A robust Indian economy has meant ringing cash registers for retailers and lifestyle brands over the last few years, and the good news continues for them in 2004. Consumer spending by Indians is up 16 per cent over last year, the GDP per capita is expected to double by 2010 and with the ever-increasing availability of lifestyle-spending options, more and more people are spending on what is known as `status' acquisition.
According to the study Consumer Outlook 2004, conducted by research firm KSA Technopak, increased consumer spending has led to a boom in lifestyle products even as spending on routine, daily-use items has dwindled.
Says Vatsala Misra, a consultant with KSA: "The consumer is spending more on lifestyle products but seeking more and more value in routine purchases like grocery, personal care products and even while eating out. This explains the current spree of price corrections across several product segments and emergence of eating out options like food courts."
Misra's contention is bolstered by research findings that suggest that even the amount an upper middle class household pays its maid has jumped by a whopping 48 per cent over the last one year whereas the share of groceries in the total household budget has dropped by one percentage point to 41.1 per cent!
The KSA study found that among the product categories that registered significant growth last year, mobile phones topped the list since their sales almost doubled, followed by consumer durables at 53 per cent. This was followed by books and music (32 per cent), movies and theatres (38 per cent) and home textiles at 29 per cent.
Again, while the amount a typical household spends on eating out has dropped by 1.4 percentage points, the money spent on lifestyle products has gained prominence.
While refuting the contention that people are looking for lower-priced groceries, retail chain Trinethra's Managing Director K. Anajaneyulu said there is a shift in favour of organised grocery retailing. "Some people are shifting from groceries to fast foods and some others from local shops to organised retailing. In general, purchasing power is on the rise. But I do not think people are willing to compromise on quality to avail of lower prices."
He said that till some years back, price was the prime consideration for people buying groceries but that today, it is the third most important aspect after product quality and service.
The study also dwelt on an interesting aspect of the Indian consumer mindset. It found consumers no longer dreaded taking credit for purchasing their dream houses. "Personal credit offtake has increased from about Rs 50,000 crore in 2000 to Rs 1,60,000 crore in 2003, giving an unprecedented boom to high-ticket item purchases such as housing and automobiles," the study found.
So, while 12 per cent people in urban SEC A/B are currently paying monthly instalments on loans, 40 per cent of these people have taken a home loan.
The study has segmented consumers into three categories — Technologies' Babies (aged 8-19 years), Impatient Aspirers (20-25 years) and Balance Seekers (26-50 years). The last category comprises the highest number of 41 million people. Typically, teenagers are spending the largest amount on books and music followed by apparel and footwear so that eating out is relegated to the third priority while they loosen their purse strings. But this is in sharp contrast to the Impatient Aspirers as well as Balance Seekers — two groups which spend the biggest amount on eating out. So, it looks like the confidence food retailers have in achieving high growth in the near future is not misplaced!
Again, the study found that Indian teens enjoy shopping and are fashion-conscious - like their counterparts all over the world - so apparel and accessories' retailers can take heart. The Aspirers are also a marketers' delight since 60 per cent said they buy more things on impulse and go for `planned spontaneity' - many purchase decisions are impulsive and based on factors such as store displays.
When it comes to the mature adults, while lifestyle is still big for these consumers, their priority is skewed towards shopping at stores where fast service is available because for these people, time is at a premium. In fact, as many as 55 per cent respondents said, "If I find a helpful salesperson, I often spend more".
Moral of the story? Consumers look for solutions, not merely products, and for those solutions which can add value in terms of saving time, enriching quality of life and enhancing productivity. So, for marketers of the future, providing viable solutions will be the key to the consumer's wallet.