Curious case of consumerism

INDIA

Rajnish Kumar

The Indian World Culture• There has been a huge change in the socio economic scenario in India post

liberalization and the country is finally demanding its place as a major cultural and economic force in the world.

Satellite television, mobile telephony, internet etc. have made the world a smaller place and exposed consumers to lifestyles and products which were not know to them earlier.

It is the emergence of a world culture than an ‘Indian culture’ or a ‘western culture’ that defines what we do today and hope for doing tommorow. This has led to a paradigm shift in the consumer mind scape. Consumerism is in and it can be seen in the ‘have money will spend’ attitude of Gen X.

Upbeat economy: India is now a trillion dollar economy, a feat achieved by just 11 other countries in the world!

Out of this 60 % is private consumption and if we take out items such as housing, education, transportation, healthcare which account for around $200 Billion it presents a retail opportunity of $ 400 Billion.

This will be equal to the consumption level of some of the most developed countries and is therefore attracting new players who now look at India as a lucrative market.

3/8/2009 2

Rajnish Kumar

The Consumer is changing..

3/8/2009 3

Rajnish Kumar

And so isThe ATTITUDE

3/8/2009 4

Rajnish Kumar

• ¾ th of India’s population is under 40 years of age which translates to 750 million young people working their way up the socio economic ladder.This perhaps is one of the country’s major competitive advantages over it’s developed competitors.

• Out of the Total population around 250 million belong to the much talked about middle class which is upwardly mobile and has the purchasing power retailers need.It translates to as many consumers as in the US even though with smaller wallet size.

• The young Indian dreams big and has seen the likes of Sabeer Bhatia,Narayan Murthy,Mukesh Ambani ,Ratan Tata and Laxmi Mittal take over the world.She is confident,practical,optimistic and is willing to work hard to make the best of every opportunity that life presents.

• Spending on one self is no longer a bad thing even though simplicity remains a virtue everyone admires

• Duality of cultures is something unique to India.While we take what is best from other cultures especially the US, a very strong ethos and history keep us deeply rooted in everything Indian

Haldiram does just as well as McDonald’s, sometimes better, especially as far as snack foods are concerned. Harry Potter and Hanuman fire the fancies of our young minds, and the MTV and Aastha channels co-exist both doing well when you talk about the media.You do yoga with Baba Ramdev in the morning and jive on Shakira’s tunes at a disc in the evening- no questions asked.

Young and Upwardly Mobile Middle class

3/8/2009 5

Rajnish Kumar

• While the income levels have more than doubled in the last 10 years, the spending has increased many folds due to credit facilities available freely not only in terms of credit cards but also as personal loans,house loans,car loans,education loans and so on.

• An interesting aspect of consumer behaviour is that while they would not like to spend as much on basic items like food and grocery they would like to upgrade to newer models of cell phones, wear the trendiest fashion brands and upgrade to bigger cars as soon as possible.The feeling of having ‘arrived’ is what drives the Indian mind in 21 st century

• Utilitarian approach to products that help in doing work or business such as the internet or the mobile is seen even in rural India.The fastest growing segment in mobile telephony is the hinterland with all players literally falling over each other to show the best value to farmers, small traders and government employees in small towns and villages. Connectivity is key to growth and if it is affordable then why not ?

• The concept Time = Money is well established which has led to the growth of organized retail and will continue to drive it in future. As people attribute more and more premium to what they can achieve in the next 24 hours rather than hunt for the best bargain for vegetables in the Subzi Mandi,Retailers who can become partners in the lifestyle change of an average Indian will succeed in the market place.

• The customer is now ready for large format organized retailing is Self Service formats therefore the first mover disadvantage of educating the customers on a new concept is not there.Chains like Giant,Nanz,Ebony (from Escorts group) failed as the market was not ready for the idea.

3/8/2009 6

Rajnish Kumar

Growth of Consumerism… Impact on consumer spending/shopping behaviour: In 1991 there were just 7 categories

accounting for 80% of consumer spending. These have expanded to 18 in 2008 !

1991 20081.Food & Grocery

2.Clothing

3.Footwear

4.Consumer durables

5.Home Linen

6.Movies & theatre

7.Eating out

1.Food & Grocery

2.Clothing

3.Footwear

4.Consumer durables

5.Expenditure on DVDs & VCDs

6.Home Linen

7.Home accessories

8.Accessories

9.Gifts

10.Take away/ pre-cooked/RTE meals

11.Movies & theatre

12.Eating out

13.Entertainment parks

14.Mobile phones & service

15.Household help

16.Travel packages

17.Club membership

18.Computer peripheral & Internet usage 3/8/2009 7