The India Retail Opportunity: Deciphering the Indian retail consumer psyche
Our India retail expert, Mita Chopra, takes a look at the changing identities of India’s retail consumer market
Modern yet traditional. Moneyed yet frugal. Extravagant yet moderate. Aspirational yet ingenuous. Dichotomy is what best describes the modern urban Indian retail consumer. The Indian consumer market is undergoing a massive disruptive change caused by both individual as well as market influences. So, it currently is somewhat in a state of flux.
Affluence levels are rising, old social norms are being challenged, and prudence is giving way to experimentation. At the same time, economic conservatism is giving way to consumerism, convenience is becoming the need of the hour, and technology is becoming an enabler in fulfilling consumer demand.
This is all having a seminal impact on consumer behaviour, consumption, and spending patterns. Thus, there is an emergence of niche consumer segments that were previously non-existent or negligible in size. For example, young start-up multi-millionaire households, double income households without children, single working households, and young retirees, are just some of the new consumer segments in India.
These niche segments have distinct needs, wants, and ambitions in life. Some have become adequate that businesses are taking note of them and catering to their needs and desires. Thus, the demand by Indian consumer is becoming more heterogeneous in nature, presenting a myriad of opportunities for a variety of businesses.
Flood of New Money and Emergence of Niche Consumer Segments
In the next decade or so, middle class households in India, the chief driver of the Indian consumption story, are set to more than double in size. Furthermore, rich households are also set to almost double in size. This is going to fuel the demand of not just necessities, but also categories that have been out of reach of the socio-economic classes that once existed.
The use of technology is becoming a way of life and its penetration is not just limited to the urban centers, but cuts across geographic, social and economic strata. According to the Internet and Mobile Association of India, current overall internet penetration in India is at around 31% with approximately 450 million internet users, of which 60% reside in urban India. Further to this, the mobile handset is considered to be the primary device for accessing the internet, largely driven by availability and affordability of smartphones.
Consumers are using technology not just for social awareness, connectivity and entertainment but also to make informed purchase decisions as well as actual purchases. The e-commerce market in India is taking off in a big way and is currently estimated to be GBP 35.6 billion. Of this, travel services like ticketing and cab aggregators like Ola and Uber account for the biggest share of 70%, followed by online retail (16%), financial services and digital payments (6%). Technology is enabling the fulfilment of conventional as well as distant and varied consumer demand. In parallel, it is creating massive opportunities for companies in the retail tech sector.