There’s been a lot of buzz about reforms sweeping across India, including those that encourage foreign investment and entry of retailers such as WalMart, Ikea, and the like. However, as foreign business moves in, the question on the minds of many is: Will Indians flock to these new foreign stores to the same extent as consumers in established Western markets? Can this success be replicated in India?
Financial Times writes in its BeyondBrics blog here:
Beyondbrics knows a few of those middle and upper-middle class folks, and the ones in charge of the shopping tend to be, for lack of a better word, aunties. Beyondbrics rang up a few, and for them, at least, the idea of going to a Tesco Express or a mini-Walmart – the companies are likely to adapt their models to Indian shopping habits, which involve little travel and smaller spaces – was ludicrous.
“In the market… we know the people and they know us from years back, if the [vegetables] are not fresh, they tell us,” said one woman. “Today I went for green peas and coriander leaves, and my seller said this is not good for you, this is not fresh – please don’t take it – these people [at a foreign grocer] are not going to tell me, whatever is there you have to take it.”
Even if the price were the same, she continued, “the relationship with the people will not be there in the [foreign shop]. Most of the housewives like me will think like that – when you are already getting the good quality from the market, why then go to the [foreign shop]?”
Well we’ve got a little more to go by than interviews with a few aunties. We surveyed 500 Indian women through our Jana Research platform and we discovered a similar sentiment:
- 70% find that sales people or in-store promoters affect their purchase decisions for all goods
- 48% of respondents made the majority of their purchasing decisions in stores
- Shopping is very personal as well, 58% turn to friends or family for recommendations on food and beverage products before making a purchase
With annual retail sales in India totalling roughly $500 billion, the opportunity is apparent for international superstores. However, less than 10% of these sales take place in modern stores, with the majority coming from small, local, family-run shops. An influx of Walmarts and foreign-based chains could drastically change the Indian retail landscape, but these stores will first have to figure out how to earn the trust of local consumers.