Rural customers in India do not shop 'just to buy' any longer. They demand brands, and are concerned about quality, and preferences. The Indian rural market is growing at an incredible speed.
It is commonly believed that rural life is less exciting than its urban counterpart. But, currently, the rural segment is emerging as a potential market for many big retailers. A report by the associated Chamber of Commerce states that the rural consumer market is estimated to grow at the rate of 40%, while the urban market sector growth would be only 25%.
Earlier, people in rural areas were traveling to nearby cities for their shopping requirements. Today, they are easily available in their own places. Media takes most of the credit for this magic transformation, making them more aware, and discerning. Television sets are seen in every household, as is the main door. Rural customers get up-to-date information on various brands, and the promises they make. Their lifestyle and shopping patterns are going through significant changes, making them more demanding. This transformation will be a key challenge facing Indian retailers.
Rural population in India:
More than 70% of the sales are made to the middle-class population, and today more than 50% of the Indian population belongs to the middle-class segment. By 2020, the urban population in India is predicted by analysts to grow from the current 30.4% to 33.7%. This means that in 2020, 66.3% of the total Indian population will live in rural areas. By the next decade, villages in India will receive a lot of development expenses, enriching the rural people.
Indian rural market is growing at 3-4% per annum, adding more than 1 million new rural consumers every year. Increasing income level, and awareness created by electronic media have altered the rural customer, making him to seek better life quality. They are now aware of various brands, and prefer shopping according to their own brand preferences. Products which were earlier considered as 'status symbols' are now being considered as 'must haves'. For a rural consumer, the per capita 30 days of consumer expenses amount to USD 12.34, of which clothing comprises USD 1.
The rural retailing power:
Income level in the rural sector sees an increasing trend, and their lifestyles are changing. They are now willing to spend more on goods that are designed to improve their lifestyle. A Neilson report states that by 2025, rural markets would contribute approximately $100 billion of retail sales. The tremendous growth potential of the rural areas is now attracting the eyes of retailers. With heavy and cut-throat competition in the urban sectors, retailers are chalking out bold strategies targeting the rural consumers in a big way.
Rural customers are now becoming a preferred target for Indian retailers. They are considering options for expanding into the 6.3 lakh odd villages. Starting modern retail formats in the rural areas are likely to revolutionize the shopping habits of rural customers. It is also likely to generate considerable employment opportunities.
Tapping the rural market identifying the rural mindset:
Tapping the Indian rural market needs retailers focus on long term goals. They have to focus on specific geographical areas, and involve in rigorous marketing rather than expanding rapidly all over the country. Indian consumers are noted for their value orientation. This distinguishes Indian consumers as discerning, and even luxury brands need to design unique pricing strategies to win a foothold in the Indian rural market. Indian rural consumers are more family oriented, and brands with identities supporting family values tend to be accepted more easily.
Products that communicate emotions and feelings penetrate into the market faster, as Indian rural consumers are more associated with values of care, and nurturing. More women from the rural areas have started working now, and this has opened floodgates for Indian retailers. Rural women of today have come out of her long standing image of homemaker, and is proving equivalent to men. They make their own decisions, thus making one powerful force in the rural market arena. Rural customers have a preference for bold colors. Their status symbols are also different from urban customers. They believe in brands, and feel that switching their brands might be risky.
Today's rural consumers are shaping their life styles influenced by changing mind sets, exposure to western culture, and a craving for self gratification. Retailers need to come up with simple business models to attract rural customers.
References:
1) "Social Changes and the Growth of Indian Rural Market", S John Mano Raj, Dr. P Selvaraj
2) "Product Market Study: Consumer Behavior in India", Matrade, Chennai
3) Asianage.com
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