The Indian consumer base is growing, aspirational and segmented across various types of products and quality
Upward trends in household income and the Indian consumer’s spending ability are key indicators of the opportunities that lie in the Indian market. Arguably, these opportunities lie across a broad spectrum. A study conducted by BCG makes the following observations about these trends:
- Firstly, the Indian middle class, The Next Billion, will continue to drive the consumption engine accounting for nearly half the market size. This means that the low-income bracket class have expanded into the middle class.
- Secondly, there is an invisible push that is driving the Indian consumer upward in his or her spend bracket, each segment is transitioning into the one above
The heterogeneity of the Indian consumer is India’s biggest strength
To assess the business implications and the potential, compare the range of household spend in India and juxtapose it with the retail market. You will observe the vastness of the spectrum of the types of consumers in India. The liberalized retail markets have invited interest from a variety of players to service the need of the diverse Indian consumer.
- The online customer buying off Amazon and Big Basket
- The Emerging Affluent Consumer buying from Food Hall and Nature’s Basket
- A mixed bag of customers, who are a sizable proportion of market - still rushing to the good old Big Bazaar and the mom & pop stores
A simple cross-section of a retail customer indicates that the consumer needs and market size are growing – whether it is a conglomerate, small & mid-size company or an aggregator, all have immense untapped potential. Nevertheless, Indians realize that not all foreign goods are perfectly suited to their tastes and needs. They want products that are made in India, for India. For example, Ikea has added India-focused products, such as the tawa to its offerings.
Innovation with impact in India
Up to 40% of India’s $10 trillion economy in 2034 could be derived from such Indian innovations.
OECD emphasizes that long-run economic growth depends on the creation and fostering of an environment that encourages innovative applications of new technologies. India has consistently risen in the Global Innovation Index ranking for the past two years - moving from 60 in 2017 to 57 in 2018.
One example of India’s aptitude for innovation was the Simputer, developed in India in 2001, which had incorporated breakthrough technologies, such as Doodle on mail, which later became a major feature on the Samsung Galaxy phones. Bruce Sterling in the New York Times magazine wrote, “The most significant innovation in computer technology in 2001 was not Apple’s gleaming titanium PowerBook G4 or Microsoft’s Windows XP, it was, in fact, the Indian Simputer - a net-linked, radically simple portable computer, intended to bring the computer revolution to the developing world.…”
Since then, many more digital innovations have had a major impact on the day to day lives of Indians. Some examples are Rivigo, UrbanClap, Paytm and OLA. In fact, Kochi's Gold Souk Grande Mall is a fully-automated, cashier-free shop. At the shop, you can pick up an item and walk out, and the amount is automatically debited from your e-wallet, reducing customer touchpoints and ensuring a quick checkout at a premium.
For rural India, start-ups like vDrone and Fasal are developing custom-built drones for ‘smart farming’ and providing agri data for increasing crop yield!
Talking about Electric Vehicles which are now the talk of town globally, the REVA, an Indian made electric vehicle, has been on the road since 2001 and has also been sold globally in Europe and South America since 2003. Visit our sectors page to know more about the Automobile Industry in India.