According to the latest EY Future Consumer Index (FCI), Indian consumers are reevaluating their retail choices as they are carefully evaluating price, value and pack size while reassessing the role brands play in their lives.

According to FCI – India edition, 52% consumers are switching to private labels, with 70% agreeing that these brands are increasingly providing better quality products. The EY report highlights heightened consumer expectations of value, trust and relevance from their purchase experiences.

Private labels gaining favour

As per the EY report, the growing preference for private label products is transforming consumer perceptions, positioning store brands as the favoured alternative to traditional branded options. 70% of consumers believe that private labels meet their needs just as effectively as branded products.

Even when brands turn to innovation and “brand improvements” such as changing ingredients or formulas to create more value, 34% of respondents perceive these efforts as cost-cutting measures rather than genuine innovation. Furthermore, 59% of consumers indicated that they only purchase branded products when they are on sale, prioritizing discounts over brand loyalty.

As per the EY report, retailers also appear to be responding to this shift, with 74% of consumers noticing more private label options where they shop and 70% observing more private label items positioned at eye level on store shelves. Additionally, a significant 69% of consumers said that store brands and private labels help them save money.

Angshuman Bhattacharya, Partner and National Leader, Consumer Products and Retail Sector, EY-Parthenon said, "Consumer behaviour has traditionally evolved in response to changing economic situations, but the current shifts appear to be more permanent. Retailers are confidently launching private labels and allocating prime shelf space to them, while technology is enhancing the shopping experience by providing consumers with limitless options and the ability to compare products. The rapid growth of private labels is further evidenced by the rising popularity of fresh, new brands among Indian consumers. At the same time, this presents established brands with both the opportunity and the imperative to deepen their connection with consumers and explore innovative ways to stay relevant."

Boomeranging brand loyalty

Notably, 47% of respondents expressed willingness to return to a branded product if it offers superior taste, quality or performance. Additionally, 44% of consumers indicated they would switch back to branded products for better value for money. Almost half, 44%, are also willing to pay a premium for enhancements that improve product performance. The product categories perceived as the most innovative include clothing and footwear (58%), beauty and cosmetics (51%) and personal care (45%), all of which are benefitting from their investments in research and development (R&D). The EY survey also reveals that artificial intelligence (AI) has emerged as a key shopping tool, with 62% of respondents making purchase decisions based on AI recommendations. Furthermore, 58% consumers stated that AI has significantly enhanced their shopping experience.

The EY survey findings reveal that today, even being ‘good enough’ is insufficient. While this has long been the message to retailers, it’s now the turn of big brands. Consumers are demanding value, quality, purpose and performance. Brands that fail to evolve will be left behind, while those that adapt can cultivate new loyalty in a dynamic market. This is an opportune moment for brands to refine their messaging and effectively target their audiences to stand out and capture market share, sums up the report.