It is hard to find a person who is employed / into business / searching for a work and hasn't heard words such as Recession, Slowdown, Economic crisis in last 6 months. We all have read the story of 10 blind people describing an elephant, few might of heard about the frog in a well story by Swami Vivekananda. Yes, I m blind and also frog in well, still let me put my 'Analysis'. 😊
Gen X, Gen Y, Millennial are western terms and I refer thus
Those who were born before 1970s : Wiser Generation (WG)
Those who were born btw mid 1970s and 1985 : Easy-go Generation (EG)
Those who were born btw 1985 and 1995 : Wiser Generation 2.0 (shortly as 2.0)
When it comes to slowdown in Auto sector people give different reasons right from GST to Ola, Uber to Car pooling to Car renting to 2nd hand cars to public transport to Greed. Be it FMCG, Hospitality, Consumer Durables, again people attribute to Demonetization to GST to Quality to Greed. Most often the opinion is based on which part of elephant they touch and also probably on where their loyalty lies, right, left or centre.
I have touched one part of an elephant and it says, the reason for this is 'Cultural Shift'. I am not sure how many have studied this.
WG always were very conservative in spending. Yes, the credit was hard to come by during their prime years, still they were content. Money was seen as Dhanalakshmi and was saved. No lavish or wasteful spending. People never bought what they didn't need. Even to buy a TV, families took 3 months to decide, once they decided they started to save. Though hire-purchase scheme was there, very few opted for it. Availing loan or credit for non-emergency purpose was a seen as a taboo.
In Kamba Ramayana, there is a line Kadanpattar nenjam pol kalanginaan Ilangai Vendan (Ravana looked worried like a man with debts). The families never wanted to get into it. The maximum credit families availed, was gold loan with local Pan wala to meet emergency expenditure. Buying a house was a 15 or 20 year plan, Car was never in mind. The WG toiled very hard, sacrificed many pleasures to see their kids grow up and settle. They were conscious of the spending.
The EG grew under these WG parents. Many from the lower, middle-class family kids understood their family situation, they studied and worked hard. 21st century offered them huge opportunities and their income too rose. With so much money in hand, these EG started to spend on the pleasures they couldn't do in their childhood days. Its human instinct and there was nothing wrong. This is when Credit Cards, Vehicle Loans, Housing Loans boomed. When I say boomed, it means accessibility to was easy.
While WG took 15 to 20 years to decide on purchasing a house, EG went ahead and bought one 3 to 5 years from 1st job. WG never bothered about owning a Car or 2-wheeler but EG bought one in EMI or cash in 1 year of taking up a job. Right from dining out or other pleasures there is big cultural change between WG and EG.
One might argue, that there were many WGs before the referred WG here. Yes, but there was no peer pressure until 1990s on any generation. The technological advancement made it easy for a person sitting here to know how the life is in other parts and it added the peer pressure of EG. While a section of EG were intelligent and fortunate enough to handle personal finance well, a big section of EG were pretty bad in managing personal finance.
The 2.0 grew in these families. They saw how EG is struggling despite earning so well. The WG who were for 20 years, seen as orthodox and conservative, are looked as legends by EG. Having learnt the lesson, EG started advising 2.0 to be cautious and not to follow them when it comes to managing finance. The 2.0 is now more conscious than the EG when it comes to spending. 2.0 like WG, not going to do impulse buying.
Compared to EG, 2.0 has more accessibility to information. They weigh everything before purchasing. For over 3 years ppl are saying Ola & Uber will kill passenger cars. May be it was instinct, analysis or real knowledge, I don't know. I will write my opinion on slowdown in Auto-sector in next article. Even if we consider this Ola, Uber theory for the purpose of argument, I opine that, even if Ola & Uber existed 20 years ago, EG wouldn't have given a damn before purchasing a car. This cultural shift is regarding the spending pattern and it applies to manufacturing, real estate, consumer durable, FMCG, Hospitality, etc.
When many parts of the world faced meltdown in 2007, we survived, thanks to savings by Indian families, and it was possible largely due to influence of WG in the families. Our family system held it together. The 2.0 generation values the money like the Grandpa & Grandma, i.e. WG. To win confidence of 2.0, industry must give value for money in return to the consumer. Unless that happens, industries will continue to struggle. And there is 3.0 waiting to take off in 5 - 10 years. 3.0 will not have any brand loyalty, they can't be won over by PR gimmicks and Advertisements.
Organizations need to redraft their strategies. What strategy the organizations should adopt? It is their baby, they know what to feed.
