Indian consumers are brand switchers

6 February 2014
NEW DELHI/MUMBAI: The extended economic slowdown in India has made consumers more open to trying new brands according to a new study.

The report from consultants KMPG and the Retailers Association of India – Emerging Consumer Segments in India – said that consumers in urban India had been postponing big-ticket purchases such as consumer durables and cars, while cutting back in the consumer goods category or opting, where possible, for bulk buying.

Anand Ramanathan, associate director at KPMG Advisory, noted that brand switching was another consequence of the economic situation, with hard-pressed consumers "clearly down trading".

His comments were echoed by Sandip Tarkas, president of customer strategy at Future Group, who told Livemint that consumers were more open to trying out new brands and that smaller and regional brands had benefited as a result.

Both retailers and brands had turned to promotions to shore up consumer demand. "You have to create demand, stimulate it," said Rajan Malhotra, CEO of electronics retailer Ezone, who reported that growth was being driven by existing consumers upgrading to better products.

Store traffic was an issue identified by Timex, the watch retailer. "There is serious money in this country and even at the lower level people want to spend," said Ian Woodcock, svp international sales Timex, "but what we saw was that there were changes in footfalls in stores…and everybody was affected by that."

Ramanathan noted that although the economy was stuttering in urban India, that was not the case in smaller towns and rural areas where consumers with more disposable income had growing aspirations and increased brand awareness.

Online retailers and retailers with a presence in smaller towns and cities were benefiting. Livemint cited the example of V-Mart Retail, which operates 89 value-format department stores across tier II cities and non-metro regions and which reported 12% year on year growth.

Despite the country's economic problems consumers remain optimistic, with a recent Nielsen global survey finding consumer confidence in India second only to Indonesia during the final quarter of 2013.

Data sourced from Livemint; additional content by Warc staff
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