This panel discussion focused on emerging consumer insights in India. The moderator opened by noting the diversity of consumer segments in India based on factors like age, location, income, and gender. Panelists then discussed trends they have observed like more men shopping for groceries and premiumization with consumers spending more for personal care and food items. The growth of e-tailing was debated, with some arguing it is disruptive but profitability is possible, while others noted consumers still prefer shopping locally from small retailers. The customer of the future was described as caring more about health, sustainability and personalized benefits from loyalty programs. The discussion concluded that integrating online and offline experiences is key to eliminating price differentials between channels.
3. Opening Remarks
Incredible diversity of consumer segments in
India. A few examples:
1. Urban <20 yrs – don’t tune into TV / Radio /
newspapers. Communicate thru data not
voice.
2. The traditional consumer who shops once a
month, but ‘tops up’ once a day.
3. The 35-55 salaried – ‘caught’ between two
generations.
4. The retired upper middle class, who travel
cross-continent to spend time with grandchilren
In addition to segments, additional complexities are introduced by the
Urban / Rural dimension, the Rich / Poor dimension, the Gender
dimension.
Consumer insights are temporary and evolve over time.
4. How do you identify your customer?
• Through our Loyalty Program – First Citizens Club
• 3 mio customers and 72% of sales from FCC.
• We know them, but can increase the intimacy of
that knowledge.
• What we track:
• Buying habits. What’s in vogue.
• In 2001 – 70% of FCC sales was Apparel.
Beauty was < 2%, is now more than 10%.
Growth comes to those retailers who are able to mirror customers
aspirations in merchandise mix.
5. What are the trends in consumer behavior that Food & Grocery
Retailers have witnessed?
2 strong trends in the last 10 years
•
From
women
to men.
•
•
•
•
•
7 years back 60% of shoppers were women. That has now
reversed.
Men are embracing grocery detail.
Implications for the business in terms of store layout and
assortment. Categories like Liquor are now fast growing.
About 4 years back – average cash memo size in
Skincare was Rs 500 – that’s increased to Rs 2000.
Have seen this in Personal Care but also in Food.
As long as you ‘play’ the balance of merchandise mix
– you can surf this ‘premiumization’ wave.
Premiumization
6. Will e-tailing grow or bleed to death?
• International experience with Amazon shows that
profitability, eventually, is possible.
• E-tailers adopt predatory pricing because there is
capital available, which allows them to fund
losses.
• They are disruptive in terms of what they do to
consumer behavior.
• The e-tailing business is where customer
engagement is the highest.
• Customers want access. To merchandise to
prices, to devices.
It’s no longer possible to think about customers linearly. The Attention ->
Interest
Desire Action model of consumer behavior is dead.
If you leave the shopping decision to the shop-floor it’s too late.
7. What can India learn from the UK market – on e-tailing.
•
•
•
In the UK market, small retailers were initially
threatened by e-tailing.
Today – two key trends. Because times are tough,
at the top and bottom ends of the market,
customers are “trading down”. That leaves a gap in
the “middle income segment” – that’s where etailing is thriving. Small retailers are using marketplaces, or setting up e-commerce sites to cater to
this “middle of the pyramid” segment.
The second trend is “buy local” – there is a move
on across the UK – consumers want to buy from
local retailers who are serving the community.
8. What can India learn from the UK market – on e-tailing.
•
A retailer like John Lewis is known for having
successfully integrated “bricks” and “clicks”.
•
They too, started with outstanding ins-tore
experience. Using technology to sell online was an
EXTENSION of their basic proposition of “Never
Knowingly Undersold”.
•
That’s what smaller retailers whether in the UK or
otherwise have to learn.
9. What can India learn from the UK market – on e-tailing.
•
For smaller retailers, the biggest problem they face
is sourcing consistent, credible online content.
Smaller retailers are also run by business men who
are 45 plus – so content creation is not a focus
area.
•
Suppliers and manufacturers have begun to offer
not just product, but content.
•
Retailers are able to “mass customize” this by
adding local flavor – e.g. local interest, “face book”
type stories.
10. How is the customer of today / tomorrow different?
•
Concepts like “bio-degradable”, “organic”,
“sustainable”, “fair trade” have begun to find favour.
•
Younger customers are thinking environment , health
and sustainability
• There is a loyalty creation plank there.
•
•
•
For example – a retailer in Sweden uses Health as
a Loyalty Tool :
In addition to tracking what the consumer
purchases, they also provide a personalized page
online with nutritional information for the purchases
and customized recipes which use those purchases.
Customer can pre-register their health profiles and
the retailer uses it to recommend what should be
bought.
Customers are willing to provide profiling information where they see benefits.
They are “speaking” with their wallets.
11. How is the customer of today / tomorrow different?
•
“Nectar” – Sainsbury’s loyalty program in the UK
also uses health to provide personalized discounts.
•
Based on purchase profile, offers are created for the
customer, which provide discounts at the POS.
•
These are personalized discounts – available only
to the purchase pattern logged on the loyalty card.
Research shows that customers are willing to alter store selection based on
these personalized loyalty programs.
That change in behavior comes about only after the retailer is able to
demonstrate a superior knowledge of buying habits together with sensitivity in
how they treat customer data.
12. How is the customer of today / tomorrow different?
• The Indian customer has not changed as much or
as fast as we would like to believe.
• The popular refrain in Fashion retailing is “Zaara
ne maara”. The reality is, Zaara sells to men, and
to a very limited segment of women – because
their sizing is not India specific.
• The mainstream customer in the top 50 cities is
not yet their customer.
• There is still room for “Fast Fashion” department
and lifestyle stores to make a dent in this market.
We’ve found that consumers are not necessarily as “fickle” and “capricious”
as the media and research would have us believe.
13. Offline v/s Online – is there a conflict?
There is a price differential between what we sell
online and offline.
It’s perhaps not as sharp as Flipkart, but there is a
difference.
We will live with this until we integrate the post sale
experience with the convenience of online. For
smart phones, post sales experience is THE key.
That would create the value to the customer, and get
rid of the pricing differential.
The battle is not “online” versus “offline”. The question is how do you create and
integrate “multi-channel”? How do you integrate the post sale and service
experience so that you can do away with the need to maintain price
differentials?
14. Audience
Question:
Does e-tailing affect the size of the store?
Directionally – Yes.
As retailers – there is a need to build an omnichannel presence rather than multi-channel.
The brand expectation has to be consistent and
seamless. That comes first.
Its logical that the delivery points will get smaller and
newer (including petrol stations etc)
Instead of rushing into e-commerce, we have to think how the brand will
transition from channel A to Channel B. The delivery point will be based on
what the customer wants and that will evolve and change over time.
15. Audience
Question:
Does e-tailing affect the size of the store?
Irrespective of omni-channel, retailer are reviewing
their space models
Retailer are looking at the right size to create the
right business channel.
SKU’s and space would both become tighter as well
as more distributed.
16. Audience
Question:
Does either screen size or bandwidth pipe impact the pace of
market adoption of ecommerce?
Four facts about the UK market in terms of market
maturity:
1. Every UK resident has a bank account
2. 76% of UK residents have smart phones
3. All families have a tablet
4. The courier / postal system covers most of UK.
In spite of that online sales at a market level is at 10%.
17. Audience
Question:
Does either screen size or bandwidth pipe impact the pace of
market adoption of ecommerce?
That old saying that “We over-estimate the pace of
change in the next 2 years and under-estimate it in
the next 5” is WRONG when it comes to Mobile
phones.
I see de-growth in the feature phones (simple basic
models) segment and in the TABLET segment – due
to lack of innovation.
Screen size is not the issue – lack of innovation is.
The simple fact is that the mobile device you carry is going to be very important
in the next 2 to 3 years. That’s irrespective of size or shape.