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A deep dive into the Indian consumer market

India’s rise as an economic power has forced the world to stop and take notice of the country. An intriguing element is India’s consumer market, characterised by diverse languages, religions and economic and social statuses.

All of these factors make the Indian consumer market a tricky proposition to understand. But as the market undergoes a paradigm shift due to India’s rapid economic growth and favorable demographics, it has become impossible to dismiss. Global corporations view India as one of the key markets where future growth will emerge.

Economic growth and rising disposable incomes

India is the fastest-growing large economy in the world, and is projected to be the world’s third largest economy with more people than any other country by 2035.

The country’s rapid economic growth is increasing and enhancing employment and business opportunities, and in turn, increasing disposable incomes.

As the benefits of growth trickle down, an increasing number of people are moving up from the economically weaker class to join the middle class. The middle class with its rising numbers and incomes is thus becoming the biggest market segment. In fact, India's middle class is expected to grow from up to 80 million today to 580 million people by 2025.

The affluent class too is predicted to continue to grow in terms of size and value, albeit at a slower pace than the middle class.

Decoding the empowered Indian consumer

The Indian consumer market is drawing global attention not just because of its promise of sheer volumes but also because of the tectonic shift happening in the nature of demand.

Increasing urbanisation, increasing incomes and rising aspiration for a better life, especially among the lower economic strata, are some of the factors reshaping the Indian consumer market. 

The result of this flux is a new Indian consumer who is more discerning than ever, ready to place his money on brand, quality and convenience and eager to explore the organised retail market.

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Indian consumer trends

There are several trends impacting Indian consumer behaviours today:

Aspiration for a better life

As millions of previously economically deprived households move into the lower strata of the middle class segment, they will begin to be able to afford and demand products and services beyond food and clothing. 

Increasing penetration of media and infrastructure facilities will expose rural India to an urbanised lifestyle and fuel the latent desire for improved living standards. Together, the ‘aspirants’ from rural and urban areas will push up demand for goods and services at the lower end of the spectrum. 

Educated purchasing decisions

Due to a rise in income, increased awareness about products and the proliferation of choices, Indian consumers are becoming pickier about their purchases. Product, positioning and packaging innovation will be the key for companies to attract this new consumer. 

For example, as consumers become increasingly health-conscious, they may opt for a food product that not only tastes great but also has health benefits. Companies will have to demonstrate value through innovating and appealing to the needs of different regions and consumer classes. 

Brand-conscious buying

The Indian consumer market, which is primarily dominated by the younger generation, is becoming increasingly sophisticated and brand-conscious. A typical upper middle class young consumer is beginning to look beyond the utility aspect of a product to seek intangibles like brand and lifestyle statement associated with the product. 

This modern consumer wants his purchases to reflect their lifestyle, or at least the one they aspire to.

An explosion in online shopping

eCommerce is growing at a rapid pace, and as a result, online retailers are being drawn towards Indian markets, which are poised to grow in leaps and bounds in the years to come. There were about 120 million online shoppers in India in 2018, and this figure is expected to reach 220 million by 2025.

A final word on the Indian consumer environment

Increasing income and consumer spending in India presents a tremendous opportunity for Australian companies. The challenge is successfully entering into the Indian market. There is no doubt this requires investment and patience, as making a mark within a segment can take time – especially in overseas markets.

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