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Consumer Markets in India: Brief Overview
Indians are amongst the world’s most positive clan when it comes to job prospects and personal finances, according to Nielsen’s Global Online Consumer Confidence second quarter of 2011. Higher brand awareness, increase in disposable incomes, availability of wider options in markets, changing lifestyle and demographics are some of the major drivers, among others, that have propelled Indian consumer markets over the last decade. The progress can also be largely attributed to calculative liberalised policies implemented by the government that have not only encouraged foreign companies to foray into India, but have also taken care of domestic players and their growth.
Consumer Markets in India: Some Statistics
Certain numbers that indicate elevation of lifestyles among Indians, that has driven consumerism directly or indirectly, are given below:
- Percentage of Indian households (both rural and urban) with electricity for domestic use showed a significant increase from 64 per cent in 2002 to 75 per cent in 2008-09, as per the report prepared by the Institute for Applied Manpower Research under the Planning Commission.
- Confirming that the expenditure on non-food items like durable goods has increased over the past few decades, a report by National Sample Survey Office (NSSO) has revealed that rural households’ expenditure on durable goods has increased from 3.1 per cent (1987-88) to 4.8 per cent (2009-10) while that of urban households increased from 4.1 per cent (1987-88) to 6.7 per cent (2009-10).
Moreover, to get a better notice of trends emerging on consumption expenditure (NSSO) has decided to release monthly per capita expenditure survey on a quarterly basis.
Retail in India
Indian retail business values at around US$ 550 billion as of now and about four per cent of it accounts for the organised sector. A report by Boston Consulting Group (BCG) has revealed that the country’s organised retail is estimated at US$ 28 billion with around 7 per cent penetration. It is projected to become a US$ 260 billion business over the next decade with around 21 per cent penetration.
Today, Indian retail industry is represented by glamorous and spacious malls. Organised retail, whose growth is marked by the entry of formats like departmental stores, hypermarkets, supermarkets, specialty stores and western-style malls, is changing the conventional shopping norms of the traditional unorganised outlets.
India has been ranked as the fourth most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney, in its Global Retail Development Index (GRDI) 2011.
Cumulative foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to August 2011 stood at US$ 44.45 million, according to the Department of Industrial Policy and Promotion (DIPP).
Certain developments and investments that took place on the Indian retail canvas recently are discussed below-
- Real estate major DLF’s subsidiary DLF Brands has struck a deal with Chicago-based Claire's Stores Inc to bring the latter to India and open its 75 stores over 2011-16. Claire's is a specialty retailer which targets young girls through over 3,000 stores globally.
- French retail chain, Carrefour is on an expansion spree in India wherein it is about to finalise lease deals across 10 to 12 sites in the country to open cash-and-carry (wholesale) outlets.
- The world's largest retailer Walmart will open an innovation lab in Bangalore by the end of 2011. The lab would be tasked to drive the US$ 422-billion company’s next generation innovations that impact shopping behavior among the customers.
Fast Moving Consumer Goods
Fast moving consumer goods (FMCG) sector is scaling new heights due to the entry of foreign brands and development of organised retailing in a big way. Indian packaged food industry, which is currently estimated at around US$ 10 billion, is driving retail sales to a major extent in India. FMCG firms have also started tapping net savvy consumers to give a boost to their revenue. Companies, including Dabur, Himalaya Herbal Healthcare, Neutrogena, Oriflame, Amul, Future Group, Aditya Birla Retail, REI Agro and Carrefour are making efforts to expand their reach through internet.
A recent study has revealed that lesser developed eastern states such as Bihar, Orissa, Chhattisgarh and Assam are leading rural sales in India. The analysis has strengthened the fact that rural markets are driving consumption of FMCG products.
- US FMCG giant McCormick, that has recently formed a joint venture (JV) with Indian basmati rice brand Kohinoor Foods, intends to tap Indian packaged food industry and achieve sales of US$ 85 million in the first year of operations in the country.
- FMCG firm GSK Consumer Healthcare (GSKCH) has made a debut into Indian breakfast cereal market by launching oats cereal under its flagship brand ‘Horlicks’. The breakfast cereal market in India is currently dominated by PepsiCo and Kellogg’s.
- Oral and dental hygiene products manufacturer Colgate Palmolive has decided to invest Rs 200 crore (US$ 40 million) to establish a greenfield facility at an upcoming industrial estate in Sanand which is being developed by state-run Gujarat Industrial Development Corporation (GIDC).
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