Retailers grow as consumers become brand conscious

Thursday, March 27th, 2014 11:09:49 by



LAHORE: 

As Pakistani consumers are becoming more image and brand conscious, the non-grocery retail segment is likely to remain a strong and emerging component of the economy in coming years.

Non-grocery retailers enjoyed a growth of 14% in value terms in 2012, marginally slower than the 17% growth for 2011. Total value of the sector stood at Rs873 billion in 2012 compared to Rs766.1 billion a year earlier, says a Euromonitor International report on the state of non-grocery retailers in Pakistan.

The decline in growth was observed due to the apparel specialist retailers, which suffered a drop from 17% in 2011 to 13% in 2012, according to Euromonitor, a market intelligence firm.

Non-grocery retailers are growing rapidly in urban areas in response to the rising disposable income of the population. The presence of such retailers though is less prominent in rural areas where income levels are much lower than in urban centres and there is less consumer demand for products beyond basic necessities of life.

However, non-grocery retailers have started to move into smaller cities and towns where it is acknowledged that there is a huge potential for growth, says the report.

Non-grocery retailers include both established brand retailers and smaller traditional retailers.

Established brand retailers position themselves according to high-quality product ranges and the modern store design. Brand value, premium location and sophisticated interior design also add to the specific value of the products sold in such outlets.

Goods sold by these retailers are often of established brands and sell for higher prices. Hence, they usually target middle to high-income population segments.

Sales of non-grocery retailers constitute about 31% of the total store-based retailing compared to 69% for grocery retailers in 2012.

Expected growth

According to the report, over the next five years – from 2013 to 2017 – non-grocery retailers are predicted to achieve a constant compound annual growth rate of 5%. This is almost the same as in the previous review period from 2007 to 2012.

This growth is expected to be driven by apparel retailers, beauty specialist retailers, electronics and appliance specialist retailers, furniture and home ware store retailers.

The value of apparel specialist retailers, which stood at Rs443.8 billion in 2012, is expected to reach Rs584.5 billion in 2017. For electronics and appliances retailers, the value, which was Rs76.5 billion in 2012, is expected to touch Rs101.8 billion in 2017.

Similarly, for health and beauty retailers, the value is likely to rise from Rs43.2 billion in 2012 to Rs48.1 billion by 2017.

Home and garden retailers, which had a value of Rs16.6 billion in 2012, could see their worth increase to Rs20.9 billion.

In the same way, the value of leisure and personal goods specialist retailers, which was Rs120.7 billion, is expected to reach Rs134.1 billion in 2017. The value of mixed retailers may go up to touch Rs43 billion in 2017 compared to Rs27.4 billion in 2012.

The value of other non-grocery retailers was at Rs145 billion and is expected to hit Rs171.3 billion in 2017.

Total value of non-grocery retailers is expected to touch Rs1,103.8 billion in 2017, up almost 26% compared to Rs873 billion in 2012.

The number of such retailer outlets was 128,362 in 2012 and estimates suggest that the figure will reach 137,813 in 2017.

Published in The Express Tribune, March 28th, 2014.

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