DNA ROUNDTABLE: Tracking the millennial wallet

Millennials, defined as individuals in the age group of 18 to 35 years, are always on the move. This age group is the most tech-savvy generation and always like to remain connected. Experts say as millennials reach their prime working and spending years, their impact on the economy is going to be huge. Millennial consumers are well informed and confident, and do not settle for anything but best. Access to credit has become faster and convenient over the past decade, which has enabled many people in this section to achieve their goals. India has the world’s largest millennial population in absolute terms, constituting nearly 34% of the country’s total population. The need of the hour is an investment tool which is flexible, allowing them to invest at fixed intervals and can be redeemed at the click of the button when the need arises. In fact the generation is willing to take a lot more risk especially early in life. Asset allocation is yet another effective tool that will help millennials balance risk and reward by allocating assets according to their goals.

SS Kim, MD & CEO, Hyundai Motor India Ltd

The millennials are making judicious use of their salary and are wary of their expenditure. At the same time, they like to splurge and own assets that add value to their personality. This age group is the most tech-savvy generation and they always like to remain connected. They are explorers and want to be connected even 'On the Move'.

Our newly launched SUV – VENUE is India's first connected SUV trying to fulfill this need of the millennials. This hi-tech that will make heads turn on the road is equipped with Hyundai's Blue Link technology ensures customers maintain seamless communication with the outside world even at the 'Go'. Hyundai VENUE meets the expectations of today's Millennials who love to explore new terrains, do not compromise on their lifestyle and always like to be connected with their friends and family at the same time.

As India's Most Loved and Trusted Brand, Hyundai is continuously evolving its product strategy as per the progressive needs of today's aspirational customers.

Despite current market challenges, Hyundai has been the only brand to maintain its leadership position and achieved the highest market share of 18.36 % for the period of April to August 2019, along with the highest market share of 19.4% for the month of August 2019.

With the launch of 3 trend-setter products in 2019 Hyundai India has continued to build excitement in the market in the form of India's First Connected Car – VENUE, India's first Electric SUV – KONA Electric and launch of Athletic Millennial – Grand i10 NIOS. Both our recently launched products- Hyundai VENUE and the GRAND i10 NIOS are specifically targeted at millennial customers.

VENUE has received an overwhelming response with over 62,000 bookings since the launch and over 55% of customers are preferring the Blue Link-enabled variant that clearly defines preference of the millennials.

For the upcoming festive season, we have developed a property “Smart Deals on Wheels” for attracting customers who look forward to special offers and schemes during Festive Season. We have also planned a 'Caravan Activity', a fleet drive of the newly launched Grand i10 NIOS for enhancing customer excitement across 19 regional Hyundai offices.

Besides the product innovations, the announcement by the Finance Minister is a bold move to revive the economy, and a very welcome gesture to provide impetus to India Inc. We believe that this will have a positive impact on not just the auto industry but on the economy on the whole and revive customer sentiments.

The lending rates are also going to make cars affordable for lot customers especially the millennials. The repo linked floating retail loan would incur mixed reaction from the consumers. Having said this, depending on the repo rate fluctuations, it will have a direct and positive effect on the disposable income and consumers will have more flexibility to apply for fresh loans.

The technology shift to BSVI is an enhanced version and is poised to give better results, Hyundai is fully committed to meet the government's BS-VI norms and will bring the BS-VI technology to all our products before the timeline.

There is a lot of enthusiasm amongst the customers to buy BSVI enabled products and at the same time with lucrative deals on the anvil, customers are making an informed choice of buying existing products.

Sathya Kalyanasundaram, country head and managing director, Experian India

Not all millennials think alike. A demographic is not psychographic”, is a profound statement by entrepreneur, Andy Dunn. The emergence of a powerful two billion millennial community around the world is often subject to intense debates and discussion, not to forget the many surveys and studies that have tried to disentangle the phenomenon from an economic perspective.

Millennials are the largest living generation. Access to credit has become faster and convenient over the past decade. This has enabled many people to achieve their goals—whether it was buying a home or vehicle to financing their holiday or luxury products —without having to burden their parents. The ease of borrowing has also led to a large population entering the formal banking system, which is a safe option.

Data from Experian India shows that Gen-X and millennials i.e. < 25 to 40 years now contribute to approximately 60% of the sourcing for consumer lending products. In fact, this segment has witnessed a 7% increase in sourcing between 2015 and 2019, citing a maturing profile.

Within this segment, the borrowing, by age group of < 25 years has grown the fast est, driven by low-ticket personal loans (PL) and consumer durable loans (CD). Non-Banking Finance Companies (NBFCs) and new-age players, especially technology unicorns are willing to lend to the younger and new-to-credit (NTC) borrowers.

Fintechs source 55% of their lending to the NTC segment as against 32% for the banking and financial service industry. However, for secured loans like home loans, the age group of 30 years and above continues to be the primary segment.

There has been a significant increase in the use of credit cards in the past few years; this reflects a noteworthy shift in consumer preferences. The demographic trend is different from PL and CD as the share of the < 25 years segment is not very predominant. 86% of the credit card sourcing is to the age group  >25 years since cards are issued by banks and NBFCs and fintechs are not present in this sector. Since cards are issued by Banks; and NBFCs are not present in this segment, the trend is consistent with the general bank lending trend.

Radhika Gupta, chief executive officer, Edelweiss Asset Management Ltd

The millennials – best defined as individuals in the age group of 18 to 35 years, form the crux of the Indian population and are the biggest determinants of India's current & future spending and investment growth. Being the largest demographic group not only in India but across the globe, they are characterised by large disposable income and are extremely digitally sound. In fact, this population drives the growth and sentiments across sectors and is the reason for new technological advancements across the globe.

Indian millennials are living in nuclear families, are well exposed to global advancements and have a lot more access to jobs and business opportunities as compared to their predecessors. In fact the generation is willing to take a lot more risk especially early in life. It's a generation that would either like to retire early or fund its own startup. Thus to achieve this, they are investing regularly in order to accumulate a huge corpus over time which will help them fulfill their financial goals.

In fact a disciplined approach can help mitigate risk over years and preserve the capital. In addition, it will result in the growth of personal assets and the subsequent rise in investment corpus. Keeping all these pre-requisites in mind, an SIP in a mutual fund can be an apt investment instrument. With SIP, the millennials will eventually benefit from the power of compounding and rupee cost averaging.

Asset allocation is yet another effective tool that will help millennials balance risk and reward by allocating assets according to their goals, risk tolerance, and investment horizon. Their investment portfolio can be a mix of Equity, Mutual Fund, Gold, Bank Fixed Deposit, etc. and can choose the relative percentage of investment in each. However, Millennials are more inclined towards Equity as compared to Fixed Deposit as their preferred investment instrument. This is mainly due to lower real returns in Fixed Deposits over long tenure which is required to fund their aggressive goals.

To conclude, as millennials reach their prime working and spending years, their impact on the economy is going to be huge. Thus the need of the hour is an investment tool which is flexible, allows them to invest at fixed intervals and can be redeemed at the click of the button when the need arises.

Alakshi, co-founder and director of TruCup

As a millennial entrepreneur, who also has job experience of six-plus years, my daily experience with the Indian economy has been bittersweet. Budgeting and finance is an important aspect of everyday life, especially as an entrepreneur wherein income is sometimes not a guarantee! Delving into my spending and saving habits, there is an overall pattern of a 'millennial' and their essential needs that I could synthesise.

Habits and what qualifies as a 'need' has evolved a lot! Living on my own, away from family, my monthly budget has to account for rent, salaries for a cook, the cleaning employee, etc. I incorporate eating out at least 5-6 times a week (cant discount for drinks obviously!), either ordering in, going out with friends or business meetings. With the stress of work, swiping right to holidays is extremely essential! In the quest to 'discover the self', travel is mostly in a group or solo, staying in hostels, homestays or airbnbs or if I want to splurge, a nice 'meditation' resort!

All the work and play has made us extremely unhealthy! For rebalancing the 'scale', I am switching to healthier groceries- organic is the way to go, which definitely has inorganic prices! With the same objective, most millennials have a gym subscription, as fitness is more than a fad, though fitness studios with offerings like Zumba, TRX, are more preferred rather than conventional gyms. Investing in a fitbit or pedometer watch is another consideration, as most habits are linked to a technology device.

My phone is essential, along with my kindle, and so is internet connectivity- home, work, travel everywhere. The extremely low-cost internet is a boon for me, as mobile/ internet bills are very controlled. Seeing that most of life is online- from work, groceries, tv (netflix/prime), music (spotify/saavn) to shopping, life without internet is tough to imagine. Having said that, I am personally trying to cut consumption and move towards a minimalist life, adding to a small but growing population who is more conscious about their waste creation and want to be eco-friendly, incorporating organic food, reusable products, slow fashion, etc. As a co-founder of a sustainable hygiene brand TruCup, the demand is slowly picking up for spending on health & hygiene and products like menstrual cups and reusables.

Coming to another daily expense- travel. To reduce my carbon footprint and cut cost, I prefer to take public transport like metros/ola/uber/autos. However, a large majority of friends have invested in a car/bike, after working for 3-4 years. With my basic needs covered, my budget definitely includes savings- mostly directed to recurring deposits, mutual funds or SIPs.

In light of the slowing down of the economy, it has not had a huge direct impact on my income or expenses as yet, apart from noticing a steep rise in the price of vegetables. However, from a business perspective, start-ups need to reevaluate their financial plans and decisions. While the entire experience of setting up the company was much more difficult than we had anticipated, GST has complicated life further, especially since there is no clarity for products like menstrual cups. Since part of our operations is in Singapore, we have been discussing the viability of shifting our base there due to tax benefits. The overhype around the ease of doing business and startup India is widespread, but we are yet to derive any concrete benefits.

With the slowdown, many millennials with regular jobs have not received annual raises. Personally, I would not prefer to enter the job market, with opportunities being few and far between in this environment. My hope as an entrepreneur and a 'millennial' is simple- the government should acknowledge the slowdown and understand the demand dynamics instead of presenting baseless excuses and only focusing on the supply side. We need concrete steps, reforms and policy decisions, not a blame game.

Anil Talreja, partner, Deloitte India

India is reported to have the world's largest millennial population in absolute terms with it constituting nearly 34% of the country's total population. This cohort drives a lot of the demand/supply situation within the consumer sectors.

Millennials would easily be classified as being a generation that is most digitally conversant, implying that this cross-section of the people are pioneers to witness technology and the internet for shopping.

Being conveniently connected to information and being the chief wage earners in the household, millennials have the power to spend and seamlessly access to products and services. A few reasons for this outbreak can be attributed to:

Higher awareness quotient: The level of health consciousness and importance on physical and emotional wellbeing is 'top priority', and thus, swiftly moving towards healthier and organic options.

Consumer-to-consumer (C2C) buying: Internet and mobile apps have made the shopping journey of consumers convenient to the extent that the millennials and younger generations have now become habituated to instant gratification.

S-commerce: Millennials are seen to be keen on socialising and collaboration, and thus, companies need to consider proactively streamlining their two-way communication with consumers. It is owing to this two way communication that a new model of consumer-to-business (C2B) has emerged where companies get cues to new products and services through crowdsourcing. Consumers are conveying their specific needs to companies that are being used for creating brand value and providing unique experiences to consumers.

Tough to satisfy: Millennial consumers are well informed and confident, and do not settle for anything but best. They love to experiment and land up getting pampered by the market. Pampering consumers can also be said to be a form of tribetailing.

Increased internet penetration: With the help of technology, and the rising internet penetration, it has become all-time easy to connect developed countries to the remotest rural regions in the country.

Greater responsibility: Giving a very topical example, there is a wider acknowledgment of the repercussions of using plastic bags, a greater focus on keeping surroundings and areas clean and hygienic, and a greater acceptance and preference for eco-friendly and recyclable products.

Instant gratification: Millennials have greater expectations from companies and want instant action on their requests just by a click on their phone screens.

As the lines of offline and online retail get blurred, companies will need to understand the evolving consumer better due to the shifts happening in technology, consumer behaviour and convergence across sectors, to adapt their organisations. This will involve a change in strategies, market dynamics, business model and reach to the consumers.