NEW DELHI: Consumers in India are varying their behaviour across categories when it comes to trading up or switching to cheaper products, new figures show.
According to the Boston Consulting Group, some 80% of Indians traded up in at least one product segment during the last year compared with the previous 12 months, and 37% did so in over 20.
More specifically, a 35% share of buyers pursued this activity in a greater number of categories than they cut back in, while 26% maintained expenditure rates, and 39% trimmed their aggregate outgoings.
Individuals earning over Rs75k per month traded up on 40% of purchase occasions, but matched this by trading down equally elsewhere. Their peers on Rs10k–20k per month moved up the value chain with roughly 35% of the acquisitions they made.
While 31% of customers from the country's major metropolitan centres switched to more expensive products in the same period, this total rose to 37% in smaller tier four towns.
Abheek Singhi, a partner and director at BCG, told the Times of India: "With increasing incomes and awareness levels, the needs and consumption in small town India are converging with larger, more affluent towns.
"Though there are fewer affluent and middle-class consumers in these smaller towns their tendency to trade up is often higher than that of their big-city counterparts."
Consumer durables, mobile phones, health products, apparel and fresh food were among the main areas where buyers opted for more premium lines, the analysis revealed.
"Upgradation is definitely driving mobile growth as is evident from the growth being witnessed by smart phones in the Indian market," said Asim Warsi, a vice president at Samsung Mobile.
Devendra Chawla, president of Food Bazaar, the retailer, argued that items such as chocolates and pure fruit juices were seeing demand rise in many smaller towns, indicative of similar trends.
"Indian consumers are smartly trading up even as they are trading down and using that saved money to further trade up in categories more relevant or important to them at this stage of consumption and growth," he said. "The net effect is clear trading up in value terms driving the consumption up."
Data sourced from Times of India; additional content by Warc staff