India’s consumer map is rapidly being redrawn by major trends

Synopsis: Companies must adapt to a market of rising incomes, digital innovations, new consumers and altered consumption curves.

Introduction

Pandemic shocks and aftershocks make the immediate economic outlook more uncertain. However, prospects for India’s consumption remain robust as incomes are projected to rise and millions more will experience growth in their spending power.

Which factors are responsible for shaping India’s consumer landscape?

– Consumption preferences and behaviour.

– Technological change.

– Digital ecosystems such as ‘super app’ model in which a single app offers one-stop-shops for a range of digital services.

– E-commerce, or communications.

What are the future predictions?

Consumption growth: one of every two upper-middle-income and above households is expected to be in Asia, and one of every two dollars of global consumption growth is likely to occur in the region.

India’s consumption growth: by 2030, 55% of India’s population could belong to ‘consuming class’, spending more than $11 a day in purchasing power parity (PPP) terms.

India’s income pyramid is expanding: The proportion of consumers in the two highest income tiers of the consuming class could double to 20% by 2030.

Despite the challenges, how India retains its large long-term growth potential?

Demographics: In India, two generations will come into focus over this decade: a generation of ‘online-first’ consumers, expected to account for at least half of all consumption by 2030, and those aged 60 and over, whose consumption could grow 1.6 times faster than that of India’s on the whole.

Spending pattern: The pandemic accelerated the shift and senior spending patterns are likely to shift increasingly online. Internet banking, ride-hailing and payment of utility bills are some of the most cited reasons why seniors use digital tools.

Economic empowerment of women: an estimated $1.4 trillion could be added to India’s economy by 2030 from increased female participation. This opportunity may not be easy to capture but we need to focus on narrowing gender gaps.

Digital empowerment: In India and South Asia, the gender gap in mobile internet access has narrowed by 16 percentage points since 2017. New digital models can help more women join the labour force as entrepreneurs.

What is the way forward?

First, companies serving the Indian market need to consider growing consumer segments that are becoming even more diverse in an era of rapid technological change.

Second, Innovation in business models needed. Technology is democratizing consumption, thereby opening up the market to a vast number of new consumers.

Source: This post is based on the article “India’s consumer map is rapidly being redrawn by major trends” published in Livemint on 24th Sep 2021.