With the average age of an Indian as low as 24 years and salaries growing at a faster clip than the rest of the world, there would be no shortage of business for the country’s retailers, said the KSA Technopak’s Retail Outlook Study 2004.
The good news, however, comes with a caveat that the 500 million Indians below the age of 21 are a vastly different buying species that their predecessors.
Arvind Singhal, chairman of retail consultancy KSA Technopak said the socio-economic classification (SEC) of consumers no longer made sense, at least in the urban areas as disposable incomes were fast starting to even out.
Instead he suggested that marketers and retailers should classify them by age. According the study, consumers in the 8 to 19 year category spend the most on books and music, eating out, personal care and apparel, while those in the 20-25 age group expend on consumer durables, music CDs and eating out.
Generally, the purchasing decisions made by those in the 20-25 age group are impulsive. “Since this group represents 16 million consumers in the urban areas, it is imperative for retailers to pay attention on details like store design and comfort to keep them inside the shops for longer periods,” said Singhal.
With the boom in the BPO sector and people having access to a disposable income of Rs 8000-Rs 10,000, a month will mean that they will spend more on travel, tourism and entertainment, said the study.
“Travel figures quite high on the priority list after a house and a car," said Singhal. Twelve per cent people in SEC A and B are currently paying EMIs for loans, of which 43 per cent have taken a loan for a house.
And in order to spend more on non traditional things like travel the consumers are willing to "downgrade" their purchases. Discretionary income grew by 15 per cent in 2003, the survey said.
The youth, according to the study want to enjoy a wide range of services.
So they are spurning bigger and expensive brands and going in for value-for-money products. "That is again a key message for the retailers that the younger consumer in extremely cost-conscious and at the same time, quite demanding in terms of quality of services," said Singhal.