Experiential Spending To Surge: Deloitte Report

EE News Desk Jun 26, 2024

Categories such as recreation, entertainment, leisure, and travel witnessed a spike in spending

Deloitte India's latest report, ‘Future of Retail: Sweating Assets for Growing Volumes and Same Store Sales’, highlights a significant shift in Indian consumer spending dynamics, with an emphasis on experiences and localised innovation overtaking traditional product-centric purchases.

The report examines the performance of various sub-sectors within the consumer and retail sectors, noting their resilience and vulnerabilities. It explores the impact of inflation on consumer spending patterns, revealing a shift towards value-conscious purchases and a renewed demand for experiences such as travel and hospitality. While spending surged in categories like recreation, entertainment, leisure, and travel, traditional retail segments like fashion and lifestyle saw flat volume growth.

Based on Deloitte's consumer survey, the report projects spending trends for FY25, capturing nuances in consumer behaviour and 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 per cent of respondents planning to reduce their dining out or ordering in due to health and budget concerns, over 50 per cent strongly preferred maintaining or increasing their dining frequency. This indicates a resilient demand for dining options that prioritise health, quality, and appeal, presenting an opportunity for establishments to cater to this discerning segment.

Leisure Travel: Approximately 29 per cent of respondents plan to increase their travel frequency in the coming year, signalling 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.

Anand Ramanathan, Partner, Consumer Products and Retail Sector Leader, Deloitte India, mentioned, “The premium segment led the post-pandemic recovery in consumption. However, most categories in retail are now witnessing a slowdown in premium demand and a revival in the mass segment. The evolving consumer landscape presents a complex interplay of value consciousness and a growing demand for unique experiences, highlighting the need for localised innovation at scale.

Companies that innovate to meet evolving consumer preferences on convenience, affordability and health will not just survive but thrive. One of the key imperatives for consumer businesses is the importance of sweating existing investments and assets to drive like-for-like growth. Industry leaders will need to leverage the use of technology and AI for operational efficiency and strategic resource allocation. This report offers a detailed analysis and actionable insights for stakeholders to navigate and capitalise on these dynamic trends."

According to the report, businesses can target an incremental 8 to 20 per cent growth in like-for-like sales by optimising their investments in customer engagement, product offerings, channel strategies, and overall experience.

The following growth levers will reshape retail experiences:

Refining Consumer Personas: About 48 per cent of consumers are willing to share their data. Businesses should focus on profitable segments and emerging consumer groups, implementing targeted interventions throughout the purchase journey using technology.

Enhancing Perceived Value: Nearly 42 percent of consumers seek value-added services and benefits. Companies should clearly communicate their holistic selling proposition, covering benefits across product/service offerings, experience, loyalty rewards, warranties, and post-sales support.

Advanced Data Analytics to Drive Sales: Leveraging centralised customer data platforms for hyper-personalisation and optimising store performance through targeted operational enhancements is crucial. In fact, 45 per cent of consumers expect brands to anticipate their needs and proactively communicate.

Localisation: Tailoring product assortments and marketing strategies to local preferences is highly valued. Consumers show interest in geo-targeted ads, with 27 per cent interested in localized product offers.

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 are crucial. For example, 80 per cent of consumers cited word of mouth as influential in their purchase decisions, 55 per cent highlighted the importance of quality advisory, and 43 per cent of global retailers plan to offer virtual expert connections.