THE URBAN CONSUMER: How India spends

Off 2

Consumer spending is vital to economic growth and development in a country. Specially, in these days of economic downturn, it assumes greater importance. As already discussed the increased income levels resulting in more disposable income followed by changing attitude towards consumption, changes in prices, flood of choices when it comes to products, have been the guiding factors for the spurge in urban spending. Except these, availability of easy credit through loans, mortgages and credit cards, growing brand consciousness coupled with rising aspirations of the urban middle class has designed this urban profligacy.

With the coming in vogue of marketisation and consumerist culture, urban India, as our Study reveals, is spending 33 percent more compared to 2005. While it’s medical expenses have climbed up by 120 percent, it’s spends on Insurance and Investments have risen up by 36 percent and 43 percent, respectively-a clear indicator of the improved living standards. Inside the burgeoning urban expenditure basket, while medical expenses claim the highest 120 percent increase over 2005, delightfully, media comes a close second with an 86 percent rise over the base period. Similarly, expenses on loans, credit cards, investments and insurance have also seen a surge of 46 percent, 44 percent, 43 percent and 36 percent, respectively. However, the most notable thing of all has been a 14 percent dip in the spendings in the communications segment.

Shopping habits are changing. Due to the factors discussed above and because of a large part of the consumer base being the youth, there is a marked change. The emphasis has shifted from price consideration to design, quality and trendiness. The desire to look and feel good have also become a factor to be reckoned with as far as influencing buying decisions are concerned. The increasing empowerment of women and the kids section getting expressive attention from households and corporates have also been determining factors in purchase decision making.

How India Shops
In the age of super and hyper markets, urban India still prefers to do most of its shopping at the kiranas. In fact, according to Pitch-IMRB Study, kiraanas or the mom-and-pop stores are the places where urban Indians make 43 percent of their total expenditure, followed by dairies with 13 percent of the spends.
Although the young generation has displayed a preference for the malls and modern retail stores, the kiranawallas, perhaps because of their reach and pricing, continue to be attractive to a significant part of the populace. Kiranas or the mom-and-pop stores stores call the shots when it comes to groceries, FMCGs and general merchandise. Meat and non-vegetarian stores also come to occupy an important place with 12 percent of the total expenditure happening there. Similarly, vendors and salesmen, and the wholesale stores claim 8 percent each of the spending pie. The other categories of prominence being pharmacy, self-service stores, restaurants, paan shops and the traditional mandies/bazaars.

Modern trade, as of 2007, had a poor penetration rate in urban India, with only a miniscule share of 2 percent. As is being observed they have become favourite weekend destinations by families but are yet to catch up with the well-entrenched kiranaas. However, the South is ahead compared to the rest of India with Modern Trade accounting 5 percent of the spends on groceries, FMCGs  and general merchandise.

When India Shops
To any market enthusiast, the most important tips that she may want to be braced up with is perhaps to know when her perspective customer opens his purse strings. Most of the urban consumers undertake shopping trips before 11am. When it comes to early morning shopping, interestingly, the South has a high incidence of before 7 am shopping along with the West while North and East prefer a later hour in the morning, the hottest shopping hour being the hour between 8 am to 9 am.

The other popular shopping slots for urban India, like rural India, where haats function in the afternoon hours, is between 5 and 7 pm. As it prefers to shop in the morning, the South’s incidence evening shopping is not high. On the contrary, the late rising the North prefers this hour the most. 30 percent of the households shop in this hour.
Coming to number of shopping trips, an average Urban household makes 2.6 shopping trips on a week day compared to 2.3 trips on weekends. Similarly, the kind of days also determines the type of store to be visited. Kiranaas are the most visited places on weekdays as well as the vegetable stores or dairies.  But visits to non-veg stores witness visits by 44 percent households on week ends indicating non-vegetarianism as strongly weekend habit of Urban households. However, the North is an exception due to prevalence of strong vegetarian tendencies.

In similar vein, monthly bulk shopping is undertaken by 64 percent households in the first week of each month. This week presents an unique opportunity for marketers to make brand promotions, and other deals to attract eyeballs. Again maverick South has 71 percent of its households out on bulk marketing in this week, as against just 56 percent of the households in the West.

A natural follow-up to the point discussed earlier, the kiranaas or the mom-and-pop stores are the place where a majority of the bulk shopping is also done. As a testimony to the South’s forward-looking behaviour, the incidence of bulk shopping from Modern stores or organised retail is the highest in the South, with nine percent of the households chosing them over the  mom-and-pop stores.

As it is everywhere, the location and visiting conveniences also are great determinants in urban marketing. Nearness to residences, store ambience and displays and in general the ‘look and feel ‘ of a store have been the biggest attracting factors. Unlike other regions, the Southern customer values quality and trustworthiness of the store keeper the most in reaching a purchasing conclusion.

About the author / 


Brand News

Recent Comments


Recent Images

    Subscribe to Pitch Newsletter

    Select a list:

    Read previous post:
    THE URBAN CONSUMER : How India Earns!

    But for the ongoing slowdown, the economy has been experiencing a free run for the last few years, and so...