Consumer spending in India to exceed $4 trn by 2030: Report
The report ‘eCommerce In The New Bharat And Its Future’ predicts that consumer spending in India is expected to surpass $4 trillion by the year 2030. This growth is anticipated to be driven by various factors:
1. Technological Innovation in Consumer Products: Advancements in technology are expected to lead to the development of innovative consumer products, making them more accessible and appealing to the Indian consumer base.
2. Higher Internet Penetration: The increasing availability of the internet and its penetration into remote areas will enable more people in India to access online shopping platforms and e-commerce services.
3. Strong Local Consumer Ecosystem: A robust and expanding consumer ecosystem in India will contribute to the growth of consumer spending, driven by factors such as rising disposable income, urbanization, and lifestyle changes.
4. Evolving Consumer Habits: As the Indian population becomes more digitally savvy and comfortable with online transactions, there will be a shift in consumer habits from traditional retail to e-commerce.
5. Increasing Female Workforce Participation: With more women joining the workforce, there will be a positive impact on household incomes, leading to higher consumer spending.
6. Policy Support – Make in India and Aatmanirbhar Bharat: Government initiatives like Make in India, aimed at promoting domestic manufacturing, and Aatmanirbhar Bharat, emphasizing self-reliance, are expected to boost the production and consumption of locally-made products.
7. Youthful Population: India’s working-age majority, with a median age of 31 years in 2030, indicates a large consumer base with substantial purchasing power. This demographic dividend is expected to drive economic growth and consumer spending.
It’s important to note that the predicted consumer spending of over $4 trillion by 2030 at a compounded annual growth rate (CAGR) of 10% is a projection based on various assumptions and factors. The actual figures may vary depending on how these factors evolve in the coming years. Nonetheless, the report suggests a positive outlook for India’s e-commerce and consumer market.
The increasing dominance of millennials and Gen Z in India’s population is a crucial factor that will shape the consumer landscape in the coming years. As these younger generations become the majority, brands that tailor their products and marketing strategies to cater to their preferences and values will likely reap significant benefits.
The report highlights that spending on various categories is expected to experience considerable growth by 2030:
1. Food: With a growing population and changing dietary habits, there will likely be a substantial increase in food-related spending as people seek diverse and convenient options.
2. Housing: As India continues to experience urbanization and a rise in disposable income, the demand for housing and related products and services is expected to surge.
3. Apparel: The fashion industry is poised to witness a boost as the younger generations, particularly millennials and Gen Z, are known for their affinity towards trendy and personalized clothing.
4. Transport and Communication: As the economy grows and becomes more connected, there will be an increase in spending on transportation and communication services.
5. Personal Care: With a greater focus on health and wellness, spending on personal care products and services is likely to witness significant growth.
The expected two-fold increase in spending on these categories signifies the evolving consumer behavior and preferences in India. Brands that identify and align themselves with these changing trends will have a better chance of capitalizing on the growing consumer market.
However, it’s essential to recognize that projections are based on assumptions and trends observed up to the present date. Economic, social, and technological changes can influence these estimates, and businesses must be adaptable to stay relevant and successful in such a dynamic environment.
The report highlights that e-commerce will play a significant role in driving the anticipated increase in consumer spending. The convenience, accessibility, and wide range of options offered by online marketplaces have made them highly preferred by consumers. As a result, nearly 80% of consumers in India currently prefer shopping online through e-commerce platforms.
In terms of payment preferences, the report reveals that about 76% of consumers prefer to prepay for their purchases. Prepayment options allow consumers to make payments before the delivery of goods or services, offering them a sense of security and control over their transactions.
Among the various prepay options, UPI (Unified Payments Interface) emerged as the most favored choice, with 57% of consumers opting for it. UPI has gained tremendous popularity in India due to its simplicity, instant transfers, and wide acceptance across various platforms and merchants.
Credit cards were the second most popular prepay option, chosen by 31% of consumers. Other payment options, such as digital wallets, net banking, and debit cards, were preferred by 12% of consumers.
The report predicts that the popularity of UPI will lead to a significant shift in payment behaviors. It anticipates a 34% decrease in cash transactions as more consumers switch to digital payment methods, and an 88% increase in digital payments by 2026.
This projected increase in digital payments indicates a growing acceptance of digital financial services and a shift towards a more cashless economy in India. As digital payment methods become more prevalent and accessible, it is expected to further boost e-commerce transactions and contribute to the overall growth of consumer spending in the country.
The report highlights some interesting insights into the current state of the e-commerce market in India:
1. Popular Shopping Categories: Fashion and lifestyle lead as the most-shopped category, with 48% of consumers making purchases in this segment. Electronics and groceries follow closely, with 32% and 30% of consumers shopping in these categories, respectively.
2. Importance of Quality: Quality emerged as the most crucial factor influencing purchase decisions for over half of Indian consumers when shopping online. This highlights the importance of providing high-quality products and services to gain trust and loyalty from customers.
3. International Expansion Opportunities: The report points out that a significant number of Indian brands, approximately 72%, do not currently sell internationally. This indicates untapped potential for expansion beyond the domestic market.
4. Uncertainty About Selling Overseas: Despite the appeal of international markets, over 38% of brands in India are uncertain about how to sell overseas. This uncertainty may be attributed to various factors, such as logistical challenges, regulatory requirements, and cultural differences in the target markets.
5. Interest in Indian Products: Both Indian and international consumers have shown keen interest in buying Indian products. This interest can be attributed to the unique cultural appeal, craftsmanship, and authenticity associated with Indian goods.
Overall, the report suggests that while the e-commerce market in India is thriving, there are still areas for improvement and growth. Brands have an opportunity to capitalize on the increasing demand for quality products in various categories, both domestically and internationally. Expanding into global markets can lead to significant business growth and exposure, especially with the appeal of Indian products in international markets. However, it is crucial for brands to overcome challenges and uncertainties related to international expansion to tap into this potential effectively.
