• SMMTs became most visited place of purchase for 22% of  lower-middle-income consumers
• Small groceries remained as most visited place of purchase  among 44% lower-middle-class consumers
• Notable reverse in earlier trend towards supermarket chains

 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.