Going back to the question of profit for retailers, is profitability not associated with the purchasing power of the consumers?
A. Yes, that’s the whole point. The purchasing power of the Indian middle class is extremely crucial for the business of marketers like McDonald’s. Since the middle class and upper class families spend 42-44 per cent of their monies in groceries, which does not exceed more than 7-8 per cent abroad, only the balance that is left is the spending power. Thus, there is a limited amount of money available and within that, marketers have to see how they can succeed as mass market players. Obviously, all the markets think hard about what should be the ‘right’ pricing. And, that’s the reason why we do a price sensitivity study. Consumers, after all, do have price expectations. A retailer may harp on the ambience, but the fact of the matter is that the consumer has to have the money to relish that. Look at the speed at which these malls are coming up. However, the sad truth is these malls witness a mere 10-15 per cent conversion of footfalls. The balance 85 per cent of the visitors do not have
