During previous decades starting right from the Industrial Revolution two centuries ago, most industries and markets underwent constant growth. As number of consumers grew, with improvement of living conditions followed by lifestyle, the market witnessed year-on-year and in fact decade-on-decade demand growth.
Hence more and more businesses started emerging to fulfil the growing market demand. And during the last four decades, demand growth (in absolute numbers – not relative percentage) just blew up with the massive urban sprawl. With such rising demand more and more providers started joining the race to cater!
In such a situation, when there is enough for all businesses to cater, everyone can compete and still stay satisfied. Although competitive, it is still cooperative enough as businesses can let competitors enjoy certain market share and still maintain their bottom line or profitability.
This situation is equivalent to having a one pound cake amongst few strangers in the room. Now when the number of people increase by a few, and the cake grows by a few grams, they will still cooperate and share in a manner that everyone gets enough not to sleep hungry! But such cooperation will prevail only when the number of hungry people grow in proportion to the cake.
Once the number of hungry people start increasing at a rate higher than the rate at which cake grows, the cooperation will transform in to competition. Going farther, as the cake growth saturates while number of hungry people continue to increase at the same rate, the competition will evolve in to fierce competition. And finally when the proportion goes beyond a certain mutual tolerance threshold:
let the HUNGER GAMES begin!
During the previous decade, growth rate in many industries and product markets has steadily declined. Moreover, as companies capture more and more regions, with each passing day the number of unexplored markets are reducing. Just imagine what happens to Facebook or Google after the point they onboard the last living human being in the most remote tribe with internet access? Where do they get new users!
The only way to grow is to create a new product for the market and generate more revenue from the same user. OR engage in fierce competition with their rival for the same user. If you are living in India in 2019-2021 you can relate this to the scenario with that of wireless telecom or internet service providers in Indian market.
To make it plain and simple, for every conventional product or service, there number of sellers are growing far rapidly than number of takers. If such trend continues even post COVID, although the lockdown busted weaker businesses, the threshold for Hunger Games is not far away!
Margins in most businesses are on a decline today, as they provide discounts to either overcome competition or liquidate stock. Hence today, unless businesses engage into innovative or emerging product or services, which have more demand than supply OR find ways to deliver something far more effectively at a lower cost, their sustenance will be questionable!
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Savvy Munshi 