NEW DELHI – India’s changing retail market is dominated by Millennials, who comprised 47 percent of the nation’s workforce in 2017, according to a new study.
India has the world’s largest Millennial population in absolute terms, totaling more than 440 million. These account for 34 percent of the country’s total population. Millennials are defined as those between the ages of 18 and 35.
India’s retail market, the fourth largest in the world after the U.S., China and Japan, is being watched carefully as consumption patterns and infrastructure are both shifting dramatically. Key to the outlook is the fact that the retail industry is forecast to grow from $795 billion in 2017 to $1.20 trillion by 2021 at a compound annual growth rate (CAGR) of more than 10 percent in the four-year period, and 13 percent growth to reach $1.75 trillion by 2026.
This also means changes across formats.
E-commerce is expected to increase rapidly in India, one of the fastest growing in Asia as well as globally, at a CAGR of more than 30 percent from 2016-2021 to reach $84 billion in 2021, more than three times the present $24 billion. Modern retail is expanding its footprint across India and is expected to reach 25 percent of total retail sales (from the present about 10 percent), said Rajat Wahi, partner at Deloitte, which compiled the report along with the Federation of Indian Chambers of Commerce and Industry (FICCI). The report was launched at Massmerize 2018, the annual retail, fast-moving consumer goods (FMCG) and e-commerce conference, organized by FICCI.
The Indian luxury market is also expected to witness healthy growth rates of over 20 percent for the next few years.
“Today’s Millennials are acutely aware of the brands and their purpose,” said Sanjiv Mehta, chairman and managing director of Hindustan Unilever Ltd., a subsidiary of consumer goods company Unilever. Mehta is also chair of the FICCI FMCG Committee.
The FICCI-Deloitte report noted that Millennials are the “first global generation of digital natives,” and first to witness and leverage the technology and the Internet for shopping. Being better connected to information and being the chief wage earners in the household, Millennials have significant spending power and greater access to products and services. This trend is expected to drive the consumer market in the country leading to disruption, especially in discretionary spending.
Other important points in terms of the evolving consumer included the fact that they have become “more unpredictable in terms of brand loyalty” and that there has been a growing shift in stance from “bricks versus clicks” to “bricks-and-clicks.”
Global retailers have also had some key learnings in the Indian market.
“The facts about changing demographics, increasing consumer spend, lifestyle changes are well-known. But the significant improvements in the next five years in terms of both physical and virtual infrastructure and a learning from the global markets will continue,” noted Krish Iyer, president and chief executive officer of Walmart India Pvt. Ltd. and chair of the FICCI Retail and Internal Trade Committee.
He said that although Walmart India has 22 cash-and-carry stores at this time, 50 more stores will be opened in the next four to five years. With the $16 billion investment in India’s largest e-commerce company, Flipkart, Walmart plans to grow its retail presence across several formats in India.
Consumption is on a growth curve as Indian GDP has maintained its momentum, with the International Monetary Fund estimating 7.4 percent growth in 2018. India is a $2.5 trillion dollar economy, the sixth largest in the world, poised to become the third largest by 2025.
“With the average age of the Indian people at 27 years, consumption will be one of the key drivers of the economy,” said Rashesh Shah, president of FICCI.