First-time modern trading shoppers and urban India’s low-income households will add around $3 billion to fast-moving consumer goods (FMCG) sales in India, according to global market research company Nielsen.
Every fourth modern trade shopper (shopping at supermarkets and hypermarkets) is entering the modern retail channel for the first time, according to Nielsen.
These first-time modern trade shoppers (FTMTS) will triple their spend on consumer packaged products from the current $280 million to $1 billion in three years, said the research group. They will also spend an additional $1 billion in general trade by the year 2015.
Speaking at Nielsen’s India Consumer 360 Conference in Mumbai, Adrian Terron, executive director, at Nielsen India, detailed the unique characteristics of low-income value explorers (LIVE) and first-time modern trading shoppers (FTMTS) segments; he also outlined the strategies necessary to grow them.
There is approximately 10 million LIVE households living in urban India. Currently spending one-fifth of their household expenditures on FMCG (i.e. $2.4 billion), this massive growth segment is expected to contribute disproportionately to FMCG growth, rising by 50 per cent to $3.6 billion over the next three years.
“Confident and buoyed by a sudden rise in incomes, half of LIVE households have already migrated to branded products,” said Terron.
For manufacturer and retailers, the move is not about share gain, but rather “expanding the base for branded product sales”, he explained to those assembled in Mumbai.
An increasing number of shoppers are still forming their relationships with brands, and more than half are predisposed to in-store influences. Having access to the Internet has led to shoppers carrying out competitor price monitoring on brands online; as well as shoppers being influenced by prices and deals, 40 per cent like to try new things. “Now is the time to create and continue a relationship with this shopper segment,” he stressed.
The Nielsen research is welcome news for manufacturers looking to emerging markets for growth at a time when key markets have slowed down.
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