CONSUMER BEHAVIOR IN

RETAIL
SMITU MALHOTRA , XLRI , SEPT 2015

Why People Go Shopping?

Personal motives

Role playing
Diversion
Self gratification
Learning about new trends
Physical activity
Sensory stimulation

Why People Go Shopping?

Social motives

Social experience
Communication with others
Peer group attraction
Status and authority
Pleasure of bargaining

CONSUMER ANALYSIS
MANUFACTURER OR RETAILERS TASK ?

PURCHASE AGENTS FOR CUSTOMERS OR

SELLING AGENTS FOR SUPPLIERS ?

RETAILERS
REQUIRE CONSUMER INSIGHTS TO :

ASSIST IN TG SELECTION
DETERMINE MARKET POTENTIAL
DESIGN MARKET OFFERS
ASSESS REASONS FOR RETAIL PERFORMANCE

 SHOPPER VS CONSUMER ?
HOW ARE THEY DIFFERENT ?

CONSUMER

SHOPPER

RETAILER OBJECTIVE
TO INFLUENCE CONSUMER DECISIONS
ABOUT
WHERE TO SHOP
WHAT TO BUY

Exercise

HOW DO YOU SHOP FOR :

monthly grocery
buying bread in a hurry
buying a suit
buying sunglasses

Outlet Selection and

Purchase
Decision Sequence

Outlet First, Brand Second

Brand First, Outlet Second
Simultaneous

Marketing Strategy Based

on Decision Sequence

FACTORS AFFECTING STORE

CHOICE

CATEGORY
PERSONALITY

YOUNG GROUP VS OLD

CONSUMPTION PATTERN
FILL IN VS MONTHLY BUY

SHOPPING TASK
URGENT PURSHASE/LARGE QUANTITIES/REGULAR
PURCHASE/NEED IDEAS

SHOPPER REQUIREMENTS

SOURCE nacs/CCRRC AND INTEGER 2009

ERGO ?
UNDERSTAND
CONSUMER CHARACTERSTICS
CONSUMER DECISION MAKING PROCESS

SECCTION I

CONSUMER
CHARACTERSTICS

 1-GEOGRAPHIC CHARACTERSTICS
KIND OF CRS IN TRADING AREA
CLIMATE ,TRANSPORT , INFRASTRUCTURE

2-DEMOGRAPHIC
NO. OF HHS, AGE , INCOME ,OCCUPATION ETC.
LIFESTYLE STAGE ANALYSIS

HELPS ESTIMATING BUYING POWER.

NUMBER OF HH IN THE AREA X AVG DISCRETIONARY HH INCOME
X %AGE OF DISPOSABLE INCOME SPENT ON PARTICULAR CATEGORY
DISCETIONARY INCOME(MONEY AVAILABLE AFTER PAYING FOR BASIC COMMITMENTS ) VS DISPOSABLE
INCOME( AFTER TAX)

 3-PSYCHOGRAPHICS
V-A-I-O
LINK TO SHOPPING BEHAVIOUR- CONSUMPTION IS AN
EXTERNAL EXPRESSION OF INTERNAL FEELING.

4-NEEDS/ WANTS/EXPECTATIONS ABOUT

ASSORTMENT
CONVENIENCE
SERVICE
VALUE
EXPERIENCE

CONVENIENCE MODEL
EMOTIONAL
ENGAGEMENT

FUNCTIONAL ENGAGEMENTE.G. DISPLAY

SOURCE COCA COLA RESEARCH AND INTEGER 2010

DISPLAY
MAKING LOOKING FOR THE PRODUCT EASIER
http://www.youtube.com/watch?v=qWEOlLNua
-U

5-SHOPPING STYLE OR ORIENTATION

A. VARIOUS ORIENTATIONS
a)
b)
c)
d)

ECONOMIC SHOPPER
PERSONALISING SHOPPER
ETHICAL SHOPPER
APATHETIC SHOPPER

B. HIGH EGO INVOLVEMENT

a) APPAREL
b) HOME FURNISHINGS

LOW EGO INVOLVEMENT

CLEANING PRODUCTS

C. TYPE OF TRIP
c)
d)
e)
f)
g)

ROUTINE
STOCK UP
FILL IN
EMERGENCY
ADVENTURE

Decision map to choose formats

in food retailing

Source cocacola retail research -2007

Source cocacola retail research -2007

D. TYPES OF SHOPPERS
a) PLANNERS
b) PARTIAL PLANNERS
c) IMPULSE BUYERS

Product buy plannedbrand

not so much
Shoppers (81%) include the type of product, and
not the brand, leaving the door open for brands and
retailers to drive brand switching in-store via
compelling marketing materials at-shelf.
Respondents also report that their shopping lists
also typically include the quantity needed (67%),
but not details like the size of an item or its price.
This may indicate that most price-based decisions
(price and/or price-per-unit valuations) are being
made at shelf

 While it is not surprising that discounting plays a

significant role in list development, roughly a third
of all list-making shoppers are influenced by
recipes (34%) and product recommendations
(31%) from friends
yet another opportunity to engage shoppers with
more experiential shopper marketing tools built
around meal solutions and occasion-based product
assortments other than margin-eroding price
promotions

 Despite pre-planning, most shoppers

still make off-list purchases
For a leading retailer like Safeway, getting an
additional 10% of existing shoppers to add
three more items could amount to more than
$1.5 billion sales a year

SECTION II

CONSUMER DECISION
MAKING PROCESS

CHOICE ABOUT

SHOPPING AREA
STORE
PRODUCT

STAGES

AWARENESS
KNOWLEDGE
PREFERENCES
CONVICTIONS
PURCHASE
POSTPURCHASE

ATTRACT CUSTOMERS MASS MEDIA

BUILD RELATIONSHIP MORE IN-STORE PROMOTIONS

APPLICATIONS

APPAREL INSIGHTS
How half the world shops: Apparel in
Brazil, China, and India

SOURCE MCKINSEY November 2007

CHINA
Chinas mass-market consumers have
relatively small, undifferentiated wardrobes.
Forty percent of the Chinese respondents, for
example, report wearing similar clothing at
work, formal social occasions (such as
weddings), and dates with friends or family

THEREFORE
Apparel retailers in China may find it more
challenging than they do in other emerging
markets to establish themselves as
specialists in clothing subcategories, such as
ladies office clothing or specialty outdoor
casual clothing.

 Chinese consumers of apparel dont appear

to place a premium on foreign brands
These figures stand in stark contrast to our
findings in India, where about 50 percent of
respondents say that international brands
are superior in value or quality

 Whats more, Chinese shoppers seem to rely

more heavily on price to form their
perceptions of a products quality than do
shoppers elsewhere.
Whereas nearly half of the respondents in
Brazil, India, and Russia believe that they can
quickly assess the quality of a garment
without taking its cost into account, only 22
percent of Chinese consumers say the same.

India: Shopping with the

family
Indians devote roughly the same share
of their income to apparel as do
Chinese and Brazilians.
But the countrys lower per capita income
levels mean overall spending on apparel is
significantly lower

 nearly 40 percent of the mass-market Indian shoppers

we surveyed said that their most important shopping
occasions revolved around special events, such as
weddings and annual religious
Furthermore, to a greater extent than elsewhere,
shopping is a family activity in India: nearly 70
percent of its shoppers always go to stores with
family, and 74 percentmore than twice the average
of Brazil, China, and Russiaview shopping as the
best way to spend time with family

 As in many markets, in India women are the primary

decision makers in apparel purchases for the entire
family. But Indias men also have an important role
India is unusual in that the market for mens apparel
is larger than the womens market, where traditional
Indian apparel still dominates.
Mass-market apparel retailers must therefore find
formats and merchandising approaches that will
attract shoppers seeking apparel not only for special
occasions but also appealing to the entire family

Brazil: Fashion conscious,

credit ready
Brazils consumers are extremely fond of
shopping for clothes: almost 80 percent of our
respondents look forward to it, a figure much
higher than those for China and Russia, though
about the same as the one for India
more than half of Brazils shoppers say they use
most of the clothing they buy for going out with
friends and family; the proportion giving that
answer in China, India, and Russia is much lower

FASHION CONSCIOUS
Brazils mass-market apparel shoppers seem particularly
conscious of fashion
Fashion trends there are strongly shaped by local
celebrities (in particular, prominent characters from
popular television soap operas),
81 percent of our respondents agree with the
statement, I trust local brands, compared with a bit less
than half of those we surveyed in China, India, and Russia.
Similarly, only 11 percent of Brazilians agree that foreign
brands are higher quality than local brandsa proportion
much smaller than it is in the other countries

 Brazilians are far more open to using credit than are consumers
in the other markets
65 percent of the Brazilians had bought something on credit
during the past six months, compared with 25, 9, and 8 percent
of the shoppers in Russia, China, and India, respectively
All major local and multinational apparel retailers therefore offer
cards with low initial spending limits that increase as consumers
prove their creditworthiness. These private-label cardsoffered
through retailer-owned finance operations or joint ventures with
banksnow finance around 70 percent of total sales for Brazils
larger apparel retailers and sometimes generate profits
comparable to those that retailers earn from apparel purchases.

CON BEHVR affects DECISIONS ON

STORE FORMAT CHOICE

LAYOUT AND DESIGN OF THE STORE

AISLE WIDTH
HOT SPOTS , COLD SPOTS

CATEGORY DISPLAY
CUSTOMER SERVICE
PROMOTIONS

BILL BUSTERS
BRAND SPECIFIC PROMO

Pack
Format
type
is not
is not
applicable
applicable
forfor
now
now

PDH - Toothbrush

Bristle strength ( Hard / Soft) is the key purchase decision criterion for the
shopper and should be highlighted for ease of shopping
Functional
Source:
Colgate feature / Benefit should be highlighted at the point of purchase

Purchase Decision Hierarchy - Chocolates

How do shoppers purchase
Chocolates?

1st
Attribute
Brand 2nd Attribute
CDM
Perk
Type of
etc
chocolate 3rd Attribute
Dark
Price
chocolate
White
4th
chocolate
Attribute
MOST
Variant
IMPORTANT
Fruits &
nuts
Raisins

5th
Attribute
Pack size
Small
Large

Chocolate shopping dictated by

taste buds
Brand followed by type and price
emerge as the 3 most significant
decisions that a shopper takes in
buying chocolates
Source: Cadbury India Ltd.

6th Attribute
Promotions
Buy 2
CDM and
get a Perk
free

7th Attribute
Product form
Mould
Count

LEAST
IMPORTANT

The Indian Consumer Is Rapidly

Transforming
Paradigm Shift in almost all aspects of life

Outlook From Traditional to Modernized Traditional

49

.. On Much Wider Range of Services

and Products
Services are now taking away a huge chunk of the
Consumers Wallet
1.
2.
3.
4.
5.
6.
7.

Food and Grocery

Clothing
Footwear
Consumer durable /
appliances
Home linen
Movies and theatre
Eating out

1991

Categories constituting 80 % of SEC

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

2009

Food and Grocery

Clothing
Footwear
Consumer durable / appliances
Expenditure on DVDs and VCDs
Home linen
Home accessories
Accessories
Gifts
Take-away/ Pre cooked / RTE
meals
11. Movies and theatre
12. Eating out
13. Entertainment parks
14. Mobile phones and service
15. Household help
16. Travel packages
17. Club membership
18. Computer Peripheral & Internet
Usage
AB consumer
discretionary spending

TRENDS 2015

SOURCE DELOITTE GLOBAL POWERS OF RETAILING 2015

TRAVEL RETAILING
MOBILE COMMERCE
SPEED RETAILING
EXPERIENCE RETAILING

TRAVEL RETAIL
OVER 1 BILLION PEOPLE ARE TRAVELLING
EACH YEAR APPOX 15 % OF POPULATION
6TH CONTINENT
AIRPORT RETAILING , LUXURY RETAILING
BUILDING BRAND AWARENESS IN EMERGING
COUNTRIES

MOBILE RETAILING
65% OF POPULATION WILL BE USING MOBILE
PHONES
GOOGLE GLASS , APPLE WATCH
PAYMENT OPTIONS

NEW AGE SHOPPERS

SHOPPING IS CHANGING
INVOLVING MORE DIGITAL ENGAGEMENT

Tesco home plus

http://
www.youtube.com/watch?v=TL3oDAEX28M

FASTER RETAILING
SAME DAY DELIVERY BY AMAZON
DRONE DELIVERY

EXPERIENCE RETAILING
ENTERTAINMENT , EDUCATION,
ENGAGEMENT
CREATING BUYING EXPERIENCE
OMNI CHANNEL EXPERIENCE