The information technology industry may have captured popular imagination in India in the decade starting the mid 1990s, but organised retail isn't far behind. And what a decade it has been for retail. By the end of 2003, according to ACNielsen's Asia Pacific Retail and Shopper Trends 2004, India has some 2,300 supermarkets, up from a mere 175 in 2000. Consider this: in these three years, across India, two supermarkets came up every single day. It isn't just supermarkets, every format of organised retail is represented in India's retail topography. Hypermarkets? Yes, with two chains Big Bazaar and Giant. Department stores? Yes, with several chains including Shoppers' Stop, Pantaloon, Westside, and Ebony flourishing. Discount stores? Yes, with two chains Subiksha and Margin Free Super Market covering huge tracts of southern India. Convenience chains? Yes, with most large petrol stations sporting convenience stores. And pharmacy chains? Yes, with some five in existence.

Across urban India, organised retail has successfully fought the perception that it is expensive. Yet, modern retail formats accounted for a mere 7 per cent of the share of trade (among all outlets selling food, groceries, and personal care products and in urban India). That is probably 7 per cent more than the corresponding proportion a decade ago, but it still remains a number that is more significant for the potential implicit in it, rather than the profits arising from it. The fact that the overall value of food, groceries, and personal care products-all clubbed under that overarching term, fast moving consumer goods-itself increased by an almost insignificant 1 per cent in 2003 (over 2002) in India, as compared to, say, 9 per cent in China and Thailand, is worrying and, at the same time, it isn't. With 80 per cent of India's 30 million-plus mobile customers using pre-paid cards that entail a recharge every month, even more frequently, and with consumer finance becoming accessible for buying everything from a motorcycle to a television, consumers are obviously cutting back on their FMCG-spend. If there's any cause for cheer for Indian companies, it must lie in the fact that with the exception of consumers in New Zealand and Sri Lanka, Indians spend the lowest proportion of their monthly outgo on food (42 per cent).

However, even if growth in value sales continues to remain anaemic in India, organised retail should continue to thrive. It will likely grow at the cost of traditional retail formats. Most modern format stores in India are better stocked, offer better service, and often cost less than their traditional counterparts. In a country as focussed on 'value for money' as India, they have ended up with a pretty significant competitive advantage: traditional stores cannot stock as many products as they do, nor invest as much in either the décor of the store itself or in inventory management. And they cannot strike the same kind of volume-deals large retailers do with manufacturers. Apart from doing these, several Indian supermarkets, discount stores, and hypermarket chains have made the logical transition to selling private label (or their own label) offerings, often sourcing products from small manufacturers. Will the 7 per cent be 17 per cent next year? That's a possibility.

COLUMN Of Novelties and Necessities

Indians are the most 'novelty-seeking' shoppers across the Asia Pacific region, according to the findings of ACNielsen's Retail and Shopper Trends 2004 report. Almost half the shoppers in India admit they "love to try new things". This finding is crucial for retailers and FMCG marketers as they seek to reassure themselves that India's retail evolution is sustainable. This novelty-seeking attitude is bound to ensure that consumer India is receptive to both innovation and change-important pre-requisites for the introduction of new products and new shopping formats. While on the subject of retail formats, one trend we spotted while carrying out the census of modern retail formats in India (see Page 111) was the presence of private labels in relatively new types of stores. Like modern or organised retail, private labels themselves are a new phenomenon in India, but they seem to be gaining ground rapidly: 47 per cent of all Indian shoppers that shop in modern format stores such as hypermarts and supermarkets are aware of private labels and 30 per cent claims to have purchased them as well. The willingness to explore newer retail environments and things like private labels makes the Indian shopper very similar to her Chinese counterpart. And if the proportion of shoppers that has tried out private labels is any indication, the trend will likely become much more pronounced in the future. That's bad news for manufacturers: as the Indian shopping environment evolves and becomes more like those in the more developed Pacific markets of New Zealand and Australia, they will have to come up with ways to stave off the challenge of private labels that are, in effect, competing for the same shopper-rupee. And there's not too much of that going around, according to the survey. At $50 (Rs 2,250), the average monthly expenditure of Indian shoppers on groceries, food, and personal care products is the lowest amongst countries in the region, and a mere half of the corresponding spend of the typical Chinese. Of the Rs 2,250, Rs 945 ($21) goes towards fresh food, a statistic that should give marketers some cause for cheer. Indians spend proportionally more on groceries and personal care products than their regional counterparts in most parts of Asia and even in Australia and New Zealand. Surprisingly, the South Asian markets of India and Sri Lanka record the highest proportion of male shoppers amongst markets across Asia Pacific: Nearly 26 per cent of Indian shoppers and 31 per cent of Sri Lankan shoppers are males compared with a more modest 13 per cent for Australia and 18 per cent in China. It is a given that this ratio will change in favour of women as they gain greater autonomy over household expenditure. Another important observation is the responsiveness of Indian shoppers to promotions: 45 per cent is strongly impacted by promotional offers, second only to the Philippines (60 per cent). However, not all shoppers are 'consumers', and the degree of responsiveness may differ across categories. In a country where companies engage in intense below-the-line activity, it is important that they understand shopper needs and behaviour better should they wish to make the most of their in-shop and product-placement strategies. Sapna Shetty is a senior manager with ACNielsen India. She is based in Delhi and worked on the Indian end of the Retail and Shopper Trends 2004 report.