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Information about t0dxj13cdvj21

Published on March 27, 2008

Author: Joshua

Source: authorstream.com

Changing Indian Consumers & Markets:  Changing Indian Consumers & Markets Pingali Venugopal Dean XLRI Jamshedpur Slide2:  The world’s economic centre of gravity is shifting-away from the established, wealthy economies of Europe, Japan, and North America and towards the Asia Pacific India is one of the fastest-growing large economies in the world. Over the last 15 years India has changed much faster than many predicted. The Indian Consumer Is Rapidly Transforming:  The Indian Consumer Is Rapidly Transforming Outlook– From Traditional to Modernized Traditional Paradigm Shift in almost all aspects of life Slide4:  Overall, competition and structural changes within the economy have raised the bar in terms of what consumers have come to expect. Automobiles are a case in point. Where sheer availability was a variable before, today that's not even a factor given the 13 companies and 40-odd models that compete in the 700,000-strong market Expected Utility from Products/ Services:  Expected Utility from Products/ Services From Functional to Lifestyle Eating habits:  Eating habits From traditional meals to Indianised “McDonalds” Value:  Value From Merely Price, to Benefit /Effort (Price +Time + Convenience) For the same amount of grocery shopping… consumers are spending 20 % less time For the same amount of eating out spends, consumers are spending about 50 % less time Saving time is more important than saving a few Rupees - 51% I’d rather have more time than money - 47% I like to shop, but do not have time - 47% I shop closest to my home/office - 59 % Source : Consumer Outlook Slide8:  With the availability of low-interest finance schemes, price is increasingly becoming a smaller factor in a purchase decision in a whole range of consumer durables also. Slide9:  Consumers jump steps as they enter: today the line between entry-level and upgraded products is disappearing. The newer generation is willing to pay more if she is convinced she is getting better value for the higher price. Upgrade is part of life. Today the average life of a mobile is 12 months, that of a TV three years; cars four to five years and soon even homes will be changed more frequently. Clearly durability is no longer the most desirable value. Slide10:  "One household, multiple products“: two cars is no longer a luxury but a practical necessity for working couples; two TVs in the house is recognition of the fact that different family members have different interests Buying a TV set- Factors :  Buying a TV set- Factors Early nineties One, availability; two, price; and, three, picture quality Mid-nineties, the efficacy of an exchange scheme and the number of channels a company offered Today sophistication -one of the fastest growing segments of the market is high-end flat TVs Air-conditioners :  Air-conditioners In the early nineties, air-conditioner manufacturers focused on institutional sales, leaving the dodgy unorganised sector, with its dirt-cheap and poor quality offerings, to service households By the late nineties, sales to households boomed. In place of the clunky box that simply cooled the room came sleek plastic shapes offering such features as a dust-free environment, split-room cooling and so on and so forth. Slide13:  Categories constituting 80 % of SEC AB consumer discretionary spending 1991 2003 Services are now taking away a huge chunk of the Consumers’ Wallet Slide14:  The Indian economy is on the cusp of something big. After a recent trip there, I am as enthusiastic about India as I was about China in the late 1990s. What excites me most is the potential for an increasingly powerful internal consumption dynamic, an ingredient sorely missing in most other Asian development models. STEPHEN ROACH, Wall Street Journal, Nov 2005 Mr. Roach is the chief economist at Morgan Stanley in New York Slide15:  Private consumption currently accounts for 64% of GDP -- higher than in Europe (58%), Japan (55%), and especially China (42%). India's transition to a 7% growth path in recent years is very much an outgrowth of the emerging consumerism of one of the world's youngest populations. Many Drivers :  Many Drivers Demographics Increased global exposure Increased discretionary incomes across wider spectrum of population, across wider geography Slide18:  Since 1990 (after deregulation) the number of sectors open to foreign participants has expanded steadily, and India’s working-class population has increased and is likely to continue to grow for the next two decades at least, Slide19:  Consuming class increasing Slide20:  As Indians have grown richer, they have begun to spend more on vehicles, phones, and restaurants, according to recent research on consumption patters by Deutsche Bank. Purchasing Power of Indian Consumers :  Purchasing Power of Indian Consumers Going by per capita GDP figures (US$340 per capita), India would seem extremely poor country However, the per capita figures do not reflect the realistic picture of purchasing abilities of consumer households and market potential for a foreign business enterprise because of significant differences in purchase power parities of various currencies Slide22:  In fact, the Indian rupee has a very high purchase power parity compared to its international exchange value The domestic purchasing power of a US dollar in the US is closer to the purchasing power of six rupees in India, for equivalent goods and services As a result, India ranks fourth richest nation in the world, on purchase power parity terms, despite being having low per capita national income Segments:  Segments India has various consuming classes The young and the restless Teen Riches, Dudes & Dudettes Call Centre Boomers The Bold and bountiful The Yeppies (Young Entrepreneurial Professionals) The Yippies (Young International Professionals) The raffles (Rural Affluent Farm-Folk): The golden Folks in High Spirits 1 The Young & Restless :  1 The Young & Restless India has the youngest population profile in different income segments and locations, who are influencing their parents’ spending. Some of them are also beginning to earn money through part-time for full-time jobs, arising out of opportunities that did not exist earlier. Some of these segments include Teen Riches, Dudes & Dudettes :  Teen Riches, Dudes & Dudettes This group mainly comprises young people who are from relatively affluent families. Eating out, movies and occasional clubbing are an integral part of their lifestyle. Dress is invariably modern, and attire must be changed frequently Call Centre Boomers :  Call Centre Boomers Formerly located mainly in the IT-savvy cities, call centres and other IT-Enabled Service centres are spreading to other cities and towns as well. Populated largely by youngsters out of school or college, drawing in their first incomes, and at levels unheard of earlier 2 The Bold and The Bountiful :  2 The Bold and The Bountiful The Yeppies (Young Entrepreneurial Professionals): entrepreneurs who have made it after the good liberalization The Yippies (Young International Professionals): work with multi-national companies, who are based in India but travel extensively The raffles (Rural Affluent Farm-Folk): the farmer with tax-free income spend on a wider choice of products The golden Folks in High Spirits :  The golden Folks in High Spirits The retired folk, with kids who are married and living in their nuclear families, or even out of the country Several of them have led fairly good lifestyles, and have the means to continue to do so Markets:  Markets India has sometimes been called a nation of shops Highest per capita outlets in the world - 11.5 outlets per 1000 population As much as 96 per cent of the 12 million-plus outlets are smaller than 500 square feet in area. The organized sector accounts for just 2 per cent. Unorganized sector includes low-cost retailing such as the local kirana shops, owner-manned general stores, paan/beedi shops, convenience stores, handcart and pavement vendors Traditional Kirana stores:  Traditional Kirana stores Complete utilisation of space in traditional outlets :  Complete utilisation of space in traditional outlets Consumer Durables outlet:  Consumer Durables outlet Road side kiosks:  Road side kiosks Computer Accessories outlet:  Computer Accessories outlet Changing Market scenario:  Changing Market scenario Since the early 1990s the market in India has been characterised by a major shift from traditional shops to modern formats that include department stores, hypermarkets, supermarkets and specialty stores across a wide range of categories Sales from the organized stores are to expand at growth rates ranging from 24% to 49% per year during 2003-2008, according to a latest report by Euromonitor International Slide38:  Source: Retail Asia 2005, KPMG in India Analysis 2005 Slide40:  Retail sales in India's consumer goods market are expected to grow to $400 billion by 2010, making it one of the world's five biggest. Winning the Indian consumer 2005 Special Edition: Fulfilling India's promise. McKinsey Quarterly Still a lot of potential India No. 1 Emerging Retail Growth Market AT Kearney Global Development Index (GDRI) :  India No. 1 Emerging Retail Growth Market AT Kearney Global Development Index (GDRI) Slide43:  1. Food and grocery • Opportunity: Rs 6,00,000 crore Big Players: RPG, Pantaloon Likely Big Players of Tomorrow: Reliance through its malls at fuel pumps, Tatas, Godrejs 2. Lifestyle Retailing Opportunity: Rs 150,000 crore Big Players: Shoppers’Stop, Pantaloon, Piramyd, Westside, Lifestyle Likely Big Players of Tomorrow: Raymond/ Singhanias, Wadias Slide44:  3. Consumer durables Opportunity: Rs 50,000 crore Big Players: Vivek Ltd., Vijay Sales 4. Rural Retail Opportunity: Rs 3,00,000 crore Big Players: ITC • Likely Big Players of Tomorrow: ITC, M&M, DCM Shriram Slide45:  5. Broadband-driven retailing Big Players: Reliance Infocomm Likely Big Players of Tomorrow: Reliance, Bharti 6. Fuel-pump driven retailing Opportunity: Rs 10,000 crore* Big Players: Indian Oil, BP, Hindustan Petroleum Likely Big Players of Tomorrow: Reliance, Indian Oil, Bharat Petroleum, Hindustan Petroleum Under-exploited categories in organized retail :  Under-exploited categories in organized retail Con durables, IT & Electronics,Communication 45,000 Furniture & Furnishings 30,000 Jewellery & Accessories 45,000 Footwear 6,500 Gifts and Handicrafts 6,000 Saree and Ethnic wear 12,000 Health & Nutrition 1,000 Children’s wear, Maternity wear, Accessories 4,700 Figures are estimated market size in Rs crore Source: KSA Technopak estimates for 2004-05 More to come !:  More to come ! From just 3 malls in 2000, India is all set to have over 2000 malls. According to consultancy firm Technopak, the industry will see $20bn of fresh investments (excluding investments in real estate) and 2,000 hypermarkets coming up within the next five years Thank You

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