The changing world

• The economic power centers shifting from

established economies to Asia Pacific
• India one of the largest growing
economies in the world
• Post liberalization (past 15 years) very
rapidly changing economic environment in
India beating skeptical predictions
The transforming Indian Consumer
• Paradigm shift in all aspects

Traditional Modernized Traditional

 The rise of the kings and queens
• Today the consumer is truly spoilt for
choices and therefore more in a position of
power – The consumer is truly king
 The rise of the kings and queens
• The structural changes in economy and the
rise of competition have led to raising the
bar of consumers expectations
• Case in point the automobile market –
earlier the detrimental variable was
‘availability’ – today 13 companies and 400
plus odd models vie for the 700K strong
market
 Expected utility from producers/
service providers
Ambassador C-class Merc
 Eating habits
• From Indian meals to Indianized
McDonalds
 Value
• From merely price to Benefit/ Effort (Price
+ time + convenience)

I like to shop but do

not have much time

Saving time is more

important than
saving a few Rupees

I like to shop
closest to home to
save time
 A case of consumer durables
• Availability of finance options is helping
undermine the price factor as the most
important one while making a purchase
decision
• The line b/w the entry level product and
upgraded products is getting fudged as
the consumer is willing to buy an upper
end product if s/he feels that there is
greater value to be derived from it
• Upgrade is a way of life. Durability is no
longer as important a factor
• One household multiple products – Cars,
TVs etc.
 Buying a TV set
• Nineties – Availabilty – Price – Picture
Quality
• Mid Nineties – Exchange schemes and
the number of channels the company
offered
• Today – Sophistication and technology
 Buying an AC
• Nineties – AC manufacturers focused on
institutional sales, leaving the household
sector to the unorganized sector
• Mid- nineties – The sale in the household
sector boomed
• Today – From clunky boxes focus on
stylized looks and higher end features like
dust free and bacteria free environment
 The wallet share
1990s 2000
• Food and grocery • Food and Grocery
• Clothing • Clothing
• Footwear • Footwear
• Consumer durables/ appliances • Consumer Durables
• Linen • Home linens/ accessories
• Movies/ Theater • Gifts
• Eating out • Takeaway/ RTE meals
• Movies
• Eating out
• Entertainment parks
• Mobile phones and services
• Household help
• Travel packages/ Holidays
• Club membership
• Computers and its peripherals
Lets look at some attractive figures
• Private consumption accounts for 64% of
GDP – higher than Europe(58%),
Japan(55%) and China(42%)
• India’s 7% growth path in recent times
comes from growing consumerism in one
of the world’s youngest population

The last three classes have seen growth in the past decade
 Many drivers
• Demographics
• Increased global exposure
• Increased discretionary incomes across a
wider spread of population, across a wider
geography
 The Socio economic classes
• Destitute
• Aspirants
• Climbers
• Consuming class
• Very rich

NCAER
• The NCAER study shows that the two
largest consumer classes are the climbers
and the consuming class with about 75
million households each
 The working class
• In the decade after deregulation (1990) the
number of sectors open to foreign participation
have increased and therefore the working class
has seen a growth and will show this growth till
two decades at least is what experts predict
• A recent research by Deutsche bank on the
consumption patterns noted that with increase in
disposable incomes more Indians are spending
on vehicles, phones and restaurants
 Purchasing Power of Indian
Consumer
• The per capita figure of USD 340 per
capita will show India as a poor country
• In reality it is not truly reflective of the
purchasing power of the consumer due to
the significant differences in the PPP of
different currencies
 Purchasing Power of Indian
Consumer
• Indian currency has very high PPP
compared to its International Exchange
rate
• The domestic PP of 1 USD in the US is
closer to Rs.6 in India for similar goods/
services
• Therefore the reality is that India ranks as
the 4th richest nation in the world in terms
of PPP, in spite of having low national PCI
 Segments
• India has various consuming segments
1. The young and the restless
1. Teen riches, dudes and duddettes
2. Call center boomers
2. The bold and the bountiful
1. Yeppies – Young Entrepreneurial professionals
2. Yippies – Young International professionals
3. Raffles – Rural Affluent Farm Folks
3. The Golden Folk
 The Young and the restless
• The class will be able to identify them!
The young and the restless
 The Young and the restless
• India has the youngest population profile across
income segments and locations, they have a huge
influence on their parents purchase decisions
• Some of them have started having own incomes
through part time/ full time jobs arising out of
opportunities that did not exist before
 Teen riches, dudes and dudettes

• From affluent families

• Favorite spends – eating out, movies and
some clubbing
• They would dress in predominantly
western attire and need a wardrobe
change often
 BPO boomers
• Previously in areas where the IT industry
was localised but now they are spreading
to other towns/ cities
• Fresh out of college/ schools and are
drawing their first incomes at previously
unheard of packages
The bold and the bountiful
 YEPPIES
Young Entrepreneurial
Professionals
• The post liberalisation entrepreneurs who
have made it good
 YIPPIES
Young International Professionals
• Work in MNCs based in India but travel
frequently
 RAFFLES
Rural Affluent Farm-Folk
• Farmers with tax free incomes now have a
wider basket of products that they spend
on
 The Golden Folk in high spirits
• The retired folks
– Kids in their own nuclear family set up
– Kids could be settled abroad
– They had led good lifestyles and have the
means to continue doing so
 Rama Bijapurkar

One of India's most respected thought leaders

on market strategy and consumer related issues in India.
India a study of contradictions

Rama Bijapurkar in her book

Truth about India
The Bazaar
The Bazaar - Now
• India had been called the nation of shops
• Highest per capita outlet ratio in the world
– 11.5 outlets per 1000 population
• 96% of 12 million plus outlets are less than 500
square feet in area
• Organized sector accounts for just 2%
• Unorganized sector includes local Kirana stores,
owner manned general stores, paan shops,
convenience stores, pavement vendors and
handcarts
 The changing market scenario
• Since early 1990s a major shift in the
retailing scenario from traditional shops to
modern formats – department stores,
hypermarkets, supermarkets, specialty
stores across categories
• According to a Euromonitor International
report the sales from organized sector
expanded in the growth range of 24% to
49% per year during 2003 - 2008
 Fastest growing retail segment in
India – Roti, Kapda aur Makaan
1. Food and grocery
2. Clothes
3. Furniture and fixtures
4. Pharmacy
5. Durables
6. Footwear and leather
7. Jewellery
• Retail sales in India to grow to USD 400
billion by 2010
• McKinsey quarterly 2005 – Winning Indian
Consumer
• Still a lot of potential in spite of the
recession
 AT Kearny Global Development
Index GDRI
GDRI Rank 2003 GDRI Rank 2004 GDRI Rank 2005
Russia Russia India
Slovak India Ukranie
China China China
Hungary Slovenia Slovenia
India Croatia Latvia
Turkey Latvia Croatia
Morocco Vietnam Vietnam
Egypt Turkey Turkey
Vietnam Slovakia Slovakia
Tunisia Thailand
India No. 1 Emerging Retail Growth Market
 % penetration

0
20
40
60
80
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Retail growth opportunity

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Retail growth opportunity
 Retailing potential
• Food and Grocery
– Opportunity: Rs. 60,00,00 crores
– Big players – Future group, Reliance
– Likely players – Bharti/ Walmart
• Lifestyle
– Opportunity: Rs. 150,000 crores
– Big Players – Pantaloons, ShoopersStop, Tata’s/
Westside, Lifestyle
– Likely big players – Wadias, Raymonds/ Singhanias
• Consumer Durables
– Opportunity: Rs. 50, 000 crores
– Big players – Vivel Ltd., Vijay Sales
– Likely Big players – Tata/ Chroma
• Rural
– Opportunity - Rs 3, 00,000 crores
– Big Players – ITC
– Likely big players- ITC, M&M, DCM Shriram
• Broadband driven retailing
– Likely Big Players – Reliance Infocomm,
Bharti
• Fuel Pump Driven retailing
– Big Players – BP, HP, IO
– Likely big players of tomorrow – Reliance,
 Underexploited categories in retail
• Consumer Durables • 45,000
• Furniture and furnishings • 30,000
• Jewelry and accessories • 45,000
• Footwear • 6,500
• Gifts/ Handicrafts • 6,000
• Ethnic wears/ Sarees • 12,000
• Health and nutrition • 1,000
• Children's wear/ Maternity wear • 4,700
accessories
Source: KSA Technopak estimates for 2004-05, figures estimated market size in crores
• From just 3 odd malls in 2000, the figure
will be over 2000 malls
• The fresh investment that this sector will
see will be around USD 20 billion
according to a Technopak consultancy
study (excluding the investment in real
estate)

XLRI study