From a consumer’s perspective, ‘value’ means finding affordable products while also getting acceptable quality, durability and trendiness. The typical Indian consumer has always been value conscious, and much of overall demand is for affordable, smallerticket items. Global consulting firm Kearney, through its report titled ‘Value e-commerce: The Next Big Leap in India’s Retail Market’, outlines a US$40 billion market opportunity that is shaping up as India’s value-conscious buyers go online. The report states that “Value e-commerce will emerge as the biggest growth opportunity within lifestyle retail with 10X growth in 10 years.”
The Value Lifestyle Segment
The lifestyle retail market is divided into six price tiers. The bottom three — mass, economy, and masstige — are the value lifestyle segment, and the top three are the premium lifestyle segment. Currently, about 70 per cent of lifestyle retail demand comes from the value lifestyle segment, which is dominated by unorganised general trade (nearly 80 per cent share). Modern trade accounts for 16 per cent, and e-commerce has a low penetration at 4 per cent. In contrast, the premium lifestyle retail has a much higher share of modern brick-and-mortar stores (40 to 45 per cent) with 10 per cent e-commerce penetration as of 2019. While multiple global and Indian brands and retailers with a presence in India’s top 100 cities bring the trendiest products to these consumers, those consumers in the rest of India also aspire to get similar trendy products, but at much lower prices.
According to the report, brickand-mortar modern retail cannot adequately bridge the gap between what value consumers need and what they have access to. Based on the latest Kearney India Retail Index, 65 per cent of India’s top 854 towns had fewer than two branded retailers. And, with active Internet users in rural towns (50 per cent of value lifestyle demand) and in Tier III & IV towns (about 25 per cent of value lifestyle demand) gradually growing and expected to increase sharply over the next five years, their needs will increasingly be met by differentiated business models and online channels. Their changing attitudes about online buying present a massive opportunity to rapidly convert unorganised and unbranded demand to organised ‘label’ demand.
Decoding Buying Behaviour
The purchasing patterns of value lifestyle consumers are very different from premium lifestyle consumers. The report highlights five key trends in the value consumers’ buying behaviour.
• Budget-oriented Buying Behaviours: Almost all value lifestyle consumers say they have a budget, and 62 per cent say they adhere to it. Because of their strict budgets, they spend a lot of time finding and evaluating products before they buy them.
• Bargain and Discount Hunting: Value lifestyle consumers scout for the best deals, often purchasing products with the biggest discount or markdown, which can be a big factor when they do decide to make a purchase. Eighty-seven per cent of these consumers look for discounts before purchasing a product. In fact, digitally savvy value consumers say they seek out more than three product evaluations before making a purchase.
• Less Brand Loyalty: Value lifestyle consumers tend to have less brand loyalty. They often have a preferred basket of brands and are focused on getting the best quality in their preferred price range. Sixty-eight per cent of the value lifestyle consumers in a Kearney consumer survey were brand-agnostic and expressed a willingness to experiment across brands.
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