New Delhi: The organised retail industry in India is gearing up for the second phase of expansion, wherein the rush to match changing consumer expectations is the main driver for growth, according to the KSA Technopak's consumer outlook 2001 presented at the 3rd KSA Retail Summit in New Delhi on Monday.This is in contrast to the first phase of organised retailing in India between 1995-2000 which was largely retailer-driven when large real estate organisations were getting into the retail business and consumer expectation did not go beyond value for money.
Says Mr Rajan Chhibba, principal KSA Technopak: "This is not to say that value for money has declined in importance for consumers. Far from it, it's just that other considerations such as quality, variety, convenience and distance have come to the fore. These expectations have offered new opportunities for retailers, which in turn accounts for the gradual but determined spread of organised retailing to the top 15-20 cities in India".
Today's urban Indian consumer has three key expectations from retailers- variety, availability of the latest products and location close to home. In response, the industry has ushered the emergence of the pure retailer as well as multi-location and multi-format retail organisations. Additionally, a few foreign retailers have also evinced interest in this sector.
Looking at some aspects of consumer behaviour during 2000 that have a bearing on the retail industry, the study shows that consumers are increasingly spending more time on shopping as compared to last year.
Moreso, spending on grocery, books and music, home products and eating out has gone up thus providing a positive sign for organised retailers venturing into it.
Adds Mr Chhibba, "These categories represent the current opportunity for retailers, more so because total consumer spending on these products is expected to increase over the coming years. Further, on an average, 65 to 75 per cent of consumers prefer going to multi-brand outlets for apparel, consumer durables and home textiles-a good opportunity for potential and existing retailers".
Non-store retailing
Though awareness of non-store retail formats such as home or TV shopping, mail order and Internet shopping is high and has actually increased over the last two years, actual purchases through these methods have remained more or less stagnant. According to Mr Chhibba, "Non-store formats work better in multiple formats rather than stand-alone-perhaps product-plus offerings through these formats will be more successful. Still, it has to be said that e-commerce and TV shopping are something of a missed opportunity in India".Recommending key success formats for non-store formats, Mr Chhibba said:
Non-store succeeds in multiple formatsNeed for unique SKU-wise strategyHealthcare
On healthcare, some of the study's findings were "startling". The study revealed that as much as 12 per cent of annual income is spent on healthcare of which a whopping 82 per cent is self-sponsored.While 9 per cent of expenses on healthcare is accounted for by employers, only a paltry 5 per cent of it is covered by insurance. Of the total expenditure on healthcare, 51 per cent is spent on dependants-children and parents and 40 per cent of expenditure is due to hospitalisation. Of the 90 per cent who are uninsured, 32 per cent were unaware of health-related policies while 26 per cent were not satisfied with current offers.
Says Mr Chhibba, "Our study on healthcare shows that tremendous opportunities exist for retailers and marketers in the areas of pension funds, preventive care and health insurance. This is a classic case of a vacuum that is waiting to be filled up and current inadequacies show that there is room here for a number of players, not just first movers".
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
