India looks for ‘shoppertunities’

As India’s economy continues to grow, ‘low income value explorers’ – a group once referred to as the deprived class – are mobilising to become the ‘first time modern trade shoppers’.

These two segments alone will drive an additional US$3 billion of fast-moving consumer goods (FMCG) sales in India, according to new estimates by Nielsen.

Urban India has around 10 million low income value explorers (LIVE), whose annual income are below Rs72,000 (below around US$1300). Spending one-fifth of their household expenditures on FMCG (US$2.4 billion), this massive growth segment is expected to contribute disproportionately to FMCG growth, rising by 50 per cent in the next three years to US$3.6 billion.

“Confident and buoyed by a sudden rise in incomes, half of LIVE households have already migrated to branded products,” said Adrian Terron, executive director at Nielsen India.

Terron said that this move is not about share gain for manufacturer and retailers, but rather expanding the base for branded product sales.

“With an increasing number of shoppers still forming their relationships with brands, more than half are predisposed to in-store influences, and 40 per cent like to try new things. Now is the time to create and continue a relationship with this shopper segment,” said Terron.

For shoppers seized by aspiration and insecure about their well-being, modern trade is an indulgence that imparts a sense of progress. Today, five per cent of LIVE’s household budget is spent at modern trade, which is expected to grow to reach US$175 million by 2015.

To win with LIVE shoppers, tackling inflation through volume gain is a good strategy, says Nielsen. One third of LIVE households buy bulk packs for certain categories, which does not only include larger pack sizes, but also banded, or combo packs, especially for personal care categories.

Meanwhile, first time modern trade shoppers (FTMTS) spend US$280 million at modern trade on FMCG products, which is expected to triple to US$1 billion in just three years. This new breed of shoppers, which currently spend 35 per cent on FMCG at modern trade, are growing by 15 per cent each year.

Impulsive and prone to upsizing quantity, two in five FTMTS also ‘supersize’ their shopping trips by buying more than they had planned. This is not only the result of greater promotions, deals and events at modern trade, but it is also due to increased word-of-mouth marketing and the intense desire to explore and discover the new experiences that modern trade offers.

While new and premium products are the routes to drive loyalty to modern trade, the arrangement of products on the shelf will differentiate retailers. By redefining the range of assortment and winning the confidence of the FTMTS, retailers can expect to gain an additional US$100 million annually, concludes Nielsen.


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