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Growing shopper segments provide $3 billion opportunity for FMCG sales in India

Two growing shopper segments, low-income value explorers (LIVE) and first-time modern trade shoppers (FTMTS), will add $3B USD in fast-moving consumer goods (FMCG) sales in India by 2015, according to a new analysis released today by Nielsen, a leading global provider of insights and information into what consumers watch and buy.

“The Indian economic landscape is flourishing and so are the shopping habits of low-income value explorers,” said Adrian Terron, executive director, Nielsen India. “This is a growing shopper base upgrading to become first-time modern trade shoppers. FMCG manufacturers and retailers need to understand the unique characteristics of these massively developing shopper segments.”

Low-Income Value Explorers

Nielsen’s research shows that an estimated 10 million LIVE households live in urban India, earning an income of less than Rs. 72,000 annually. Spending one-fifth of their household expenditures on FMCG ($2.4 billion USD), Nielsen expects this shopper segment to increase FMCG sales by 50 percent in the next three years to $3.6 billion USD.

“Confident and buoyed by a sudden rise in incomes, half of LIVE households have already migrated to branded products,” said Terron. “For FMCG manufacturers and retailers, it’s important to understand that this move is not about share gain, but rather expanding the base for branded product sales. With an increasing number of shoppers still forming their relationships with brands and more  than half predisposed to in-store influences, now is the time to create and continue a relationship with this shopper segment.”

Five percent of LIVE household budgets is currently spent at modern trade, and is expected to grow to reach $175M USD by 2015.

“For shoppers seized by aspiration and insecure about their well-being, modern trade is an indulgence that imparts a sense of progress,” said Terron.

Nielsen’s analysis shows that while 63 percent of LIVE households reduce or optimize quantities for key consumption categories and 58 percent seek better value through lower prices, one-third of LIVE households buy bulk packs for certain categories. These bulk packs include larger pack sizes, as well as banded or combo packs, especially for personal care categories.

First-Time Modern Trade Shoppers

Nielsen’s research indicates that every fourth modern trade shopper is a first time entrant to this retail channel. FTMTS spend $280M USD at modern trade on FMCG products, and is expected to triple to $1B USD in three years. FTMTS spends 35 percent on FMCG at modern trade and is growing by 15 percent each year.

“This new breed of shopper, a first-time modern trade shopper, is impulsive and prone to ‘supersizing’ their shopping trips by buying more than they had planned,” said Terron. “This is not only the result of greater promotions, deals and events at modern trade, but also due to increased word-of-mouth marketing and the intense desire to explore and discover the new experiences that modern trade offers.”

Nielsen suggests strategies to succeed with the first-time modern trade shopper: 

Simplify the navigation. “Retailers can help new shoppers overcome the anxiety of being overwhelmed by too many in-store interruptions,” said Terron. “Too much of the same thing in the aisle will decrease the effectiveness of all displays and signs.”

Make product connections. Clear associations between similar and complementary products remind shoppers to consider and buy them.

Offer the right product range. “FTMTS are driven by the ample range of products available,” said Terron. “But that desire for range can potentially destabilize the relationship between the shopper and their current brands. With nearly one-in-two shoppers looking to switch brands, category assortment strategies must align consumers with their changing shopping behaviors.”

 About Nielsen

Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement,  online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit www.nielsen.com.