A New Consumer Lifestyle Experience

The study focuses on three aspects :1. An Overview of the Retail Sector

2. Consumer Lifestyles

3. Implications

Impact of Indian retail sector on CL

The Indian retail sector is highly fragmented with 97% of its business being run by the unorganized retailers like the traditional family run stores and corner stores.

The organized retail is at a very nascent stage though attempts are being made to increase its proportion to 9-10% by the year 2010 bringing in a huge opportunity for prospective new players.

The Indian retail market is the fifth largest retail destination globally estimated to grow from US$ 330 billion in 2007 to US$ 427 billion by 2010 and $637 billion by 2015.

Analysis of retail sector

Simultaneously, modern retail, which presently accounts for 4 per cent of the total market, is likely to increase its share to 22 per cent by 2010.

Almost half of retail market in 2006 is in rural India; although share of urban market is increasing by almost 5% every 8-10 years.

The key drivers being –

changing consumer profile and demographics, increase in the number of international brands available

in the Indian market, economic implications of the government increasing urbanization,

credit availability, improvement in the infrastructure, increasing investments in technology and real estate

building a world class shopping environment for the consumers.

There is so much opportunity in the untapped Indian retail market. Where the consumers are smarter and much more price savvy.

It is interesting to see the level of acceptance of retailers promotions by the consumers.

RETAIL - Statistics

Source: Ernst &Young, The Great Indian Retail Story, 2006.

Retail trade – India, U.S and China

Trade

($ bn )

Employment

(%)

Shops

(million)

Organized sector share

(%)

India 180-394 7 12 2 - 3

China 360 12 2.7 20

U.S. 3800 12.6-16 15.3 80

Source: Economist, Let gradualism guide FDI in retail, 2006.

Retail stores – Comprising “Lifestyles”

Source: E&Y, The Great Indian Retail Story, 2006.

Category lifestyles

Footwear Clothing Books & Music Jewelry & Accessory Durables Home furnishings Medical services Food & Grocery Health & Beauty ….

TYPES OF RETAIL OUTLETS

Retail formats available in India

Mono/exclusiveBranded retail shops

Multi – branded retail shops

Convergence retail outlets

Exclusive showrooms either owned or franchised out

by a manufacturer

Focus on particular product categoriesand carry most of

the brands available

Usually have on display most of the

convergence as well asconsumer electronic

products

Complete rangeavailable for a given

brand, certified product quality

One stop shop for customers, many product lines of different brands

on display

Customers get to have more choicesas many brands are

on display

Indian Organized Retail Sector's Impact On Lifestyles

The Indian organized retail sector's impact changed the lifestyle of the Indian consumers drastically.

The evident increase in consumerist activity is colossal which has already chipped out a money making recess for the Indian organized retail sector.

With the onset of a globalized economy in India, the Indian consumer's psyche has been changed.

People have become aware of the value of money.

Nowadays the Indian consumers are well versed with the concepts about quality of products & services.

These demands are the visible impacts of the Indian organized retail sector.

Retail environment – trends & changes in CL

Developments in retail (IT , infrastructure,….) – shifting from traditional - modern

CONSUMER LIFESTYLES

How has the Indian consumer changed over the

years ?

In the past few years the whole concept of shopping has been altered in terms of format and consumer buying behavior.

With the increasing urbanization, the Indian consumer is emerging as more trend-conscious.

There has also been a shift from price considerations to designs and quality as there is a greater focus on looking and feeling good (apparel as well as fitness).

Indians have grown richer and thus spending more on vehicles, phones and eating out in restaurants.

The spending is focused more outside the homes, unlike in other Asian countries where consumers have tended to spend more on personal items as they grow richer.

Spending on luxury goods have increased twice as fast with 2/3 of India's population is under 35, consumer demand is clearly growing.

The mall mania has bought in a whole new breed of modern retail formats across the country catering to every need of the value-seeking Indian consumer.

An average Indian would see a mall as a perfect weekend getaway with family offering them entertainment, leisure, food, shopping all under one roof.

Mall mania

Metropolitan Mall , Gurgaon

Transforming lifestyles and spending 

Mad about malls Malls are also bringing about

profound changes in the way the mass affluent household spends. Take the case of groceries. It is common to find many families doing their monthly grocery shopping at malls and paying by cards. Five years back, the same exercise would have been carried out in a small locality / neighbourhood store with cash. 

…with high Private Consumption

GDP US$ 804 Bn

Private Consumption

US $482 Bn (60%)

RetailUS $300 Bn (62%)

Non-RetailUS $182 Bn (38%)

UrbanUS $135 Bn (45%)

RuralUS $165 Bn (55%)

India is a consumption led economy : Private Final Consumption Expenditure (PFCE) is 60% of the economy (as against 42% of China and 55% of Japan)

Source :Central Statistical Organization (CS0) and Technopak Analysis

Public Spending and Gross Capital Formation 40%

RETAIL : Share of Categories

  Market Size

$billion 2006

% Share 2006

Growth Rate b/w 2010-05

Market Size

$billion 2010

% Share 2010

Growth Rate b/w 2015-10

Market Size US $billion

2015

% Share 2015

Food, Beverages and Tobacco 195 65% 7.0% 256 60% 6% 342 54%

Personal Care 15 5% 11% 23 5% 9% 35 5%

Apparel 21 7% 11% 33 8% 9% 50 8%

Footwear 5 2% 11% 7 2% 9% 11 2%

Furnishings 4 1% 15% 7 2% 12% 12 2%

Consumer Durables & IT 14 5% 15% 24 6% 12% 43 7%

Furniture 9 3% 15% 16 4% 12% 28 4%

Jewellery & Watches 15 5% 12% 24 6% 9% 37 6%

Medical Care and Health Services

8 3% 12% 12 3% 12% 21 3%

Recreation 2 0.6% 17% 3 1% 15% 7 1%

Others 12 4% 18% 23 5% 18% 53 8%

  300 100% 9% 427 100% 8.4% 637 100%

Above are indicative calculations only .Share is % share of Retail market.

In View Of The Rapidly Expanding Spend Categories…

1. Food and Grocery2. Clothing3. Footwear4. Consumer durables 5. Home linen6. Movies and theatre7. Eating out

199119911. Food and Grocery2. Clothing3. Footwear4. Consumer durables 5. Expenditure on DVDs and VCDs6. Home linen7. Home accessories 8. Accessories9. Gifts10. Take-away/ Pre cooked / RTE meals11. Movies and theatre12. Eating out13. Entertainment parks14. Mobile phones and service15. Household help16. Travel packages 17. Club membership18. Computer Peripheral & Internet

Usage

20042004 201020101. Food and Grocery2. Clothing3. Footwear4. Consumer durables 5. Expenditure on DVDs and VCDs6. Home linen7. Home accessories 8. Accessories9. Gifts10. Take-away/ Pre cooked / RTE meals11. Movies and theatre12. Eating out13. Entertainment parks14. Mobile phones and service15. Household help16. Travel packages 17. Club membership18. Computer Peripheral & Internet Usage19. ???20. ???21. ???22. ???Note: The above categories account for 80% of consumer spending

Case of sector impact on CL The non-food sector, segments comprising apparel,

accessories, fashion, lifestyle felt the significant change with the emergence of new stores formats like convenience stores, mini marts, mini supermarkets, large supermarkets, and hyper marts.

Even food retailing has became an important retail business in the national arena, with large format retail stores, establishing stores all over India.

With the entry of packaged foods like MTR, ITC Ashirwaad, fast foods chains like McDonald's, KFC, beverage parlors like Nescafe, Tata Tea, Café Coffee and Barista, the Indian food habits has been altered. This stores have earned the reputation of being 'super saver locations'.

Two – faced Consumers…

Seeking upgradation in some categories and value in the others.

Consumer SpendsConsumer SpendsGroceryApparel

Eating Out

Upgrading

Mobile phonesHousing

AutomobilesDurables

Seeking cheaper options

Factors that Determine and Influence Consumer Lifestyles

Consumer Lifestyle and Consumer Decisions

How does retail business affect CL ?

What happens ? Consumers prefer high value products that satisfy

their changing lifestyles

Attracted by the unknown differentiated product (myopia)

Makes a purchase that adds to his utility or prestige

Expects a processed utility

Goes for an easy shopping experience (amount of choice, options and easy mode of purchase)

At every stage, customer keeps his lifestyles in view (traditional – modern)

Consumer behavior is affecting the process of adopting new lifestyles

And retail operations are influencing the behavior of customers

This had large impact on CL and created a entirely new set of lifestyles (modern CL)

Retail Business – ‘consumerism’

Implications

• Profile of the Indian consumer is changing and so are the aspirations and buying behavior.

• Consumer understanding and consumer orientation will be one of the key drivers of future success.

Impact on traditional retailers

Impact confined to perhaps 300,000 to 500,000 retailers across India coming in direct range of about 1000 Hypermarkets and about 3000+ supermarkets by 2011

Overall, the universe of traditional retailers will actually increase by 2011 and even by 2015

Importance of traditional channel to become even more for established FMCG and other consumer product companies

Impact areas

Most will come under severe pressureMost are grossly undercapitalized, and have largely

invested in the “front end” rather than the back endMost have weak business processes and IT systemsMost have no serious understanding or investment in

supply chainMost have no real margin drivers in their business model

that can enable them to make exceptional investments in the immediate future

Current Modern Retailers

Consumer Today’s consumers are more informed, more discerning, with

more choices… and more power. They are more attentive to the benefits and consequences of food.

Today’s consumer have challenged industry like no other generation of consumers and have made the industry better at what they do in order to serve their needs.

A correction is taking place today – beauty defined on how you feel, not on how you look.

Retail industry is driving the value of lifestyles consumed and enjoyed by the customers as retailers experiment.

Presented by

Sudhir Kumar gupta

Sudheer

Upama kashyap

Wasim akram

Thanks. Any questions?