Consumer- the prime mover for Retail business

A variety of factors seem to influence the growth in the retailing industry. `Consumer Pull', however, seems to be the most important driving factor behind the sustenance of the industry.

In this context, A. F. Ferguson & Co. had carried out a brief survey among consumers across income segments to understand their spending pattern. An analysis of the `monthly purchase basket of the consumers surveyed indicated that the average monthly household spend on food and grocery related items varied across income segments. For instance, in the case of upper income households, the average spend was around Rs 4,200 per month. As against this, the average spend in the case of a middle income household was around Rs. 2,850 and lower income households Rs. 1,250 per month. (This is computed from a sample of 100 customers having an average family size of four.)

Based on the distribution of the more than 15 lakh households in Chennai across income segments and the average spend, a conservative estimate of the grocery retailing potential at Chennai will be around Rs. 300 crores.

Besides increasing purchasing power, a variety of other factors also seem to fuel the retailing boom. With increase in double-income households and working women, there is an increasing pressure on time with very little time being available for leisure. In this scenario, consumers are seeking the convenience of one-stop shopping, whereby they could have better utility of time. They are also seeking speed and efficiency in processing, as a result. Being more aware, consumers are on the look-out for more information, better quality and hygiene as well as increased customer service. These changes in consumer behaviour also augur well for the retailing industry.

However, in India there are no uniform trends with respect to consumer buying behaviour. There are visible differences in the shopping pattern of consumers across income segments as shown in the table.

Organised retailing has definitely made headway in the upper class. However, even in this segment, items such as milk, fruits, vegetables and a significant portion of `through-the-month' purchases seem to be done at traditional outlets. The middle income class prefer shopping for processed food and personal care in supermarkets and fall back on traditional outlets for bulk shopping. Organised retail outlets seem to be associated with branded items/special purchases. Organised retailing does not seem to have made an impact on the lower class, except for `curiosity' shopping.

The biggest question before organised retailers therefore, is whether this really means a huge untapped potential for the organised retailers and whether the conversion in mindset going to be easy.

- Contributed by Nithin Narayanan