UNDERSTANDING THE RETAIL CONSUMERS

Learning objectives

The factors influencing the retail consumer The consumer decision making process Changes in the Indian consumer

Except ... The interplay of cultural mix

The cultural differences in different countries can impact the desired Retail Experience

What Makes Retail Shoppers Tick

The Classic Segmentation Variables for Consumer Markets

FIGURE 7.3

Consumer Behaviour ...

In-Home Shoppers

Shopping is discretionary, not necessary, Convenience is important Active, affluent, well-educated Self-confident, younger, adventuresome Time scarcity is not a motivator

Online Shoppers

Use of Web for decision- making process as well as buying process Convenience is important Above average incomes, well-educated Time scarcity is a motivator

...

Out shoppers

Out-of-hometown shopping Male, young, members of a large family, and new to the community Income and education vary They like to travel, enjoy fine food, are active, and read out-of-town newspapers

Classification of Customers

Loyal Customers: They represent no more than 20% of customer base, but make up more than 50% of sales.

Discount Customers: They shop stores frequently, but make their decisions based on the size of our markdowns.

Impulse Customers: They do not have buying a particular item at the top of their To Do list, but come into the store on a whim. They will purchase what seems good at the time.

Need-Based Customers: They have a specific intention to buy a particular type of item.

Wandering Customers: They have no specific need or desire in mind when they come into the store. Rather, they want a sense of experience and/or community.

Attitudes Towards Shopping

Shopping enjoyment, Entertainment Shopping time Shifting feelings about retailing : Shopping becomes an addiction Why people buy or not on a shopping trip Attitudes toward private brands

Cross-Shopping

Shopping for a product category at more than one retail format during the year

Visiting multiple retailers on one shopping trip

The Consumer Decision Process

Indian Consumer

Reasons for Change in the Indian Consumer

Media explosion , Peer Group, Increase in disposable income and rise of Indian middle class Increase in the no. of earning young people Increase in no. of working women

Key Trends Impacting The Market

Urbanization? How rapid is it going to be? What is the likely impact on consumption and its growth/trends? Changing family structures? What is the future family structure? How is it going to impact shopping behavior? How is it going to impact the spending power and hence consumption? Demographic Changes? What would be the demographic structure of India in next 5, 10, 15 years? How is it going to impact shopping behavior? How is it going to impact the spending power and hence consumption?

In View Of The Rapidly Expanding Spend Categories

1991
1. 2. 3. 4. 5. 6. 7. Food and Grocery Clothing Footwear Consumer durables Home linen Movies and theatre Eating out 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

2004
Food and Grocery Clothing Footwear Consumer durables Expenditure on DVDs and VCDs Home linen Home accessories Accessories Gifts Take-away/ Pre cooked / RTE meals Movies and theatre Eating out Entertainment parks Mobile phones and service Household help Travel packages Club membership Computer Peripheral & Internet Usage
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

2010
Food and Grocery Clothing Footwear Consumer durables Expenditure on DVDs and VCDs Home linen Home accessories Accessories Gifts Take-away/ Pre cooked / RTE meals Movies and theatre Eating out Entertainment parks Mobile phones and service Household help Travel packages Club membership Computer Peripheral & Internet Usage ??? ??? ??? ???

Note: The above categories account for 80% of consumer spending

Two-faced Indian Consumers

Seeking up gradation in some categories & value in the others! Key issue for any retailer is to identify the upgrades and value-focused product
categories to rationalize the product mix and maintain healthy margins

Seeking cheaper options

Consumer Spends
Grocery Apparel Eating Out

Upgrading
Mobile phones Housing Automobiles Durables Education

Some myths

Myth: The Indian middle class lives in the metros. Reality: Of the 80 million households that constitute the Indian middle class, only 25 million are in Tier I cities. Close to 55 million belong to the smaller towns. Mercedes sells more cars in small-town Ludhiana than it does in Mumbai

Myth: India is a "price sensitive" market. Reality: For products such as Vim Bar dishwashing detergent and Head &

Shoulders shampoo, the Indian market easily absorbed price hikes of 13% and 18%, respectively, in 2007. Yet for years, candy manufacturers have been trying in vain to increase prices from 50p to Re 1. Value sensitivity, not price sensitivity, is the buzzword.

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

Thank You !!!