The India Retail Opportunity: A second look
Our India retail expert, Mita Chopra, takes a second look at the nuances of the India retail market
In my first article (please see here if you haven’t read it), I explored the changing identities of India’s retail consumer profile, and how changing behaviours are leading to new opportunities opening up across sectors. In this piece, we are focusing on the demand for new brands, and the importance of value consciousness, and convenience in the retail market.
To put it simply, Indians at the moment are brand starved. This cuts across sectors and categories, with even segments like fashion apparel that have a comparatively high branded share remaining under penetrated.
Furthermore, for the large majority of consumers, brand purchases are driven by logos. They want to show off what they buy, hence the branding needs to be visible and recognisable. In general, consumers are typified as being flamboyant and ostentatious.
A study on consumer behaviour reveals that 8-9 out of 10 consumers buy a brand only to show it off to their peers and gain dominance in their social circle. This finding is substantiated by the sale numbers of some of the major international apparel brands present in India. As soon as the brands incorporated the visible brand logos on the products, sales figures increased by over 30-40%. This shows that Indians are not into discreet buying and whatever they buy needs to be eye-catching.
Further to this, for the budding Indian consumer, the only bucketing for all the brands is between Indian and international. They cannot differentiate a Tommy Hilfiger from a G-Star or a Scotch and Soda from a Mango except for maybe pricing. For them, all brands are either Indian or international. Indian consumers have not evolved to an extent where they understand the brand personality, what it stands for and then make an informed choice about what they are buying.
Most of the times Indians buy brand that have high recall value, brands they have seen in their social circle, or just what looks good. There is a long way to go before consumers mature to an extent where fashion becomes very personal and brands are bought for what they stand for.
Indian consumers have traditionally been value conscious irrespective of the social and economic class they belong to. Though with higher obsolescence rates and a higher frequency of purchase, particularly for fashion and technology-led categories, consumers want lower average transaction value. They are looking to buy products from which they derive value. So, whether it is affordable smart phones and tablets, fashion wear, or affordable luxury, products that meet or exceed the target group’s perceived value quotient will be a hit.
Indian consumer space is complex with many different layers beneath the surface. The success of any international consumer brand entering India lies in how soon and how well it can dive into this vast ocean.
In today’s fast paced life coupled with decreasing family support, consumers have to multi-task and play multiple roles every day, leaving them hard pressed for time. Consumers are always looking at ways, products and services that can make their everyday life simpler, easy and stress free.
Growth in the demand for packaged, pre-mix, and ready to eat food segments that help consumers save precious time on daily chores is a case in point – indeed, companies like MTR are riding high on this wave. With old conventions, family structures, and beliefs changing and the engagement of women in the kitchen decreasing, there is going to be a further spurt in demand for categories that offer convenience and solutions.