Senior Research Fellow Naoki Nagashima
With the growth of India’s middle class and changes in its lifestyle, the quality and quantity of demand for retail of foodstuffs and daily goods are undergoing significant changes. While traditional Kirana (small shops) hold sway over the industry, accounting for more than 90% of the market, modern distribution stores such as supermarkets and hypermarkets of local conglomerates are also expanding rapidly. A consumer survey was conducted in Chennai and Coimbatore to look at the issue of business opportunities for Japanese retailers, especially convenience stores. The following 3 conclusions were revealed:
1. A change in lifestyle, starting from the upper class, has begun to increase the spread of demand for developed-country-like foods, i.e., instant and frozen foods.
2. There is a significant need for services at convenience stores, such as paying utility bills, reserving and purchasing bus and train tickets, and sending and receiving packages.
3. Customers at retailers pay attention not only to the quality and price of products, but to elements such as the store’s atmosphere and how they are treated by staff. Such elements are differentiators which can affect customer satisfaction. Dissatisfaction with existing supermarkets is apparent in such customer experience elements.
Based on the above, India would appear to be a significant business opportunity for Japanese convenience stores. Demand for ready-made foods, such as bento lunch boxes and side dishes, among the middle class, especially working couples who want to save time on chores, is strongly predicted to increase. Furthermore, if, in addition to providing foods and daily goods, convenience stores were to provide services to meet the significant demand, they would be able to offer the convenience of one-stop shopping. Finally, the stores could appeal to Indian consumers with Japanese quality, through their immaculate interiors and well trained sales staff.