India’s consumers are set to become all-powerful.
According to recent data from the McKinsey Global Institute, Asia will likely account for one of every two households with incomes in the upper-middle class and above and one of every two dollars of the world’s consumption growth. In other words, if you ignore Asia, you might miss out on half of the $10 trillion global consumer growth story over the next ten years, of which India will account for $1.8 trillion.
As per a BCG report, India’s consumption, which was growing at approximately 12% pre-pandemic, went into negative territory during the pandemic but has now recovered to surpass pre-pandemic growth levels at 17%.
By 2030, 55% of India’s population may be part of what we refer to as the “consuming class,” spending more than $11 per day on both necessities like food and housing, as well as discretionary items. In ten years, India may have half a billion more middle-income consumers than it does today. This would represent a huge growth of almost double the current population share of 24%, and 9% in 2000.
Moreover, the income pyramid in India is getting higher at the top.By 2030, the percentage of consumers in the two-income quartiles of the purchasing class with the greatest daily expenditure ($30–$70 and beyond $70) might double to 20%. Click To Tweet
Where is India shopping?
Looks like Indians love the convenience of shopping on their phones!
In the fiscal year 2021, the offline retail market in India decreased by 5% to $810 billion. On the other hand, the Indian e-commerce market expanded by 25% and is predicted to continue expanding at this rate over the next five years. According to recent research by Kearney, one in three Indians would be actively purchasing online by 2030.
According to a Bain & Company report, the Indian e-retail market is expected to grow to $140 bn by FY26. India is home to the third-largest online shopper base of 140 million. It is only next in line after China and the United States of America (USA).
The pandemic was a watershed moment for India’s e-retail market, driving a 12-month acceleration in e-retail penetration, which was at 4.6 per cent by end of FY21Bain & Co report
While Kearney has predicted a 9% growth rate for offline retail to reach $1.4 trillion, Bain & Company has anticipated a 25%-30% per annum growth rate for e-commerce to reach $120-140 billion by FY26.
Where does the future of shopping lie?
Even though the future does lie mainly on the internet, physical retail stores may not be entirely dead.
What business folks are calling the “phygital shopping experience” is basically an amalgamation of digital elements into your physical retail stores. Even though e-commerce sales will keep expanding, according to Euromonitor data, 78% of all purchases will still be performed in-store by 2024.
According to Google’s own research, “the pandemic has made individuals more flexible about whether they buy online or offline,” with 73% of survey participants claiming they are channel-agnostic, up from 65% before the pandemic.
Clearly, brands and businesses are optimising for omnichannel experiences to get the best of both online and offline shopping experiences. Stores are optimising for experiences with salons like Blown offering wine with salon services, Lenskart giving users the option for in-store trials before online purchase, and so on.
Bullish on India’s consumer potential? Well, never a better time than now to start investing in ideas you believe in!
Markets Last Week
Brought to you by Windmill Capital
Well, every week is not happening! That’s exactly what the market mood was, in the week gone by. The Nifty 50 benchmark traded sideways ending 0.85% higher. The week was primarily dominated by macroeconomic news with a bunch of announcements coming through. Let’s look at some of those, but before that, here’s how the markets looked last week:
- Crude Oil Gets Government Attention – Firstly, the Union Cabinet approved deregulation of the domestic crude oil market. Meaning, that up until now Oil Marketing Companies (OMCs) were only allowed to sell crude oil to the government or its nominee. Now, that clause has been lifted. OMCs can sell in the private markets. Secondly, the government also imposed a windfall tax on Oil & Gas companies, while also levying excise duty on the export of fuel (₹6/litre on petrol and ₹1/litre on diesel). The tax slap is approximately around ₹66,000 crores!
- GST Council Meeting – The GST Council had its fair share of decision-making, wherein they decided to increase the GST rates on a few goods/services and also decided to lower the rate on certain items. You can find a quick snapshot here. Interestingly, the council deferred to levying 28% GST on casinos, online gaming, horse racing, and lottery. So if you’re into one of these, it’s good news for you, isn’t it?
This week, see how travel became the reason a smallcase was born…
This week, we are…
Reading Afternoon Raag by Amit Chaudhuri: Feeling a little nostalgic during gloomy afternoons? This book is a perfect companion for the melancholic and longing soul, with stories of arrivals and departures, homes and new spaces. Read this with a cup of coffee when your soul needs some feeding.
Watching Atlanta on Netflix: If you’re done bingeing on the last two episodes of the latest Stranger Things volume, do give this a watch! This show intricately balances real-life and comedy to follow upcoming rapper Alfred and his manager Earn, as they try to make their way into the music industry.
It’s salary week! How did you spend your first few thousands over the weekend? Tell us in the comments!
Until next week, stay hydrated and invested!