Indian consumers are expected to fuel a spending boom, especially on fashion.

NEW DELHIIndia will be the third-largest consumer market in the world by 2025, according to a report released Tuesday by the Boston Consulting Group.

India is still a growth story — a big growth story,” the report noted. “Even assuming conservative GDP increases of 6 to 7 percent a year, we expect consumption expenditure to rise by a factor of three to reach $4 trillion by 2025. India’s nominal expenditure growth of 12 percent is more than double the anticipated global rate of 5 percent.”

The report, “The New Indian — The Many Facets of a Changing Consumer,” observed that for the first time wealthy consumers would lead spending, with the elite and affluent income segments constituting 40 percent of all consumer spend by 2025. The impact of penetration, frequency and spending per purchase will vary across categories, but for example, in women’s apparel, elite and affluent consumers spend nine times and five times, respectively, more than a struggler.

The difference is mostly a matter of higher spending per purchase while the differences in product penetration and purchase frequency are not significant.

“A set of emerging social trends could reshape consumption patterns significantly,” said Abheek Singhi, a BCG senior partner and report coauthor. “These include more — and better educated — women taking their rightful place in society, greater pride in being Indian, and increasing time compression, each of which will drive exponential growth in various categories differently.”

Among the changing trends are a veering toward a more social pattern of shopping — involving all family members — and more frequent shopping.

Immediate gratification is becoming more important than the traditional impulse of asset creation and the desires of affluent households, which are becoming “comfort seekers.” And they are willing to pay for these comforts.

The report warned that to meet changing consumer needs and behaviors companies need to shed conventional wisdom and adapt their business models. For this, they need to pay attention to several emerging trends affecting behaviors and consumption patterns.

These include the country’s rising wealth, ongoing urbanization and fundamental shifts in family structure.

As global brands as well as domestic retailers turn their attention to smaller cities after the initial metro areas of New Delhi, Mumbai and Bengaluru, they appear to be on the right track.

The report cited the fact that emerging cities — those with populations of less than one million — “will be the fastest growing” and noted that urbanization has unique Indian characteristics.

“The migration to urban centers is not concentrated in a few cities as it is in countries such as Indonesia or Thailand; nor is urbanization occurring as quickly as in China. In India, the population is booming in scores of small cities across the country,” the report said.

More than 40 percent of the population is expected to be living in urban areas by 2025. They will account for more than 60 percent of consumption.

“Expenditures in these cities are already rising by nearly 14 percent a year, while consumer spending in India’s biggest cities is increasing at about 12 percent a year.

“Consumers in these cities behave differently from big-city consumers. They have a strong value-for-money orientation, significant local-culture affinity and a more conservative financial outlook,” the report said.

The continuing trend toward nuclear households — a shift from the traditional joint families — is going to be a major factor in the shift of consumer spend. “The proportion of nuclear households, which has been on the rise during the past two decades, has reached 70 percent and is projected to increase to percent by 2025. This ongoing shift is significant to marketers because nuclear families spend 20 percent to 30 percent more per capita than joint families,” the report noted.

E-commerce will continue to be a major driver as well. In the past three years, the number of online buyers has increased sevenfold to 80 to 90 million. Digitally influenced spending is about $45 billion to $50 billion a year and is projected to increase more than tenfold to $500 billion to $550 billion — and to account for 30 to 35 percent of all retail sales — by 2025.

Eight out of 10 e-commerce transactions take place by phone — across categories, income segments and regions. Almost three-quarters of Internet users today use only mobile phones to access the Internet, compared to 52 percent in 2014.

Other factors worth nothing include:

• The development of ‘micro markets,’ which will provide the best opportunities in metropolitan areas.

• From 2016 through 2025, the share of elite and affluent households will double, increasing from 8 percent to 16 percent while the share of strugglers will drop from 31 percent to 18 percent.

• Emerging cities — those with populations of less than one million — will be the fastest growing and will constitute one-third of total consumer spending by 2025.

• Digital channels will influence about 30 percent of all retail sales and 8 to 10 percent of all retail spending will be online.

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