Gone are the days when shopping meant merely a necessity of life. Today, 'leisure’ forms an essential part of this activity. Thanks to the entry of international brands that have made so many choices available at consumers’ disposition. Keenly aware of what is ‘in’ and what is ‘out’, consumers have become more fashion conscious. With a large youth population, India promises huge retail prospect and this has attracted foreign companies. If India’s robust economic growth continues, there will be a voluminous increase of incomes pushing India’s position up from the twelfth largest consumer market today to the world’s fifth-largest consumer market by 2025. This is what a study by Mckinsey Global Institute (MGI) entitled The ‘Bird of Gold’ revealed.
Changing economy, increase in wealth
Magi’s survey shows how the effect of increasing incomes will change the shape of income pyramid dramatically. The effect will definitely bear a positive sign. The indigent section of the society will experience betterment of its living standard. By 2025, over 23 million Indians will gain the position of ‘wealthiest citizens’. There will be changes in the geographic pattern of India’s income and consumption growth. The focus will be on urban economy for around 62 per cent of the consumption will take place in urban areas. But, there will be a significant change in rural economy.
International recognition of India
India’s transformation in every sector and its market, relatively new in the world’s arena, can prove to be a gold mine. This fact has made foreign companies to venture into the country. They have made India-centric marketing strategy that entails several promotional activities including upholding Indian beauty in the international beauty pageant. This makes them win the confidence of Indian consumers. Global retailers keen to capture the vast and virgin market of India have entered the country making thus global products available in India. While getting global attention, Indian consumers seem to be fearless and demanding. To woo customers, Indian retailers gradually shift their mode of operation in the line of foreign players. In modern formats, price of a commodity is a fixed and displayed enhancing transparency one hand and, on the other, making retailers get rig of bargaining by consumers. This transparency, which facilitates both retailer and consumer, is gradually taking over everywhere. Even at a petrol filling station, we can see digital oil dispenser, which can be pre-set according to a customer’s payment and fill the tank without any hazard.
Young Indians on spending spree
Over 50 per cent of Indian consumers are below 25 with high purchasing power and eagerness to possess quality products. According to findings of a study conducted by leading global professional services firm Ernst and amp; Young, the youth of India will help global retailers in consolidating their business in a fledgling market where large scale consumerism is yet to attain maturity. According to Mr Ashok Rajpal, Director (retail industry), Ernst and amp; Young, Indians are, till now, more inclined to saving than spending. But, once per capita income reaches the tipping point, the growth of consumerism will be full-fledged. He also opines that Indian youths are the most prospective buyers for luxury and lifestyle products and services. By making the youth population as their target consumers, retailers are ensuring their future business prospect by creating brand loyalty from the start. The study also reveals how preference of youth in large cities differs from that of youth in small towns. IMAGES – ACNeilsen Study on ‘The Indian Wallet & Brand Share’ reports that the Indian youth spends almost the same amount on apparel and accessories as the elders in their households do. The amount they spend on using internet is double their household expenditure. It is also a copious amount of money that they spend on mobile phones. A zonal-based survey has brought out some interesting facts about Indian youth. The working youth in the southern part of the country possesses more disposable money than its counterpart in the northern part. Also, youths in south spend more on two-wheelers whereas youths in the west spend more on mobiles.
Retailers mull over consumer credit
According to Kishore Biyani of Future Group, the credit market will shoot up to Rs 1 billion in 2010. This very fact will drive retailers to cash on the spending spree. In his words, “The consumption boom will drive the retail growth in India and consumer finance is the future of retail. We need to look at innovative ways of making money available to consumers.” This will be practically implemented as he announces that Big Bazaar of Future Group is going to offer consumer credits to its every outlet.
E-tailing – Popular mode for buying
With the passage of time, Indian consumers are going online in increasing number as per reports of a survey conducted by JuxtConsult. The survey gives out the detail on how internet has made online shopping a popular mode for reaching out to chosen products. Forty three per cent of the country’s internet-using population (approx. 1.08 crore) are buying items online, while e-commerce amounts to Rs 23 billion. The most preferred service sought on internet is online travel booking. The study shows that 84 per cent of online users purchased travel related products last year.
Plastic money – an impetus to consumers
While average annual credit card payments is Rs 62,220, the average for young adults stands at Rs 1.21 lakh, and, for women, it is even higher. About 12 to 13 per cent of the youth in India have home or car loans, but only seven per cent have durable loans to pay off. As on March 31, 2006, Visa saw a 36 per cent growth in the number of cards issued, making India the third biggest card market for Visa, after Japan and Korea. Present trend shows that the retail sector in India has all the necessary elements for its growth. This particular fact is drawing a number of foreign investors towards Indian shore.
Telephone, a popular accessory
In India, telecom sector has recorded the highest growth rate in the world by adding five million subscribers each month. The telecom industry has recorded 232.87 million Indian customers by July 2007. Every 20th person now owns a telephone. The Indian telecom sector proposes to connect 650 million subscribers over the next five years, which is more than triple its current size.
Customised to taste
Open economy has enabled a number of foreign companies to woo Indian consumers. In order to win consumers’ hearts, these companies have customised their products to Indian taste and pocket. Maggi, a well-known international brand of instant noodle, has customised their products to Indian palate. Similarly, chicken tikka burger becomes equally favourite as chicken burger of Mcdonald’s among Indians. “Indian consumers, like global consumers, have welcomed Pizza Hut’s strategy of introducing familiar toppings over the years. At the same time, international products have also been tested on levels of salt and spices to ensure that they suit the Indian palate. To cater to the Indian consumers, localisation is important as pizza is an alien food item in the country”, states Niren Chaudhary, MD, Yum! Restaurants International, Indian subcontinent.
What makes Indians frenetic buyers?
A confidence survey shows how the mindset of Indian consumers is experiencing overwhelming change in tandem with retail growth. The survey reveals that majority of Indians are much ahead of their other Asian counterparts in their willingness to purchase what they desire and invest in mutual funds and shares. Mr BS Nagesh, Managing Director, Shoppers’ Stop Ltd, observes, “ Three principal factors are responsible for the recent positive shift of consumers’ behaviour. These are – influence of media resulting in global exposure, increase of income cutting across all classes of salaried and business people and increase in household discretionary disposal income due to more family members being employed. Consumers have started experimenting new formats showing new consumption patterns and new behaviour.” To cash in on this change in consumers’ behaviour, Indian government too is planning to scrap subsidies on LPG gas for PAN card holders. Mr Saket Gore, Business Head, Consumer Products Division, The Himalaya Drug Company, observes, “High prices are no longer a deterrent to the vast majority of urban consumers. Though the Indian consumer is price-sensitive, a good product or service can demand a higher price. Interestingly, consumer’s perception of value has expanded: value no longer means just price; it means quality, efficacy, safety, convenience and other similar factors.”
What rules Indian consumers?
R Subramanian, MD, Subhiksha Trading Services Ltd, says, “Dominant factors which influence the consumers are low prices, better value and quality of goods, proximity and range of merchandise.” On the other hand, Esha Anand, Head (Marketing & Visual Merchandising), HyperCity Retail (India) Pvt. Ltd, believes that consumers’ shopping behaviour is a function of shopping ambience, choice of products and prices. She is against the belief that wealthy customers ignore price and says, “At HyperCity, we have followed the mantra – ‘Rich people love low prices, the poor need them.” Mr Saket Gore opines, “Urban consumers in particular enjoy wider choice and access to information. As such, purchase decisions are not based solely on what a company tells you or hearsay. People do their own research before buying a product by looking up in the internet or asking their peers or finding out more from sales representatives. The focus has shifted from gimmicks to hardcore factual information.”
Experiential marketing
Consumers are not what they were and the market is not what it was. There have been changes leading to many a development. Mr Saket Gore says, “Another interesting development in this information-driven market space is the emergence of experiential marketing. This is best represented by the evolving retail format. While consumers, in the past, would stand in front of a store counter asking for a product, they want today to touch, feel and read on the product. Hence, modern retail formats - with their aisle spaces, product display units, information leaflets and well trained personnel - offer consumers a more engaging shopping experience.”
Impact of organised retail on Indian consumers
Retailing has acquired a new meaning with the coming of organised retail. The change is in every sector - from pharmacy to apparel stores and from eating-joints to multiplexes. Mr Subramanian says, “After the arrival of organised retail, the first and major casualty has been the relationship of consumers with the local grocer. Players like Subhiksha who offer everyday lowest prices and significant savings to consumers are forcing consumers to re-evaluate their relationship with the traditional grocer who sells most merchandise at MRP.” Mr Nagesh opines, “With organised retailing, the biggest shift is the increased consumption due to availability of wider range of merchandise and greater demand. Socially, you find customers better dressed, more aware in terms of options of living, eating and dressing and, therefore, higher service expectations.” However, Esha Anand’s interpretation is different. She says that India’s large young population and growing economy have prepared the breeding ground for retail boom. She observes further, “In the not-too-distant past, high-end products were off limits to all but to the fortunate elite in India. However, a rapidly changing economy is making the higher life available to more and more people of the country.”
Overall observation
Indians have imbibed a changing attitude towards shopping but not without an element of Indianness. Mr Nagesh points out, “The customer is becoming more and more global. However, because of Indian culture and value systems, you still feel that the Indian customer tolerance level is higher during his or her shopping.” Agreeing to this, Ms Esha’s says, “In India, shopping in modern formats is considered as a leisure activity and, unlike in the west, has a certain novelty attached to it.” As regards future, she says, “With competition coming in droves, the massive footfall enjoyed by the few retailers today will be hard to come by in future. But, consumers can reap the benefit of competition through wider choice and better price.”
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