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A woman shops inside a retail store in Mumbai. (Photo: Reuters)
A woman shops inside a retail store in Mumbai. (Photo: Reuters)

Consumers picking nearby stores, planning in advance before shopping: EY survey

  • Consumers have been shunning large stores or avoiding traveling longer distances as they shop online or make fewer trips in-stores. Consumers are also unwilling to spend more than 15 minutes in store.

Consumers are likely to stick to shopping at stores closer to home, unwilling to travel long distances, and spend more time planning their purchases at home, a move that could spell bad news for malls and large retail stores, according to findings of survey by EY.

This could have significant impact on how consumers buy in large-format organized retail stores that have been struggling to attract more shoppers.

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“Three out of four customers would avoid crowded places while 67% of them showed unwillingness to travel beyond 5 km. Nearly 50% customers have switched from their preferred shops to new grocery stores even as factors like proximity, availability, variety, safety and hygiene take precedence," EY said in a report on Tuesday.

The report is based on surveys of 436 salaried professionals across India whose incomes remained intact in the aftermath of the pandemic.

Consumers have been shunning large stores or avoiding traveling longer distances as they shop online or make fewer trips in-stores. Consumers are also unwilling to spend more than 15 minutes in store, apart from a majority of them preferring digital wallets or self-checkout kiosks and buying more goods per trip.

In the mid-to-long term this could push retailers to bring about a range of changes to their in-store experiences and even get more active online.

“The user does not want to travel more than five kilometres. And that's why hyper localization has really worked, it's the time that the retailers need to go into that particular region of the customer rather than the customer going to that particular store," said Shashank Shwet, partner, design thinking and digital transformation, EY India.

Shwet said the pandemic has also brought about a sea change in shopping behaviour with fundamentally more categories such as electronics, cosmetics and home appliances moving online.

Small grocery shops and medical stores have been the biggest beneficiaries with consumers returning to stores within days of the store opening.

While electronics, cosmetics, and home appliances witnessed a shift in buying behaviour with approximately 40% of customers preferring to buy online, less than 20% of customers still value in-store experiences to purchase jewellery, automobiles and furniture.

But even for those returning to stores—consumers are likely to ask for social distancing norms, contactless deliveries and payments. Over 75% of those surveyed want their purchases to be sanitized again at the point of purchase, while 76% customers prefer to pay via UPI or digital wallets and 78% customers would prefer to use self-checkout kiosks. In a sense, store experiences are likely to be altered going forward.

While overall consumer demand is yet to recover to pre-pandemic levels, retailers with a physical-only presence face greater challenges, EY’s research said.

This has already impacted sales of apparel and large grocery retailers.

In a November report researcher Nielsen said that FMCG sales via modern trade improved slightly after months of visible decline. In fact, value contribution of modern trade to FMCG sales declined from 10.4% in the first quarter of 2020 to 8.2% in the third quarter. Nielsen follows a calendar year.

However, Nielsen said modern trade was slowly moving towards recovery in September.

Shwet said that modern trade store is likely to struggle forth next 1 to 3 years as kiranas and e-commerce win consumer favour.

“Kiranas have strengthened the relationship that he had with his local customer. There are some people that started buying online. The big modern trade will come back when the e-commerce grocery retailers will start creating offline stores. In the next one to three years, we believe that kirana stores as well as the online players will be the leaders. Modern trade retailers such as D-Mart, Spencer's, More will shift more online, he said. “They will adapt to hyper localization. Stores will become like delivery centers," he said.

This makes it critical for retailers to plug in more digital interventions inside stores.

“While earlier a shopper would just decide on the products, brands, channel, outlet and budget of a commodity, now the questions have become more rudimentary. Shoppers are pondering over how far they are willing to travel to shop, when they should travel to shop, where should they shop from, what should they be spending on, how should they be shopping and whether they should be shopping at all," EY said.

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