Abhishek Malhotra India Shopping Centre Forum 2016 Gen Y Shopping Trends vF · With increasing players and brands in the market, retailers are jostling for consumer share of wallet

India Shopping Centre Forum 2016

11th May, 2016

Partner & Co-Head

Consumer Industries & Retail Products Practice

India & SE Asia

Abhishek Malhotra

Gen Y and their Shopping Trends

The Indian consumer landscape is landscape is undergoing a tectonic shift…

Consumers in India today are richer and younger

Population split by annual household income (Mn Households)

4%197 263246

5 – 10 Lakhs

>10 Lakhs <0.9 Lakhs

0.9 – 2 Lakhs

2 – 5 Lakhs

Indian Population Breakup(Mn)

Growing middle and upper class

with higher 1,389

1,311

40 – 69 years

65+ years20 – 39 years

0 – 19 years

Young millennials

building the majority of

the consumer

base

62%

21%

9%

69%

67%

20%

29%

6% 14%4%

2000 2020F2015

Source: The Economist Intelligence Unit, A.T. Kearney

with higher spending power

2020F

6%

26%

33%

36%

2015

1,311

5%

24%

33%

38%

2000

1,053

4%

20%

31%

44%

54%62%

% shoppers who prefer going online to make purchases

Rising internet penetration is giving way to online retail, with participation increasing outside metros

Value growth of online retail across India1

(%)

58%56%50%

59%

Global India

% shoppers in India who have used these stores online

Flash sales

Health stores 8%

8%

23%

Pure-play online retailers

Airlines & Hotels 32%

32%Department stores

41%

Mass merchants

1. Over years 2009 till 2013Source: A.T. Kearney Connected Consumer Survey 2014, with over 10,000 global respondents including 1,003 from India, Nielsen, A.T. Kearney analysis

Increasing value of online retail outside

of the traditional

stronghold –Indian metros!

Tier 1/2 Cities

RuralMetros Tier 3/4 Urban Areas

The Indian retail landscape is landscape is changing in similar fashion…

The retail market is growing strongly as retailers move online to expand their businesses

Share of Online in Total Store Count

Apparel & 0.5%

Total1.9%

0.1%

Overall Retail Market Size(USD Bn)

+7%600

Online

Physical

1.1%0%

Health2.7%

0.1%

PersonalCare

PackagedFood 0.5%

0%

HomeCare

0.9%0.1%

Apparel &Footwear 5.3%

0.5%

20152010

Source: IBEF, Euromonitor International, A.T. Kearney

589

424

2010

424

0.4(0.1%)

2015

11(1.9%)

With increasing

internet penetration,

Indian retailers have gained

presence online to

reach out to more

consumers

With increasing players and brands in the market, retailers are jostling for consumer share of wallet

A plethora of options across retail categories have entered the market in the past 5 years

Retail Category

Apparel & Footwear

20101 20161

Footwear

Beauty & Personal Care

Food & Beverages

Home Care & Furnishings

1. Representation not exhaustiveSource: A.T. Kearney

But who is the Gen Y the Gen Y consumer?

The Gen Y consumer in India is…

1. A member of the millennials – i.e.

born after 1980

2. Digitally-connected

3. Ambitious in lifestyle choices3. Ambitious in lifestyle choices

4. Equally represented across gender

1 Using multiple channels in the shopping experience

2 Seeking information across multiple sources

Gen Y consumers display 5 key shopping characteristicsGen Y consumers are…

2 Seeking information across multiple sources

3 Increasing two-way engagement with retailers

4 Stressing on brands

5 Still value-conscious!

Shopping patterns are changing as Gen Y is accessing multiple channels1

Gen Y’s buying behavior is evolving

• Search

online

• Go to stores

• Ask friends

• Ask my

Facebook friends

Inform

Shop

• Check ads

• Check prices

• Buy in a

store

Service

• Let the

retailer set problems

• Buy a service

“I want to buy a smartphone”

• Check prices

using my smartphone

• Check

Flipkart

store

• Buy online• Order from

catalogue

retailer set it up

• Contact call

centre if

there are any

• Buy a service

plan in store

• Buy a

service plan online

Pay Service

• Is there a

financing

plan?

• Pay online

• Pay with my

mobile wallet

• Click and collect in store

• Take home

from store

right away

• Get home

delivery

• Pick up at

other location

Source: A.T. Kearney

Consumers are using multiple information sources to enhance their shopping experience2

45%

55%81% 76% 76% 83%

17%24%24%19%

Pickup or After-sales Test or try onResearch Purchase

Online

Stores

% of shoppers

There are multiple new ways to research, verify, and purchase products

Source: A.T. Kearney Retail in the Era of the Connected Consumer Report 2016

Pickup or delivery

After-sales experience

Test or try onResearch Purchase

Description

What’s new

Inform Browse Buy Fulfill Service

• Discover and review products and services

• Access reviews via websites and social media

• Select and verify right product

• Try product online with virtual testers

• Obtain and pay for product

• Purchase in store but ship to home

• Acquire purchases (store pick-up / home delivery)

• Order online and pick-up in store same day

• Get post-purchase support

• Return items bought online in-store and vice versa

Young, connected consumers are increasingly being influenced by social media…

81%33% 29% 34%

49%

22%14%

61% 68% 63%40%

65%

11%3%4%6%

5%12%

Consumers are increasingly engaging with retailers on online / digital platforms3

On asked how

often a decision is

made based on

what's happening

in their social

network56-65 yrs46-55 yrs36-45 yrs Above 65 yrs26-35 yrs16-25 yrs

…while retailers believe social media and point-of-sale systems are important sources of feedback and customer engagement

Never Occasionally Frequently

34%66% 69%

38%83% 86%

28% 10%3%10% 28%24% 7%

Telephonic Interaction

Online Surveys Social Media

14%

Emails POS Systems

UnlikelyNeutralLikely

On asked how

likely the

following modes

of customer

feedback will help

improve customer

experience

network

Source: A.T. Kearney – Connected Consumers Are Not Created Equal: A Global Perspective Report 2014, A.T. Kearney Retail in the Era of the Connected Consumer Report 2016

15%25% 18% 18% 14%

Consumers are displaying increasing brand loyalty across retail categories and destinations4

Mostly Loyal Not LoyalCompletely Loyal

How loyal is the consumer to a brand?

>50% of the

Retail Category Retail Destination

37%20%

30% 25%36%

48%

54%52% 57%

51%

Online RetailersFood & Drinks brands

Mobile & Electronics

Supermarket Retailers

Personal Beauty products

Source: Nielsen Global Survey of Loyalty Sentiment 2013, with respondents across the Asia Pacific

>50% of the consumer base is brand-loyal in a

retail category and a shopping destination!

In spite of rising incomes, consumers are still highly value-conscious5

What factors drive consumers to choose a retailer?1

“Is a brand I’ve used often”

“Is worth the price tag”

Consumers prefer opting for the value-

for-money and trustworthy brand

choices!44%

49%

Source: Consumers Survey 2015, with over 1,000 respondents spanning age groups 18 to 65 years across India, A.T. Kearney analysis

29%31%

34%

Good return policy

Trust in the brand

Good prices Easy to usewebsite /

mobile app

Availabilty of products

In summary

Inform Browse Buy Fulfill Service

• Use multiple

information

sources –

physical and

• Process more

information

before making

choices

• Make rapid

transitions

across channels

to complete a

• Demand

flexibility in

delivery modes

• Desire

connectivity

anytime and

anywhere with

Gen Y shopping behavior across the purchase value chain

physical and

digital

• Are strongly

influenced by

social trends

choices

• Are more

discerning about

product & service

offerings

to complete a

purchase

• Seek higher

convenience

during shopping

• Expect quick

turn-around time

for deliveries and

returns

anywhere with

retailers

• Expect

instantaneous

response to

feedback

Source: A.T. Kearney

So what does the rise of the Gen Y mean for…

Retailers Mall Owners Service Providers

Think omnichannel

To offer Gen Y the convenience,

personalisation, and variety of

products that it seeks

Assess store mix, placement,

and brands

To target the desired consumer base and provide greater connected

services

Become digitally equipped

and

innovate on delivery models

To expand customer reach

Source: A.T. Kearney