How India will consume in 2030: 10 mega trends

indians 2019

Taj Mahal, Agra, India (Unsplash, 2019)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Nikhil Prasad Ojha, Partner and Head of Strategy Practice, Bain & Company, India & Zara Ingilizian, Head of Future of Consumption, Member of the Executive Committee, World Economic Forum


Over the next decade, consumption in fast-growth consumer markets such as China, India and Southeast Asia will be reshaped by the Fourth Industrial Revolution and more than one billion first-time consumers.

The Future of Consumption in Fast-Growth Consumer Markets, a project in collaboration with Bain & Company, focuses on the emerging markets that comprise more than 40% of the world’s population. After studying China in 2017, for 2018 it turned its attention to India.

India is one of the fastest-growing economies in the world. By 2030, it is on course to witness a 4x growth in consumer spend. It will remain one of the youngest nations on the planet and will be home to more than one billion internet users. The new Indian consumer will be richer and more willing to spend, and unlike her predecessors, she will have very specific preferences.

The following 10 mega trends for India in 2030 can help businesses and policy leaders envision the India of the future. The trends draw upon the research and consumer survey conducted by the World Economic Forum and Bain for the Insight Report on the “Future of Consumption in Fast-Growth Consumer Markets: India”.

1. The Indian middle class will truly come into its own

By 2030, India will move from being an economy led by the bottom of the pyramid, to one led by the middle class. Nearly 80% of households in 2030 will be middle-income, up from about 50% today. The middle class will drive 75% of consumer spending in 2030.

2. Upward income mobility will drive growth across all consumption categories

As 140 million households move into the middle class and another 20 million move into the high-income bracket, they will spend 2-2.5x more on essential categories (food, beverages, apparel, personal care, gadgets, transport and housing) and 3-4x more on services (healthcare, education, entertainment and household care). Upper-middle-income and high-income entrants will drive a 15-20% increase in the ownership of durables (washing machines, refrigerators, TVs and personal vehicles).

3. Half the incremental rupees will go into buying more, the rest nearly equally into buying better and buying new

Half the incremental consumer spend by 2030 will be simply to buy more of the products and services being consumed today. Affordable options will continue to be important. The remaining half will be split nearly equally on upgrading to premium offerings and including new variants in existing routines, such as adding organic food items and a new skincare regime, or adopting app-based ride-sharing. Premiumization and category addition will drive a significant share of incremental spend on eating (food and beverages at home, and dining out), looking good (personal care and apparel) and staying connected (cellphones, data packs and gadgets).

4. Aspirations are fast converging across urban and rural India, and better access will transform this intent into actual spend

The internet and smartphones have significantly bridged the information divide between consumers in urban and rural India. Beyond the top 40 cities, developed rural and small urban towns already have a very similar income profile. At a given income level, both these consumer groups desire a similar standard of living, aspire to a similar set of brands and are equally comfortable with technology-enabled consumption. Rural India’s strong desire to consume is presently constrained by poor access to roads, power, organized retail and financial services. Future efforts to improve physical and digital connectivity, and the use of innovative distribution channels, will enhance well-being and unlock the true consumption potential of rural India.

5. Millennial and Generation Z preferences will significantly shape the market

These consumers will be able and willing to spend more but will also be more discerning. In 2030, 77% of Indians will be born in the late 1980s and onwards. This generation of consumers will have had exposure to more product and service options than their predecessors. These youngest Indians already exhibit the greatest willingness to increase spending over the next 10 years, but they are also highly discerning about what they consider “best in class” offerings in every consumption category, from apparel to cars. Businesses will have richer, more willing buyers, but these buyers will be highly informed and make very specific choices for themselves and their families.

6. Digitally influenced consumption will become the norm

“Connectedness” will drive a significant difference in preferences, even at the same income level. As many as 50-70% of the most digitally connected consumers today, across income levels, already use digital platforms for product discovery and pre-purchase research. By 2030, more than 40% of all purchases will be highly digitally influenced, up from 20-22% today.

Income and age may have been the traditional drivers of preferences, but in the future, preferences will be significantly driven by a consumer’s degree of connectedness to digital media and online platforms. At the same income level, the more “connected” consumer (by internet and smartphone) will spend well, own durables, premiumize to better products (according to her income) and be very aware of the brands that best serve her needs. Her less connected counterpart is likely to spend frugally, own few durables and continue buying more of the same.

7. India’s eternal hunt for value will aid the growth of e-commerce, ‘value for money’ brands and category extensions

Indian consumers will be willing to adopt value-for-money brands that have “just right” features and prices. India’s new consumers have aspirations to consume more (and the necessary income to fulfil this desire), but they are dispersed across tens of thousands of urban and rural towns. Asset-light e-commerce models, supported by offline partnerships and demand-aggregators, will help brands test out and reach these new markets in a cost-efficient manner. Businesses will also have an opportunity to unlock spend on new category extensions.

For instance, dining out will become a significant area of food and beverage spend (up from more than 10% today), driven by the increasing use of app-based meal deliveries to replace home-cooked meals, especially by upper-middle-income and high-income working consumers. One in four of these consumers has already begun to increase their spend on entertainment to subscribe to digital video-streaming services. Affordable and innovative options can unlock massive incremental spend and establish new variants of consumption in many existing categories.

8. Technology-enabled new business models will leverage inherent comfort with ‘usership’ and the desire for increased convenience and well-being

As the original usership economy, India has lessons for the world. Indians have traditionally used public transport services over owned vehicles, and furnished homes using low-cost second-hand furniture rather than new purchases. Digital platforms for renting and sharing will speak to this usership mindset, as well as to the tech-savviness of future consumers. Subscription models, much like today’s Bombay Shaving Club, Amazon India Grocery Pantry and Fab Bag, will serve the value-conscious Indian keen to access new brands and products for a small recurring spend. Digital platforms for health and learning will fulfil the Indian consumer’s prime aspiration – the desire for greater well-being for themselves and their family.

9. Business, policy and civic society leaders will collectively drive an inclusive, healthy and sustainable future for India

India presents a host of exciting business opportunities in the next decade. At the same time, the next phase of India’s growth story offers stakeholders a chance to shape a path of responsible and equitable growth, from which other fast-growing markets can learn. Building on the momentum of collaborative efforts such as Skill India and Eat Right India, public-private-civic-society partnerships can help tackle the three key societal challenges facing India today: the need for skills and jobs for its working age majority; the greater inclusion of rural India; and the building of a healthy and sustainable future for its citizens and cities.

 

10. Firms will thrive by innovating for India and embracing a ‘founder’s mentality’

Companies will go a step beyond replicating Western models at low costs; they will localize and personalize business models and product/service offerings according to the unique preferences and constraints of their Indian consumer. In the past, companies that have sustained growth in India have been ones with an insurgent mission, frontline obsession and strong owner’s mindset. This “founder’s mentality” will be a critical capability for the future, for small and established businesses alike. Entrepreneurial and agile organizations will be best positioned to capture the full potential of consumption opportunities in the vibrant and diverse market that is India.

India in 2030 will be a playground for growth and innovation for consumer businesses – both Indian and global, established and emerging. The transformations in the Indian consumer’s income, propensity for consumption, awareness and tech-savviness will create massive opportunities. India in 2030 will also be a platform for stakeholders to shape a path of inclusive and responsible growth, for fast-growing markets across the world to follow.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Foreign direct investments the success secrete of Eurozone

The Italian crisis may act as a catalyst for less austerity

Night owls, rest easy

All at sea during COVID-19 lockdown? Try these sailor survival tips

Health without borders: How we can Improve International Collaboration in Health Care

We all have a ‘hierarchy of needs’. But is technology meeting them?

Pedro Sánchez: We must protect Europe, so Europe can protect its citizens

An ECB banker wants to change the European social model

The vital role played by logistics during humanitarian crises

MWC 2016 LIVE: Stripe gives payments leg-up to startups in emerging markets

FROM THE FIELD: Sailing a traditional and sustainable path in Fiji’s tropical waters

Parliament makes it easier to organise a European Citizens’ Initiative

These are the 10 most in-demand skills of 2019, according to LinkedIn

More than half of world’s refugee children ‘do not get an education’, warns UNHCR

Iran: BBC and other broadcast journalists harassed; families threatened – UN experts

What is the IMF telling Eurozone about fiscal and banking unification?

Traditional knowledge at ‘core’ of indigenous heritage, and ‘must be protected’, says UN Forum

“BRI cooperation is entering a new stage: we need a new and more constructive approach rather than waste time on suspicion”, China’s Ambassador to EU Zhang Ming underlines live from European Business Summit 2019 in Brussels

On Kristallnacht anniversary, UN chief urges renewed fight against ‘crime’ of anti-Semitism

UN chief ‘commends’ leadership of Greece and former Yugoslav Republic of Macedonia, as name dispute draws to final close

The issue of health literacy and how it affects European health policies

Pharmaceuticals in the environment: Commission defines actions to address risks and challenges

Restrictions, unmet promises, unbridled violence in Sudan, a ‘recipe for disaster’, says Bachelet

This is how a smart factory actually works

How the tech sector can power the shift to a sustainable economy

Working fewer hours makes you more efficient. Here’s the proof

8 top stories from the week in Davos 2020

Working with millennials, leaders say humility works better than bossing around

German heavy artillery against Brussels and Paris

Make progress or risk redundancy, UN chief warns world disarmament body

EU Commission: Growth first then fiscal consolidation

The world to teach Germans to…un-German

Road to Brexit: the UK seeks early agreement on Data Privacy with the EU

Palestinian Bedouin community faces demolition after Israeli court ruling, warns UN rights office

Why the way of loving closes doors of health?

These social entrepreneurs are lighting up Africa

State aid: Commission approves €431 million public support for cleaner transport in German cities

Eight years after Fukushima, nuclear power is making a comeback

MWC 2016 LIVE: Xiaomi looks to revive growth with flagships

At UN, France’s Macron says more ‘political courage’ is needed to face global challenges

In rural Bangladesh, solar power is changing lives

DR Congo: ‘No time to lose’ says newly appointed UN Ebola response coordinator

Youth unemployment: No light at the end of the tunnel

India’s future as a world power depends on 4 key relationships

One-in-five suffers mental health condition in conflict zones, new UN figures reveal

“Fortress Europe”, “Pegida” and its laughing stocks

COP21 Breaking News: Conference of Youth Focuses on Hard Skills to Drive Greater Climate Action

Brexit update: Will Theresa May’s last-minute desperate efforts procrastinate Brexit?

How Europe beat the financial crisis – and the risks it still faces

There is huge talent in the world’s refugee camps. We must realize this overlooked potential

We generate 125,000 jumbo jets worth of e-waste every year. Here’s how we can tackle the problem

Women’s rights: MEPs call for action to fight backlash against gender equality

Celebrate love, strengthen partnerships to end AIDS epidemic by 2030 says UN agency

These scientists are using sound waves to filter plastic fibres from washing machine wastewater

The Japanese idea of ‘chowa’ – and how Asia can thrive in the future

How the United States is falling in love with secondhand clothes

No more lead in PVC to protect public health, say MEPs

Population in crisis hit EU countries will suffer for decades

Finland must focus on integrating migrant women and their children to boost their contribution to the economy and society

How public private partnerships must evolve to create social impact

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s