Habits change in India

06 July 2011

NEW DELHI: Consumers in India are adopting a wide range of new habits, meaning brands must increasingly focus their attention on the "moment of truth", a study has argued.

Research by the Boston Consulting Group found 42% of shoppers across the country expected to rein in household budgets during the coming 12 months.

Based on a survey of 2,000 adults, the firm's analysis also asserted a "new normal" was beginning to emerge, not least as a result of rising prices.

In demonstration of this, over 40% of shoppers believe they have been personally influenced by the financial crisis, up from just 10% a year ago.

Abheek Singhi, a partner and director at BCG India, told the Hindustan Times: "The conspicuous-to-conscious spending is a longer term trend that will continue.

"Inflation, which impacts daily decisions of consumers, is shaping the overall perception of the economy and their attitude towards spending."

Singhi added that affluent customers and their counterparts at the entry-level have a lot in common - despite the income gap.

"There is the upper income urban consumer who has the money to spend. And there is the low income urban consumer whom inflation is hurting the most. Both want more and are confident of getting more," he said.

By contrast, shoppers positioned between these two demographics are exhibiting a shift in behaviour, posing a particular problem for mid-market brands.

"The metros and the middle income groups are driving these downbeat spend intentions," said Singhi.

The proportion of all interviewees anticipating that they will have to make cutbacks on non-essential items was 74%, while 64% said they will use discount stores more.

An additional 63% of the panel are attempting to discover the best prices, 61% cited a deferral in making major purchases, and 60% are snapping up higher numbers of goods available on promotion.

"Volumes in categories such as apparel and consumer durables have fallen. Air conditioners and refrigerators - but not washing machines - have also seen sales slowing," said Singhi.

Similar patterns are observable in segments like jewellery, entertainment, sporting equipment, wines, spirits, out-of-home dining and travel, with the last sector broadly indicative of wider issues.

"More people are buying holiday packages, but they are looking for the best deals on them," said Singhi.

"Unless the product is differentiated, people will trade up or trade down in the same category."

More positively, 75% of contributors proved confident concerning the future outlook for the Indian economy, and 58% intended to maintain or increase their expenditure.

Exactly 34% of Indians expressed a desire to trade up, with numerous factors encouraging such a strategy.

Goods with strong health credentials were mentioned by 65% and brand names posted 64%, while 62% agreed "I enjoy the feeling of using these products".

A further 61% referenced technical differences, and 60% simply stated "I deserve it".

Another 58% reported these moves were motivated by the fact they could now afford to do so, and 55% yielded emotional benefits from acquiring higher-priced offerings.

This second figure was matched by the proportion who believed premium lines gave better results.

In advising marketers, BCG suggested brands should place a heightened emphasis on the "last three feet", namely, the in-store arena where shoppers reach a final decision.

"Increasingly important now and in the future will be not just big media campaigns to build brands, but promotions and helping consumers choose your brand at the point of sale," Singhi said.

Data sourced from Hindustan Times, Livemint, Economic Times; additional content by Warc staff