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Slowdown is playing on the minds of the Indian consumer. After almost a decade of splurging, the consumer is now back looking for ‘value-for-money’ deals. Companies and analysts agree that persisting economic pressures will compel buyers to choose value products over premium brands.
“Unlike in the previous decade, consumers may start to look at ‘value’ strictly from the template of affordability. This may happen with consumers across income levels and geographies,” says a report by consulting firm Technopak Advisors.
The report adds that the economic environment has a profound impact on consumer’s psyche. Job insecurity, inflation, and stagnant income levels alter consumer behaviour. People will either defer purchases or start to trade down on price. And in such a scenario, private labels (owned by retailers) and online deal platforms are preferred over big-ticket brands when it comes to real purchase decisions.
This is already visible on ground. In the apparel category, it is the value proposition of private brands that has held retailers in good stead during the slowdown. Akhilesh Prasad, CEO, Reliance Trends, says, “Today almost 60 per cent of the business is driven by private brands such as Fig and Avassa. It is value fashion that is expected to have a greater share of the apparel market and this trend will also continue across the festival season.”
private labels
Kishore Biyani's Future Group, which offers private labels across categories such as FMCG, consumer durables, electronics and apparels, confirms this trend. “The private brands business has grown 20-25 per cent in the last six months,” says Devendra Chawla, President, Food Bazaar, Future Group.
Max Retail, a division of the Dubai-based retail major Landmark Group, has seen sales jump a whopping 37 per cent over last year because it has made fashion more affordable. “It is not just about price but the value that we offer which is not about cheap fashion,” says Vasanth Kumar, Executive Director, Max Retail.
Indian consumers value private labels for their affordability, prized over brand loyalty, says a study by Rabobank. It adds that economic recession has been a catalyst for the growth of private labels in India.
The impact of this alteration of consumer behaviour, driven by economic uncertainty, will also manifest in year-round discounts and promotions instead of seasonal ones, says Technopak.
For starters, the spring-summer sale season this year started in mid-June itself, rather than the first week of July, and went on till August-end at many retail outlets. On e-commerce sites such as Flipkart and Jabong, sales and special offers have become a round-the-year phenomenon.
used goods
Portals such as Olx.in and Quikr, which are Web sites for classifieds, are also seeing robust traffic as consumers turn bargain hunters. Olx says the traffic to its site has grown 60 times in the last two years. “People are finally realising the value in second-hand goods. There has been a rapid acceleration in transactions in the last few months, led by used cars, mobiles and household furniture,” says Olx CEO Amarjit Batra.
He points out that some of the products are sold out within a few hours of being put up for sale. “This was not the case earlier. Today, people are looking at deals for everything they buy,” he adds.
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