Indian consumers prioritise value-conscious purchases amidst a surge in experiential spending: Deloitte’s Future of Retail report

Tailoring product assortments and marketing strategies to local preferences to bolster brand connections are highly valued.

28 Jun 2024 | By Campaign India Team

According to the survey, 45% of consumers expect brands to anticipate needs and proactively communicate. Image source: Pixabay

Deloitte India’s ‘Future of Retail: Sweating assets for growing volumes and same-store sales’ report highlights a significant shift in Indian consumers’ spending dynamics. It emphasises that experiences and localised innovation are key trends taking over traditional product-centric purchases.

The report, which takes the opinions of 660 respondents, delves into the performance of various sub-sectors within the consumer and retail sectors. Highlighting their resilience and vulnerabilities, it examines the impact of inflation on consumer spending patterns. The report exhibits a transition towards value-conscious purchases and a resurgence in demand for experiences, such as travel and hospitality.

While categories like recreation, entertainment, leisure and travel witnessed a surge in spending, traditional retail segments such as fashion and lifestyle observed a flat volume growth. Companies that innovate to meet evolving consumer preferences on convenience, affordability and health will not just survive but thrive.

Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India, said, “The premium segment led the post-pandemic recovery in consumption. However, most categories in retail are now witnessing a slowdown in premium demand and a revival in the mass segment. The evolving consumer landscape presents a complex interplay of value consciousness and a growing demand for unique experiences, highlighting the need for localised innovation at scale.”

One of the key imperatives for consumer businesses is sweating existing investments and assets to drive like-for-like growth. According to the report, these companies can aim for an incremental 8% to 20% growth in like-to-like sales by sweating their investments in customer, product, channel and experience.

They can further leverage technology and AI for operational efficiency and strategic resource allocation. They can also harness consumer data judiciously, since the survey noted that around 48% of consumers are willing to share data.

By using centralised customer data platforms brands can aim for hyper-personalisation and can optimise store performance through targeted operational enhancements. After all, 45% of consumers expect brands to anticipate needs and proactively communicate.

Tailoring product assortments and marketing strategies to local preferences to bolster brand connections are highly valued. Consumers show interest in geo-targeted ads; 27% are interested in product offers.

Nearly 42% consumers look for value-added services or benefits. Hence, brands should focus on profitable segments and emerging consumer groups, implementing targeted interventions across the purchase journey using technology. They can articulate their holistic selling proposition covering benefits across product or service proposition, experience, loyalty rewards, warranty and even post-sales support.

“The upcoming Union budget for 2024-25 will be an excellent opportunity to add momentum to the revival of the mass segment by enhancing investments in the rural economy and agriculture. A normal monsoon, festival season and replacement demand will help drive volumes in all categories for broad based growth in consumer and retail beyond urban markets to rural and semi-urban centers,” Ramanathan further added.

Moreover, companies should look at creating engaging experiences across physical and digital channels, implementing innovative in-store activations and using digital tools for high-quality customer advisory services. For instance, 80% cited word of mouth for influencing purchase, 55% highlighted the quality of advisory as important, and 43% of global retailers plan to offer virtual expert connects.

Source: Campaign India