The spending patterns of Indian consumers are stabilising after double-digit growths in discretionary spending over the last two years. While overall spending across 13 categories grew 44 per cent, the total spending basket comprising 20 categories (including groceries, consumer durables and entertainment) has seen a 9 per cent growth this year, as against 20 per cent last year.
The seventh KSA Retail Summit 2005 concluded with KSA Technopak revealing highlights of its upcoming Consumer Outlook 2005.
The KSA Youth Trendmill 2005 — a study to track tastes in the youth market — was also launched at the summit. SEC A kids in Mumbai, Delhi and Bangalore in the age group 11-21 years were surveyed.
KSA Technopak's study has revealed that the most preferred shopping destinations for the Indian consumer are city high streets, especially MBOs and colony markets. For categories such as apparel and home appliances, more than 55 per cent of the respondents shop from high streets.
For personal care and toiletries, 52 per cent prefer local colony markets; and for grocery, 82 per cent prefer colony markets.
Deconstructing the face of the new Indian consumers and their preferred shopping trends, Harminder Sahni, Principle & Associate Director, KSA Technopak India, said consumer spending in India today can be categorised into `regular spends' and `lifestyle spends.'
Regular spends, which grew 4 per cent, include those on grocery, eating out, books and music, personal care items, consumer durables, savings and investment, clothing, footwear, accessories, movies and theatre, entertainment, vacation, and textiles. Barring a few categories such as vacation, books and music, textiles, and savings and investment, most in that category have either stagnated or are de-growing in terms of absolute spends.
Lifestyle spends grew 20 per cent, and comprise payment for household help, gifts, furniture, computers/laptops, mobile phones and Internet connection. While spends on mobiles, furniture, computers, and payment to household help have gone up, those on gifts and Internet have gone down.
"The Indian consumer has changed and the shopping trends are changing. This change is good for innovation and growth," said Sahni.
"The need basket of an average Indian has changed sharply. In 1991, whereas 80 per cent of the spending was on eight items, today that percentage of spend is across 17 items, with the inclusion of mobile handsets, gifts, durables, and so on. The rise in disposable incomes, increasing number of dual-income nuclear families and changing attitude toward consumption are positive indications for the growth of the retail sector. Today, consumers don't want to experience shopping, they want to shop for experience," said Ravi Raheja, Managing Director, K. Raheja Group.
The KSA Youth Trendmill 2005 has revealed that money is the driving factor for today's kids. Entrepreneurship is a popular choice even as lucrative, contemporary careers are in. For example, a physical instructor opening a chain of `stay-fit' workshops or an adventure tourist guide starting an adventure travel company.
Even though the Indian youth is computer savvy, e-commerce is still only an emerging activity. It is still restricted due to payment modalities. But the acceptance of e-commerce will rise when kids mature into the consuming class.
To the delight of mobile telephony providers, the Indian youth are enthralled and `engaged' to their mobile phones. Mobiles, apart from their functional use, also connote status. Even kids are familiar with mobiles' advanced features. The threshold age for owning a handset now is 16 years. So, this is a huge and rapidly evolving market that requires creative value-added services.