The Mixed Message From Consumer India

By Avinash Kumar Singh

Even though the world has just discovered it, the India growth story is not new. It has been going on for 25 years old

What is the India story?

India Story

1) Rising GDP growth

% average annual GDP growth

1900 1950 1950 1980 1980 2002 2002 2010

1.0 3.5 6.0 8.3

Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001), 20002010 Finance Ministry

India Story

2) Population growth is slowing

% average annual growth

1901 1950 1.0 1951 1980 2.2 1981 1990 2.1 1991 2000 1.8 2001 2010

1.5

Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)

India Story

3. Literacy is rising
1950 1990 2000 2010 % 17 52 65 80

Source: Census of India (2001)

India Story

4. Middle class is exploding

Million People

1980 2000 2010

8 22 32

65 220 368

India Story

5. Poverty is declining

1980 2000 2010 16%

46% 26%

1% of the people have been crossing poverty line each year for 20 years. Equals ~ 200 million.

India Story

6. Productivity is rising

30% to 40% of GDP growth is due to rising productivity

India Story

7. Per capita income gains

(US$ ppp) 1980 2000 1178 3051

Source: World Bank

India Story

8. India is now the economy

th 4

largest

And it will cross Japan between 2012 and 2014 to become the 3rd largest

THE INDIA MODEL IS UNIQUE

DRIVERS OF GROWTH

India
Domestic

East and S.E. Asia

Exports

DRIVERS OF GROWTH

India
Domestic Services

East and S.E. Asia

Exports Manufacturing

DRIVERS OF GROWTH

India
Domestic Services Consumption

East and S.E. Asia

Exports Manufacturing Investment

DRIVERS OF GROWTH

India

East and S.E. Asia

Domestic Exports Services Manufacturing Consumption Investment High tech, capital Low tech, labour intensive industry intensive industry

Reasons for Success

Indias success is market led whereas Chinas is state induced. The entrepreneur is at centre of the Indian model

Rise of globally competitive Indian companies:

Reliance, Jet Airways, Infosys, Wipro, Ranbaxy, Bharat Forge, Tata Motors, TCS, Bharati, ICICI and HDFC Banks

Public space is a problem

+ + -

Dynamic democracy Free, lively media and press Poor governance High subsidies High fiscal deficit No money for infrastructure

 The worlds economic centre of gravity is shifting-away from the established, wealthy economies of Europe, Japan, and North America and towards the Asia Pacific India is one of the fastest-growing large economies in the world. Over the last 15 years India has changed much faster than many predicted.

The Indian Consumer Is Rapidly Transforming

Paradigm Shift in almost all aspects of life

Outlook From Traditional to Modernized Traditional

 From Functional to Lifestyle

Expected Utility from Products/ Services

Eating habits
From traditional meals to Indianised McDonalds

 From Merely Price, to Benefit /Effort (Price Value +Time + Convenience)

Saving time is more important than saving a few Rupees - 51% Id rather have more time than money 47%

I like to shop, but do not have time - 47%

I shop closest to my home/office 59 %

Source : Consumer Outlook

Buying a TV set- Factors

Early nineties
One, availability; two, price; and, three, picture quality

Mid-nineties,
the efficacy of an exchange scheme and the number of channels a company offered

Today
sophistication -one of the fastest growing segments of the market is high-end flat TVs

 As Indians have grown richer, they have begun to spend more on vehicles, phones, and restaurants, according to recent research on consumption patters by Deutsche Bank.

Conclusion

THANK YOU

Complete utilisation of space in traditional outlets