human nature. More specifically, all
were doing is what all other creatures have ever done to survive, expanding into
whatever territory is available and using up whatever resources are available and one day
it may result into a death in their own waste.
The University of Colorado at Boulder likened the expansion of human cities to the
growth and spread of cancer, predicting death of the Earth in about 2025. Since the
human population has quadrupled in the past 100 years and at this rate will reach a size in
2025 that leads to global collapse.
One is in a rat race to earn more and is forced to cope up with stress and other work
related tensions.
Material wealth is the deciding factor about whether a society is highly developed or not.
Our ethical and spiritual values are left unimportant under the circumstances.
Over-dependence on labor saving devices.
A car for each individual would mean gradual erosion of public transport.
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 Crime rate also increases as wants to possess expensive gadgets increase. Thefts become
common and daylight robberies take place.
Personal relationships also get affected as people are busy trying to earn more to maintain
their standard of living.
Cheaper goods are Todays consumption which also affect environmental resource
Consumerism has also resulted in ecological imbalances. The natural habitat is being
destroyed to create more goods and build more buildings affecting the weather. Global
warming will eventually result in health problems. Industrial pollution is affecting people
rather than focusing on simplicity.

Consumerism is basically, a social and economic order that is based on the systematic
creation and fostering of a desire to purchase goods or services in ever greater amounts.
Five examples of consumerism over in India in short are:
1. All the pollution that is exported over from richer countries to the not so rich ones, such
as India.
2. The cycle of poverty India suffers from alot due to consumerism.
3. The economic effects that consumerism has brought to India.
4. The many ways in which India has been exploited because of consumerism.
5. Important environmental aspects that consumerism has brought to India

CONSUMPTION AND RETAILING IN INDIA IN THE YEARS AHEAD

Kishore Biyani is the Group CEO of Future Group and is author of the book, It Happened In India.

Independent India may be over sixty years old but a large majority of Indians today are
not even in their middle age. Life expectancy has crossed seventy years, but more than 890
million Indians are below the age of forty-five. Half of the country hasnt yet reached the age of
twenty-five. We are a Republic of the Young wherein the young generation has never been part
of our socialist era and doesnt know scarcity. They value choice and freedom and have seen
India winning in every arena, be it sports, business, technology or even beauty pageants. In
effect, they are far more confident about their place in the world and justifiably proud of their
Indian origins. They not only believe in change, but are confident that they can affect change. A
young working population will not only drive productivity but also set a spiraling effect on
consumption and income generation. A young nation is willing to work harder, earn higher and
spend more on buying goods and services.

THE ECONOMIC IMPACT OF MODERN RETAIL

Few can deny that India today provides the single biggest consumption opportunity in the
world. Consensus is that the macro trends in urbanization, demographic shifts and income
growth will be positive and irreversible. Over the course of the last six decades, Indian GDP
grew and touched $1 trillion dollars. However, at the current growth rate, India s GDP will
double within this decade and add another trillion dollars to its economy. What took almost sixty
years, will happen over the course of a decade. This additional trillion dollar of new economy
will throw up new opportunities including a doubling of consumption demand in the country.
The additional $450 billion of discretionary consumption demand can be catered to by modern
retailers.
Retail is a significant contributor to the overall economic activity the world over. Apart
from being one of the largest employers the total retail share in the World GDP is as high as 27
per cent. While in the United States retail accounts for 22 per cent of the GDP, the share of
organized retail in the developing markets ranges between 20 per cent and 55 per cent.
In India, modern retail is poised to grow at over 35 per cent every year for the next few
years. Indias peers such as China and Brazil, took 10-15 years to raise the share of their
organized retail sectors in the total retail pie from 5 per cent to 20 per cent and 38 per cent
respectively.
Modern retail now captures just 4 per cent of total retail trade in India and this figure will
hit the 20 per cent level far faster than it has anywhere in the world. The world over, the growth
of modern retail has played a significant role in the transformation of the economy. Though the
emergence of modern retail has been somewhat late in India, its impact in boosting consumption
cant be denied. Increase in consumption is now driving manufacturing, thereby creating more
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jobs and income for the entire population. The change is far more dramatic when one considers
that with the popularity of modern retail, the market for packaged and value-added food products
is expanding at a fast pace. This is providing the much needed boost to value creation in agroproducts. In turn there is more wealth-creation and rise in consumer demand even in the smaller
towns and semi-urban centers.
While capturing the empirical evidence behind these trends, the much-venerated
consultancy giant, McKinsey & Company recently came up with a report titled, The Bird of
Gold: The Rise of Indias Consumer Market. Apart from throwing up a host of numbers on the
consumer market in India, the report confirmed the emergence of a virtuous cycle between
consumption and income growth. Increased consumption has meant higher manufacturing, more
jobs and wealth creation.
While consumption grew slowly in the decade before the 1991 reforms, it has been an
important engine of Indian growth over the past decade, accounting for over half of India s GDP
growth during 1995-2005, stated the report and went on to add, One of the greatest dreams of
all Indians has been an economy that could lift the countrys millions out of destitution, and
Indias reforms have been very successful in making progress towards that goal.

THE CHALLENGES AND OPPORTUNITIES

The most challenging and exciting time to live in, is on the cusp of change. And that is
where India is today. We are on the cusp of change wherein a huge, multicultural India is
transforming from a socialist economy to a consumption-led creative economy. The scope and
depth of change that is taking place across India, is unparalleled in its history. This change
provides both a humongous challenge and a gigantic opportunity for marketers and retailers.
Changing demographic profiles, increasing income levels, urbanization, technology,
globalization and a free flow of ideas from within and outside the country is brining about a
dramatic shift in consumer tastes and preferences. As retailers, we not only have to acknowledge
this change but also stay a step ahead of the evolution curve of Indian consumers.

Indian consumers, unlike the rest of people in the world, demand ideas and solutions that are
uniquely Indian. The diversity and heterogeneity of our nation doesnt allow us the luxury of
developing a standardized solution. At the same time, as Indian retailers, we are in a uniquely
advantageous position to understand and react proactively to the needs and aspirations of Indian
consumers.

The economic, social and cultural diversity of Indian consumers forces marketers and
retailers to view this mass of consumers not as one single market but as a mass of niches. The
language people speak, the religion they follow, the food they consume, the fabric they wear and
the festivals they celebrate changes every few hundred kilometers. Logic and emotion, individual
and social, poverty and affluence, capitalism and socialism, life and lifestyle, value and
indulgence, and the past and the future simultaneously coexist in India. And all these paradoxes
converge to make India what it is.
To the external world, the harmonious coexistence of seeming contradictions in is one of
the most confusing aspects of the Indian consumer market. But to me it signifies our countrys
openness to change and its ability to add new dimensions without losing old ones. It opens up
new and unique opportunities as well as brings forth challenges for marketers and retailers. At
the forefront of private consumption-led growth are retailers who cater to the consumption needs
of the consumer. Over the next couple of years retailers will need to play a more inclusive and
holistic role in building brands, shaping desires, creating aspirations and catalyzing further
consumption. We are at an inflection point wherein the first phase of retailing is coming to a
close.
Contrary to popular perception, the Indian consumer market continues to be significantly
unbranded, especially in categories like food, apparel, home care and home products. Brands are
a product of imagination. A brand is an idea and if translated properly, it can fire a customers
imagination. Therefore each brand needs to be developed on a fresh canvas. Yet, most of the new
brands that have emerged in the last fifteen years seem to have been borrowed from the
international market and often lack a real connection with India. There are very few brands that
have been launched in the last two decades that were conceived in India. Therefore, there lies a
significant opportunity to conceive and create new brands that cater to aspirations of the new
generation of Indian consumers.
Being present closer to consumers, retailers have the inherent advantage in building or
supporting brands. Increasingly in many categories, retailers will have the option to directly tieup with manufacturers and develop their own brands. In certain categories like snacks, staples,
tea and dairy products, we have been able to develop a strong portfolio of brands by directly
tying up with small manufacturers. At the same time, a large retail chain network allows brand
owners to collaborate with retailers. Over the next couple of years, one will notice an increasing
collaboration between retailers and consumer goods companies in sharing consumer data and
insights, exclusive packaging and product formulations for specific retail chains and joint
promotion and marketing of certain brands.
While brands that are able to establish an emotional connect with Indian consumers will
be able to boost consumption, what will catalyze it further is the availability of customized credit
products provided by retailers within their stores. Till now, credit products have largely been
made for very large ticket purchases like automobiles and home and cater to a very small
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segment of the population. Customer aspirations are increasing faster than their income and in
order to capture the full consumption potential, we will need to build credit products customized
for sections of the society yet untouched by existing credit products.
As retailers, we are now in a far better position to understand and cater to customized
credit needs of our customers. In fact, we can draw some lessons from Latin American,
especially Brazilian models wherein the largest retailers have built a substantial chunk of their
business through integrating credit products in every product category. More often than not,
these customized micro-credit products cater to the marginalized sections of the society. It is a
proven fact that easy availability of such consumer credit acts as a catalyst towards driving better
lifestyle and higher consumption.
The major trends in retailing that we envision may have little to do with the conventional
form of retailing. However, in more ways than one each of these trends builds upon the platform
that modern retail chains provide and at the same time boosts consumption within these retail
chains. The convergence of these catalysts retail, brands and consumer credit within a retail
store can bring about a paradigm shift in modern retailing. As new entrants get into retail, the
agenda for the next phase of retailing has already been set it is no longer about buying and
selling, the challenge is to catalyze consumption that will lead to economic growth.