Two growing shopper segments, the low-income value explorers (LIVE) and first-time modern trade shoppers (FTMTS), will add $3 billion in the fast-moving consumer goods (FMCG) sales in India by 2015, according to a new analysis released on Wednesday by Nielsen, a global provider of insights and information into what consumers watch and buy.
“The Indian economic landscape is flourishing and so are the shopping habits of low-income value explorers,” said Adrian Terron, executive director, Nielsen India. “This is a growing shopper base upgrading to become first-time modern trade shoppers. FMCG manufacturers and retailers need to understand the unique characteristics of these massively developing shopper segments.”
Nielsen’s research shows that an estimated 10 million LIVE households live in urban India, earning an income of less than Rs 72,000 annually. Spending one-fifth of their household expenditures on FMCG ($2.4 billion), Nielsen expects this shopper segment to increase FMCG sales by 50 per cent in the next three years to $3.6 billion. “Confident and buoyed by a sudden rise in incomes, half of LIVE households have already migrated to branded products,” said Terron. “For FMCG manufacturers and retailers, it’s important to understand that this move is not about share gain, but rather expanding the base for branded product sales. With an increasing number of shoppers still forming their relationships with brands and more than half predisposed to in-store influences, now is the time to create and continue a relationship with this shopper segment.”
Five per cent of LIVE household budgets is presently spent at modern trade, and is expected to grow to reach $175 million by 2015.
“For shoppers seized by aspiration and insecure about their well-being, modern trade is an indulgence that imparts a sense of progress,” said Terron. Nielsen’s analysis shows that while 63 per cent of LIVE households reduce or optimise quantities for key consumption categories and 58 percent seek better value through lower prices, one-third of LIVE households buy bulk packs for certain categories. These bulk packs include larger pack sizes, as well as banded or combo packs, especially for personal care categories. First-time modern trade shoppers
Nielsen’s research indicates that every fourth modern trade shopper is a first time entrant to this retail channel. FTMTS spend $280 million at modern trade on FMCG products, and is expected to triple to $1 billion in three years. FTMTS spends 35 per cent on FMCG at modern trade and is growing by 15 percent each year.
“This new breed of shopper, a first-time modern trade shopper, is impulsive and prone to ‘supersizing’ their shopping trips by buying more than they had planned,” said Terron. “This is not only the result of greater promotions, deals and events at modern trade, but also due to increased word-of-mouth marketing and the intense desire to explore and discover the new experiences that modern trade offers.”