Deloitte India’s latest report, “Future of Retail: Sweating assets for growing volumes and same store sales” highlights a significant shift in Indian consumers’ spending dynamics, emphasizing experiences and localised innovation as a key trend taking over traditional product-centric purchases.

National, June 25, 2024: Deloitte India’s latest report, “Future of Retail: Sweating assets for growing volumes and same store sales” highlights a significant shift in Indian consumers’ spending dynamics, emphasizing experiences and localised innovation as a key trend taking over traditional product-centric purchases.

The report delves into the performance of various sub-sectors within the consumer and retail sectors, highlighting their resilience and vulnerabilities as it examines the impact of inflation on consumer spending patterns, exhibiting a transition towards value-conscious purchases and a resurgence in demand for experiences, such as travel and hospitality. While categories like recreation, entertainment, leisure and travel witnessed a surge in spending, traditional retail segments such as fashion and lifestyle observed a flat volume growth.

Consumer spending trends expected in FY25 based on Deloitte’s Consumer survey* aimed to capture nuances in consumer behaviour, assessing their likelihood of purchasing within the next 12 months. Deloitte conducted a comprehensive survey with over 660 respondents.

• Dining out or ordering in: Despite 29 percent of respondents planning to reduce dining out or ordering in due to health and budget concerns, over 50 percent strongly preferred maintaining or increasing their dining frequency. This suggests a resilient demand for dining options prioritising health, quality and appeal, presenting an opportunity for establishments to cater to this discerning segment.
• Apparel, footwear and fashion accessories: While 32 percent intend to decrease spending, citing satisfaction with their current wardrobe and a preference for minimalist lifestyles, around 14 percent plan to increase their purchases. Retailers need to offer compelling design considerations for customers to refresh their wardrobes, such as new trends or sustainable fashion options, to maintain engagement.
• Leisure travel: Around 29 percent of respondents plan to increase travel frequency in the coming year, indicating a growing appetite for experiential spending. This trend allows travel companies to create tailored experiences that resonate with consumers seeking unique adventures and cultural immersion, potentially driving higher engagement and loyalty.
• Consumer durables and appliances: Despite 30 percent of respondents citing financial constraints as a deterrent, approximately one-third have recently purchased in this category. This indicates that there is still a market segment with unmet needs, possibly looking for more affordable options or innovative features.
• Consumer electronics: Anticipated purchases declining, due to existing device adequacy and financial considerations. To stimulate demand, brands may need to introduce budget-friendly variants or flexible payment plans that align with consumers' financial priorities.
• Furniture and home furnishings: Nearly 60 percent expressed no immediate intent to purchase major furniture items; however, there is sustained interest in home décor purchases for redecoration purposes. This suggests an opportunity for retailers to focus on smaller, more affordable home décor items to serve this segment.
• Luggage items: Interest in luggage purchases remains modest, with only 15 percent considering a purchase in the next year. This aligns with a broader trend of selective spending on travel-related items, primarily driven by the need to replace old or damaged luggage. This segment may benefit from value-driven offerings or innovative designs to attract consumers.

Following growth levers for businesses will reshape the retail experiences:

1. Refining consumer personas: Around 48 percent of consumers are willing to share data. Businesses must focus on profitable segments and emerging consumer groups, implementing targeted interventions across the purchase journey using technology.
2. Enhancing perceived value: Nearly 42 percent consumers look for value added services/ benefits. Companies should articulate their holistic selling proposition covering benefits across product/service proposition, experience, loyalty rewards, warranty and even post-sales support.
3. Advanced data analytics to drive sales: Using centralised customer data platforms for hyper-personalisation and optimising store performance through targeted operational enhancements. Infact, 45 percent of consumers expect brands to anticipate needs and proactively communicate.
4. Localisation: Tailoring product assortments and marketing strategies to local preferences to bolster brand connections are highly valued. Consumers show interest in geo-targeted ads; 27 percent are interested in product offers.
5. Interactive and immersive experiences: Creating engaging experiences across physical and digital channels, implementing innovative in-store activations and using digital tools for high-quality customer advisory services. For instance, 80 percent cited word of mouth for influencing purchase, 55 percent highlighted the quality of advisory as important, and 43 percent of global retailers plan to offer virtual expert connects.