9 April 2024 02:42 am Views - 1492
By Nishel Fernando
The Small Medium Modern Trade (SMMT) outlets are rapidly capturing the attention of Sri Lanka’s middle class, with the traditional retailers swiftly adapting to this shifting retail landscape. A recent survey by Colombo-based independent research agency Sparkwinn Research indicated that this trend is driven by the changing consumer behaviour patterns, influenced by the soaring cost of living. According to the findings of the survey, the SMMTs became the most visited place of purchase for 22 percent of lower-middleincome (Rs.50,000-100,000 monthly income) consumers, up from 15 percent three months ago.
The small groceries remained as the most visited place of purchase among 44 percent of the lower-middleclass consumers, down from 50 percent three months ago, while the share of the lower-middle-class shoppers in the supermarket chains remain unchanged. Meanwhile, the SMMTs became the most visited place of retail shopping among 24 percent of the upper-middle-class segment (Rs.101,000-200,000 monthly income), up from 18 percent three months ago. At the same time, there was a noteworthy decline in the upper-middle-class consumer choosing the supermarket chains as their preferred place of shopping, with only 25 percent of these consumers stating the supermarket chains as their most visited place of retail shopping, down from 32 percent three months ago. “The SMMT and wholesale stores are preferred by the middleclass consumers for better deals and discounts, budgeted purchases and satisfactory customer service. The Small/Medium Modern Outlets will be future of retail, as the traditional retailers are gradually upgrading themselves to provide an enhanced shopping experience,” Sparkwinn noted. However, the supermarket chains continued to gain traction among the high income (above Rs.201,000 monthly income) consumers, with nearly two-thirds of the segments choosing the supermarket chains as their preferred choice of retail shopping. According to some surveyed middle-class consumers, close proximity, deep discounts, low price, product availability and customer service attracted them to the SMMTs, compared to the large supermarket chains. As the consumers put more focus on preserving their limited financial resources, the survey revealed that they have prioritised cutting down expenses, along with the adoption of different coping mechanisms.
Focus on ‘Putting Food on Table’ drives consumer buying patterns
With the price hikes of food items becoming the single largest concern among all consumer segments, the consumer focus has shifted to ‘Putting Food on the Table’, while preserving their limited financial resources. This also reflects low levels of confidence on the current personal finance and local economy. In particular, for the middle class, the higher transportation cost, better discounts and higher prices at their usual place of shopping drove them to shift from their current place of shopping. In addition, the middle-class consumers have shifted their buying habits, in terms of frequency, in order to stretch their rupee as far as possible.
“The consumers who previously purchased groceries on a monthly basis are now shopping weekly or twice a month. This includes staples like rice, which used to be purchased on a monthly basis but in current times being bought more frequently. When the groceries are purchased more often (weekly basis) than in bulk, the consumers are able to better budget their money throughout the month, thus, ensuring they have enough cash on hand to cover the other expenses,” it elaborated. Interestingly, the report highlighted the visits to the traditional “Pola” markets and smaller grocery shops are decreasing. “The reason is, the “Pola” sellers often set their own prices and require minimum purchases, while the smaller shops may have higher prices overall, compared to the supermarkets and wholesale stores,” it stated. Retrospectively, the consumers continue to visit the supermarkets to buy vegetables and fruits, due to the convenience of standardised pricing and the option to purchase small quantities.