Retail sees modest growth in India: Nielsen survey
The survey finds that only 26% more shoppers of packaged consumer products visited retail shops in 2013 than in 2007, an average growth of just about 4% a year
New Delhi: Big Retail may be in the cross-hairs if a Bharatiya Janata Party (BJP)-led government comes to power after the ongoing general election, but retailers have more to fear—modest growth in a business widely considered the next big thing.
Indeed, according to a study by researcher Nielsen India, only 26% more shoppers of packaged consumer products such as soaps and shampoos visited modern retail establishments in 2013 than in 2007, an increase of a mere 4% a year.
Still, retailers can take heart from the fact that a little more than one in four customers say they spend most of their monthly budget in such stores, up from just around one in eight in 2007.
Nielsen surveyed 600 customers across Delhi and Mumbai to understand their shopping habits while buying consumer products.
Consumer product companies say around 10% of their sales are through modern retail stores.
That’s still small. Modern retail hasn’t reached the scale it was expected to, said Krishna Rao, group product head at Parle Products Pvt. Ltd.
Mohita Kampani, president and chief executive officer at Spencer’s Retail Ltd, said the numbers were “conservative" and that the modern trade business has contracted over the past 12 months, a period when many retailers have tweaked their business models even as the economy has slowed.
India has around 10,000 modern trade stores, as opposed to nine million so-called kirana stores.
Retailers will also cheer the fact that people seem more prone to unplanned purchases in modern retail stores, according to the survey.
Nine out of 10 customers bought more than they had planned to buy, Nielsen said.
“We see consumers often trying out new products or picking up more than what they planned, impulse purchases are typically high in modern retail," said Parle’s Rao.
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