Shift in Consumer Spending Patterns: Deloitte's Future of Retail Report

Deloitte's ‘Future of Retail’ report predicts a slowdown in sectors like beauty products and electronics due to post-pandemic high purchase volumes. However, there's a rise in value-seeking consumers and increased spending on leisure activities. Retailers are advised to focus on premium products and replacement purchases to drive growth.

According to a recent report by Deloitte, several consumer sectors, including beauty products and electronics, are expected to experience a tempering of growth. This projection stems from the high volume of purchases post-pandemic, creating a substantial base for the fiscal year 2025.

The 'Future of Retail' report reveals a notable shift in consumer spending patterns, with an uptick in value-seeking buyers observed across various consumer businesses. Despite this, spending on leisure activities is likely to rise, suggesting a robust performance for the aviation and hotel industries in FY2024-25.

Interestingly, the growth in premium products has outpaced entry-level ones in sectors like electronics and personal care. Deloitte suggests that companies should understand their customers' preference for premium products and leverage this trend to drive growth. The report also indicates that replacement purchases will significantly fuel consumer buying decisions in FY25, offering companies a chance to retain their loyal customer base and encourage product replacements where performance or perceived value is expected to improve.

Moreover, Indian retailers can achieve an incremental growth of 8-20% by optimizing investments in customer experience, products, channels, and overall experience, even amidst plateauing demand. The report notes that the key challenge and opportunity for retailers would be to grow like-for-like businesses by maximizing the potential of existing assets and investments.

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