NEW DELHI — A new report predicts consumer spending in India will climb to $3.6 trillion by 2020 from $991 billion in 2010.
The report from Boston Consulting Group and The Confederation of Indian Industry, “The Tiger Roars,” is an in-depth analysis of how a billion-plus people consume and gives a new perspective from which to look at retail and growth in India, especially at a time when growth forecasts are showing a drop — from the 8.4 percent last year to about 6.9 percent.
However, the report states India will continue to have “a robust growth path despite the current global economic environment.”
“The spending will increase 3.6 times by 2020, buoyed by rising household income, the coming of age of a new generation and other socioeconomic forces,” said Abheek Singhi, co-author of the report and leader of the consumer and retail practices for BCG India.
India will account for 5.8 percent of global consumption by 2020, more than double the 2.7 percent it is today.
However, Singhi cautions about the tiger and what it can mean for companies trying to do business in India.
“The roar of the tiger is a fitting metaphor for consumer spending in India. Consumer spending in India will continue to roar, but the companies that try to capture it may not be so fortunate. India is a big and growing consumer market, but not an easy one. Understanding the size and shape of the prize and where it is hidden in the challenging fabric of India are the first steps to capturing it,” he observed.
The report predicts the apparel market will quadruple in size over the next decade.
Singhi mentioned that although there is a large opportunity for private or store labels, retailers must remember to tailor their value proposition to focus on specific consumer segments.
Several key factors drive apparel shopping, he said. The first of them is occasion, rather than functional need, and the second is the fabric quality and brand image.
As for private brands or store labels, the report said consumers are more likely to consider these as alternatives and can be swayed by offers, promotions or lower prices.
“Therefore, apparel is a level playing field — there is an opportunity for private labels-store brands to capture the consumer’s mind space and increase share of wallet in the apparel-spend basket,” the report observed.
The report mentioned that a majority of consumers shop for apparel every two or three months and that they tend to visit all store formats with similar frequency. It noted that the preference for modern trade increased with income and that a majority of consumers indicated that they enjoyed the experience of shopping for apparel, independent of the trigger for the purchase decision and that it was a “time for fun.”
The report points out that the opportunity here may “not necessarily be easy to unlock,” simply because of the tremendous variety and diversity of a country with 23 official languages, around 100 unofficial languages, 1,600 dialects and eight major religions in a land mass of more than 3.2 million square kilometers.