New trends emerge in India

10 June 2011

NEW DELHI: Shoppers in India are increasingly seeking out deals and promotions, a habit that has become more pronounced in the past 12 months.

Research firm Nielsen assessed emerging behaviour in eight major cities and three smaller metropolitan centres with populations of around 300,000 people.

The research revealed that, in the first quarter of 2011, 39% of consumers were attempting to find the best possible price available for goods.

This is an increase from the 30% who said the same in an equivalent study published last year.

One contributory factor to this trend is the higher number of people attending organised retail stores, which are growing in density as chains compete to enhance their position.

Some 37% of consumers now visit hypermarkets, supermarkets, convenience stores and similar outlets on at least a monthly basis, a seven percentage point surge year on year.

Dipita Chakraborty, Nielsen's executive director, retail and shopper practice, told the Economic Times rising prices and the evolving industry landscape had combined to change popular attitudes.

She said: "There is a greater deal-seeking nature in consumers due to two primary reasons - inflation as well as accessibility that make consumers aware of the various deals being offered by retailers."

Colgate, for example, has boosted prices by between 2% and 7% on several lines, with Dabur, another FMCG manufacturer, pursuing a parallel strategy.

Hair oils sold by Emami and Bajaj Corp also saw gains in the 4% to 9% range, and food specialist Britannia logged upticks from 15% to 20% across certain elements of its portfolio.

In response, Future Group, one of India's biggest retailers, is running integrated offers incorporating a variety of items.

"Every product category involves interplay of many product categories. For instance, tea involves tea, biscuits, sugar, snacks and crockery," said Devendra Chawla, Future Group's head of private brands.

"This multi-category consumption lens comes naturally to us as a retailer and we are using the category inter-play by bundling products and offering promotions on them."

Elsewhere, Max Hypermarkets, parent of the Spar banner in India, is prioritising service and the in-store experience to strengthen bonds with customers.

"We have focused on increasing loyalty by offering convenience aspects such as multiple cash counters to ensure fewer queues and relevance of product range which differs [by] 5% to 6% across catchments," said Vineet Singh, Max Hypermarkets managing director.

Harminder Sahni, managing director of consultancy Wazir Advisors, reported that inflationary shifts were also widespread in the apparel segment.

"A few brands have already hiked their prices by between 15% and 30%, while others had increased them marginally, so the second category may increase prices between 5% and 15%," he said.

"Retail brands have been under severe pressure on the raw material side as well as all other cost-affecting factors.

"[The] labour cost has become extremely high and labour availability is also a major issue."

Shoppers Stop, a fashion chain for women, is hoping the benefits provided to the 2m members of its loyalty card programme, who deliver 73% of sales, would help overcome such problems.

"We are putting use buying patterns and consumer insights from our loyal customers' database in our schemes and promotions," Vinay Bhatia, senior vice president, Shoppers Stop, said.

"Instead of giving freebies, we are now offering points so that customers can shop within our stores."

Data sourced by Economic Times/Fibre2fashion; additional content by Warc staff