There has been a marked shift in terms of the lifestyle preferences and buying trends among Indian consumers over the last two decades. With the opening up of the Indian economy in 1991, Urban India has gradually embraced consumerism and is increasingly opting for branded products.
The Indian retail industry currently ranks among the world's top five retail markets. The industry has been experiencing exponential growth, with retail development taking place not just in the metros, but in Tier 1 and 2 towns as well.
Growing internet penetration and the rise in the number of people using smartphones have acted as a catalyst for the retail sector while reshaping customer behaviour and expectations. Along with this, increasing disposable incomes, rise in aspirational values of the consumer, urbanisation, and change in technology have also contributed to a booming retail sector. Also, there is an increase in the young population who believe in ‘Working hard and living well’. They, too, are responsible for the spurt in activity in the retail sector.
Talking of the eCommerce industry in India, it has seen a significant growth and given rise to many first generation startups. This trend has been instrumental for a lot of offline retailers to move online to adapt to the changing consumer behaviour.
To cater to the changed mindset of the evolved consumer, brick and mortar retailers are launching integrated online and offline strategies at all times and wherever they are. It is the need of the hour to reinvent existing models and adopt new strategies to satisfy the needs of the consumers who are evolved and connected.
Another interesting trend which has been observed is that the millennial consumers are quite experimental in nature. There is a growing movement in new and unconventional categories like Furniture, Health and Beauty care, Apparel and Groceries as opposed to traditional online categories of books and consumer electronics.
If we look at the food industry, which is currently valued at US$ 39.71 billion, it is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11 per cent to $65.4 billion by 2018. Food and grocery account for around 31 per cent of India’s consumption basket.
Going forward, the Indian eCommerce market is expected to quadruple to $70 billion, over the next 5 years. With growing number of smartphone users, competitive costs for connectivity, and expanded reach, internet users are expected to reach the 600 million mark.
Customers look out for great value propositions like wider assortment, higher discounts and greater convenience. Keeping this in view, etailers are working on strategies to attract customers for repeat purchase and also than attract the new ones. Hence, companies are coming out with customer loyalty programs to retain them while making profit through them.
Also, due to growing social media and new technologies, customers look for a seamless experience. Hence, retailers in India have been conceptualising digital strategies with clarity and leverage on social media to create brand awareness and offer a seamless shopping experience.
Omni-channel business has gained ground to cater to the needs of the consumer offering options and flexibility across channels.
Going forward, the eCommerce players are targeting the right market with the right experiences to create the next generation of winners.
Authored By: Gaurav Khurana, CMO, PAYBACK India