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The Next Billion $ Shoppertunity

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To understand consumers better, it is essential to categorise them into segments in order to identify the opportunities and develop strategies more Effectively.
Segmenting based on income and shopping habits, we identify the fi rst segment as the Low Income Value Explorers (L.I.V.E.). This segment is typically constrained for resources and seeks to maximise value in every purchase across categories. The second consists of the population that is slightly higher up on the affl uence curve. We are calling them the First Time Modern Trade Shopper (F.T.M.T.S.) – the shopper who for the fi rst time is exposed to the reality of organised retail, to the deluge of brands, to the proliferation of choice, and to the profusion of categories that they have never had before. ’s research suggests that these two categories together are worth USD three billion.
L.I.V.E: the low income value explorers 
The low income value explorer or L.I.V.E is typically a household with an annual income of Rs 72,000. They correspond to the socio-economic classifi cation ‘E’ or the bottom quintile. With a base of 10 million urban households, every sixth urban household falls into this category. Estimates show that the segment spends USD 2.4 billion on branded FMCG alone and the fi gure is expected to increase to USD 3.5 billion in three years. Consumption in this segment is driven by a sense of optimism and confi dence. One in two has experienced an increase in income in 2012, and one in four expect their income to continue rising in 2013. This increase in income is also converting into conspicuous consumption with half of them having switched from unbranded to branded products.
Important Indicators
With growing confi dence, the L.I.V.E segment is witnessing a change in behaviour and lifestyle. Two-thirds own a mobile phone, a fourth insist on sending their children to English medium schools, and a fi fth aspire to have home cooling equipment, in addition to refrigerators, in their homes. Their exposure to media via mobile devices, preparation for more lucrative careers, and intent to transform their lifestyles, are indicators of the tremendous opportunity for brands.
In spite of the optimism, this segment faces several issues. Half of them are anxious about how unpredictable ailments and health issues may derail their plans and pull the magic carpet of aspiration from underneath them. This is an important characteristic of the segment and works well for brands seeking to endear themselves to it. Our studies show that products and services positioned around preventive health are much more likely to gain acceptance in this segment.
The segment has also shed its diffidence in terms of buying habits. For shoppers seized by aspiration and insecure about their well-being, modern trade is an indulgence that imparts a sense of progress. Today, fi ve percent of their household budget is spent at modern trade, which is expected to grow to reach USD175 mn by 2015.
Bulk-Buying to Beat Inflation 
The low income value explorer(L.I.V.E.) is also the most sensitive to inflation. However, instead of lowering its consumption or seeking lower price points, the segment has shown a tendency to buy bulk packs in order to economise. While 63 percent of L.I.V.E households reduce or optimise quantities for key consumption categories, and 58 percent seek better value through lower prices, onethird of households buy bulk packs for certain categories, which not only include larger pack sizes, but also branded or combo packs, especially for personal care categories.
F.T.M.T.S 
The first-time modern trade shopper can be defined as the shopper who has visited modern trade for the first time in the last four weeks. The segment is poised to add a billion dollars in sales to the FMCG sector in the next three years over the present value of USD 2 billion.
Important Indicators 
A fourth of all modern trade shoppers are first-time modern trade shoppers. This segment has already spent over a quarter of a billion dollars at modern trade on FMCG products. At the current proportion of their spending in modern trade, a third of their total FMCG spends will be in modern trade, which is expected to grow 300 percent over the next three years.
Two in fi ve in this category claim to have purchased more than they planned, which indicates that 40 percent of them are open to being influenced in store. This translates to a USD 100 million opportunity on impulse. We also found that only 30 percent of these consumers claim that advertising and promotions were the reasons they walked into organised retail stores, whereas 50 percent of them claimed they walked in because of word-of-mouth and the urge to explore.
Influencing this Category 
According to neuroscience experts, it is important to avoid repetition blindness. This means that the retail experience comprising racks and racks of products is ineffective. The way to approach this segment is to bring in variation even in a large format store so that the consumer can navigate and discover rather than be blinded by the choice. The second important is to place the appropriate category adjacencies that can help enhance the shopping experience and increase the size of the shopping basket. The third and most important is to ensure that the retail experience is simplified for the shopper and their demands are met effectively and easily.
Charting Buyer Behaviour 
Shoppers usually change their buying behaviour along two dimensions: they either change the pack they buy or change the brand. Sometimes they may change both at the same time.
The success factor lies in making the first time shopper spend as much as the regular modern trade shopper. Estimates show that it would give organised retailing a whopping USD 100 million uplift. New launches, a variety of premium options within categories, and conducive instore environments are also important ingredients to achieve this.
Winning Over the F.T.M.T.S 
Winning over the first-time modern trade shopper is about catering to their need for enlightenment and a desire to seem smarter and more knowledgeable than their peers. We can achieve this through smarter ranging techniques to grow their consumption in quantity and quality, and more importantly, providing an opportunity to discover new experiences. Doing this successfully can make them ambassadors to other shoppers who have not yet had their taste of modern trade.