The Great Indian Consumer
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- Pages: 65
The Great Indian Consumer
Contents • Indian Economy – A change in Guard • Indian consumer – Changing Demographics and Attitude • Consumer Share of Wallet • Indian Consumers of the Next Decade • Conclusions
Indian Economy: A change in Guard
Economy is Set To Boom: GDP Projections 1576 1436 1307
1800 • The Indian economy is expected to grow at more than 7% in 2003-04, a rate the economy has not clocked since the mid-1990s. • In the long term, India’s GDP is expected to triple by 20013-14 • Expected GDP growth for 2004-05 around 7% backed by: • Clear overall demand growth • Order books of companies better than before • Companies have a strong outlook
1500
• Rising rural demand – The recent budget announcements to give further boost • Upturn observed in investment cycle Source: Indian Economy Review, Confederation of Indian Industry, August 7, 2004 & BusinesworldIndia , Deutsche Bank
Demographic Trends
Demo There has been a net addition of 41 Million to the urban population in India between 1996 – 2001 and between 2001 – 2011 it is expected that there will be a net addition of 84 Million people to the urban population.
Particulars
Source: Study from Deutsche Bank
Huge Potential Growth of 100% to 500% Estimated Potential based on comparable benchmarks Particulars
Units
India 2007 Potential
Current Base
Growth(%)
Mobile Users
Mn
170
28
510%
Internet users
Mn
56
13
330%
Car sales
Mn/annum
1.5
0.6
150%
TV Owners
Mn
220
92
140%
Oil Consumption
Mn tonnes/annum
263
113
140%
Power Consumption
Mn MWH/annum
882
404
120%
Healthcare Exp.
US $bn/annum
46
23
100%
India’s potential in 2007 is derived by applying the 2002 comparable benchmarks to the corresponding demographic segment as projected in 2007 Source: DSP Merrill Lynch Investor Conference, February 9, 2004, Goa, India
Growth in Telecom and Technology Increasing at a Wider Pace
Penetration of P
PC Households ( Penetration of I TV Households ( Internet Users (in
Source: Pyramid Group, 2004
India’s Infocomm Opportunity by 2007
• Indian Infocomm market currently at US$14 bn - underserved in voice, data, computing and applications for consumer and enterprise • A population of over 1 bn individuals – teledensity to grow from 7% to 25% • Infocomm revenues to grow to $40bn by 2007 Source: DSP Merrill Lynch Investor Conference , 2004
Indian Consumer Changing Demographics and Attitude
India Is Young...
Lowest Median Age of 24 for its 1 Bn+ Population
Source: Population Division, DESA, United Nations
Largest “Young” Population
Source: Merrill Lynch : India Economics
Changing Demographics Driving Growth
• • • •
44% of population less than 19 years Estimated literacy rate for this segment is over 75% Working population (19 – 60 years of age) will increase from 485 mn to 615 mn by 2010 Educational base of 21 mn professionals and 90mn graduates / post graduates by 2010
Source: U.S. Bureau of the Census, IPC, International Database, & GOI, BIU, Statistics as per Feb 2004
People Are Getting Richer…
GDP & Disposable Incomes Are on the Rise
Population (mn)
• GDP Per head is expected to increase by 57% in 2008 over 2003 • Personal Disposable income is expected to almost double by 2008
GDP per head (US$ at m
Source: Executive Briefing: India, ECONOMIST INTELLIGENCE UNIT, 2004
A Demographic Transformation is Occurring
• Addition of 100mn to the Consuming Class during 1996-2002 • Reduction in Aspirants and Destitutes by about 225 mn in 10 years
Source: Indian Market Demographics Report 2002, NCAER
GDP Per Capita is Slated to Approximately Double by 2010
Source: Merrill Lynch : India Economics, I USD = Rs. 45
Consumer Sentiment and Confidence in the Economy is Highest in India
Source: AcNielsen Asia Pacific Consumer Confidence Survey, 1st Half 2004
The New Indian Consumer
Business Standard, 2004 India leads Asia-Pacific in consumer confidence. Indians also appear to display the highest degree of confidence in their economy than consumers in other Asia-Pacific countries.
Time Magazine, 2003 “…a new breed of consumer in India - young, increasingly wealthy and willing to spend on everything from mobile phones to speakers to French fries.”
The New Indian Consumer Confederation of Indian Industry, 2004 The internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, and are expected to immensely contribute to the growth of the retail sector in India.
The New Indian Consumer “…one of the most significant changes has been the transformation of households into dual- and even triple-income ones. With young people in new professions in the services and BPO industries, beginning to work at an early age, spending habits have changed. There has also been the Mr Arvind Singhal Chairman KSA Technopak
influence of media and travel on consumer spending habits, not to mention connectivity
and
communication.
Demographics
too
will
influence
consumer behavior. Half of the Indian population is below 20 years of age, youth marketing is in essence "mass marketing"…”
Overall Metamorphosis in Mindset
Enabled by an Explosion of Lifestyle Spending Options Availability of lifestyle spending options are increasing and inducing higher spends on “status acquisition”
Over 400 malls under construction across 60 cities; 70-80 million square feet Growth in multiplexes: Number of screens to grow by over 1000 in 2004
Converging Aspirations Converging aspirations: Differences in wants and desires of consumers in conventionally defined segments like metros vs. small towns, SEC’s diminishing.
Credit Friendly Indian
• Radical change in Indian consumer mindset: credit no more a feared entity • Personal Credit off take has increased from about US$ 11 bn in 2000 to about US$ 36 bn in 2003, giving an unprecedented boom to high ticket item purchases e.g. housing and automobiles • 12% people in urban SEC A/B are currently paying EMI’s for loans, of which40% have taken a home loan • “…there are 0.9 mn cardholders in the country who swiped almost US$ 3 bn worth last year. Of this, US$ 2 bn was spent on retail and only US$ 240 mn of this spending was through malls…” - V. Vaidyanathan, Managing Director (Retail Asset Product group), ICICI Bank. I USD = Rs. 45
Card Market in India Witnessing Robust Growth
Growing affluence levels and consumer sophistication, which are the usual developments accompanying a booming economy, are the main factors contributing to the robust growth of financial cards in India. The fact that the young generation is pro towards spending coupled with the perception that financial cards are a status symbol in India, serve as a contributing factor to the healthy performance of credit and debit card industry. Source : Business World – Oct 2004, Outlook Money Sept 2004
RETAIL: AN ENGINE FOR FUTURE ECONOMIC GROWTH
Retail Sector in India
Total Ret Source : KSA Technopak Feb 2004
Retail Chains are Showing Impressive Growth
Source : BusinessWorld, 14 June 2004, Source : BusinessWorld, 25 Oct 2004, Rs. 1 crore = US$ 0.2 mn
Capital Expenditures Becoming Revenue Expenditure
Consumer Share of Wallet
The Steep Upward Curve of Indian Consumer Spending
*Figures represent consumer spending on discretionary items
Conspicuous expenditure rising; spends on durables, home textiles risen. Consumer seeking value for grocery, personal grooming items and eating out.
Indian Consumer Spending Basket Expanding
The New Indian Consumer is on a Spending Spree 1. Consumer spending by Indians is up 16 per cent over last year, the GDP per capita is expected to double by 2010 and with the ever-increasing availability of lifestyle-spending options, more and more people are spending on what is known as `status' acquisition. 2. Ninety per cent of the 539 Indian consumers polled in the bi-annual study of 7,230 consumers said they would spend their disposable incomes on non-essentials. 3. Overall, Indian consumers display a proclivity to spend that is greater than the regional average. 4. A KSA Technopak study found that among the product categories that registered significant growth last year, mobile phones topped the list since their sales almost doubled, followed by consumer durables at 53 per cent. This was followed by books and music (32 per cent), movies and theatres (38 per cent) and home textiles at 29 per cent.
Advertising and Commerce Revenues
Advertising
Total Advertisin Print
With consumer incomes and willingness to spend on the rise, more and more advertisers are spending on different types of media. Online (Internet) ad spends show the highest growth over the eight year period (2000 – 2008). Mobile revenues are expected to grow the fastest among both advertising and commerce revenues, highlighting that more and more consumers are expected to spend online or through the mobile. Source: Pyramid Group, 2004
Emergence of the Two Faced Customer
Emergence of the Two Faced Customer A quick review of Indian urban consumer shopping basket reveals
Emergence of the Two Faced Customer
Overall consumers spending power is increasing
Value is more
Indian Consumers of the Next Decade
Indian Consumers of the Next Decade 8 to 19 years “Technologies’
20 to 25 years
26 to 50 years
“Impatient aspirers”
“Balance seekers”
Babies”
32 million Source: KSA
16 million Universe = Urban, SEC A/B/C
41 million
Technologies’ Babies •
India’s urban tweens and teens are growing up midst a growing economy surrounded by feel good factors.
•
Born to be wired and tech savvy.
•
Knowledge seekers.
•
Growing up with the Indian value system but high degree of western influence as well.
•
Desire to set themselves apart from the other age segments
What are They Spending On?
TEENS (15-19 YEARS)
Wired Generation
Influence on Household Purchases •
In India, there is a high degree of influence of the tweens and teens on household purchases and brand choices, as seen globally
•
48% of parents agree that their children play a major role in decisions about household purchases and what brands to buy.
•
The guilt factor of urban upper and middle class “time pressed” parents leading to increasing ‘pester power’ influence of tweens and teens on household purchases
•
Implications for marketers – cannot afford to exclude targeting kids in marketing plan.
Teen Attitude
% indicates people agreeing
Targeting the Young…
Targeting the Young…
Impatient Aspirers
New Economy; New Avenues of Income
What are they Spending On?
Young Adult Attitude
Balance Seekers
What are they Spending on ?
Mature Adult Attitude
Targeting Mature Adults
Indian consumers of the future…
It’s Not All About Money ITEMS: The 5 Consumer Currencies
Back to Basics
Consumers Shall Look For Solutions • Consumers shall look for solutions and not merely problems • Solutions which can add value in terms of – – – –
Saving Time Enriching Quality of Life Enhancing Productivity Lifestyle Aspirations
Conclusion Indian Economy – A change in Guard •
The Indian economy is expected to grow at more than 7% in 2003-04, a rate the economy has not clocked since the mid1990s.
•
In the long term, India’s GDP is expected to triple by 20013-14
Demographic Trends •
There has been a net addition of 41 Million to the urban population in India between 1996 – 2001 and between 2001 – 2011 it is expected that there will be a net addition of 84 Million people to the urban population.
Indian consumer – Changing demographics and attitude •
Lowest Median Age of 24 for its 1 Bn+ Population
•
Largest “Young” Population of approximately 250 million people. 44% of population less than 19 years
Rising Incomes •
GDP Per head is expected to increase by 57% in 2008 over 2003
•
Personal Disposable income is expected to almost double by 2008
•
GDP Per Capita is Slated to Approximately Double by 2010
•
Among Asia-Pacific countries Consumer Sentiment and Confidence in the Economy is Highest in India
•
Personal Credit off take has increased from about US$ 11 bn in 2000 to about US$ 36 bn in 2003, giving an unprecedented boom to high ticket item purchases e.g. housing and automobiles
Conclusion Consumer Share of wallet •
Conspicuous expenditure rising; spends on durables, home textiles risen. Consumer seeking value for grocery, personal grooming items and eating out.
•
Consumer spending by Indians is up 16 per cent over last year, the GDP per capita is expected to double by 2010 and with the ever-increasing availability of lifestyle-spending options, more and more people are spending on what is known as `status' acquisition.
•
Overall, Indian consumers display a proclivity to spend that is greater than the regional average.
Indian Consumers of the Next Decade Three Types •
8 to 19 years: “Technologies’ Babies”
•
20 to 25 years: “Impatient aspirers”
•
26 to 50 years: “Balance seekers”
•
Overall consumer spending of the above up on Mobile phones, Housing, Automobiles, Durables & Education
•
And spending less on Grocery, Personal care, Eating Out
Contents • Indian Economy – A change in Guard • Indian consumer – Changing Demographics and Attitude • Consumer Share of Wallet • Indian Consumers of the Next Decade • Conclusions
Indian Economy: A change in Guard
Economy is Set To Boom: GDP Projections 1576 1436 1307
1800 • The Indian economy is expected to grow at more than 7% in 2003-04, a rate the economy has not clocked since the mid-1990s. • In the long term, India’s GDP is expected to triple by 20013-14 • Expected GDP growth for 2004-05 around 7% backed by: • Clear overall demand growth • Order books of companies better than before • Companies have a strong outlook
1500
• Rising rural demand – The recent budget announcements to give further boost • Upturn observed in investment cycle Source: Indian Economy Review, Confederation of Indian Industry, August 7, 2004 & BusinesworldIndia , Deutsche Bank
Demographic Trends
Demo There has been a net addition of 41 Million to the urban population in India between 1996 – 2001 and between 2001 – 2011 it is expected that there will be a net addition of 84 Million people to the urban population.
Particulars
Source: Study from Deutsche Bank
Huge Potential Growth of 100% to 500% Estimated Potential based on comparable benchmarks Particulars
Units
India 2007 Potential
Current Base
Growth(%)
Mobile Users
Mn
170
28
510%
Internet users
Mn
56
13
330%
Car sales
Mn/annum
1.5
0.6
150%
TV Owners
Mn
220
92
140%
Oil Consumption
Mn tonnes/annum
263
113
140%
Power Consumption
Mn MWH/annum
882
404
120%
Healthcare Exp.
US $bn/annum
46
23
100%
India’s potential in 2007 is derived by applying the 2002 comparable benchmarks to the corresponding demographic segment as projected in 2007 Source: DSP Merrill Lynch Investor Conference, February 9, 2004, Goa, India
Growth in Telecom and Technology Increasing at a Wider Pace
Penetration of P
PC Households ( Penetration of I TV Households ( Internet Users (in
Source: Pyramid Group, 2004
India’s Infocomm Opportunity by 2007
• Indian Infocomm market currently at US$14 bn - underserved in voice, data, computing and applications for consumer and enterprise • A population of over 1 bn individuals – teledensity to grow from 7% to 25% • Infocomm revenues to grow to $40bn by 2007 Source: DSP Merrill Lynch Investor Conference , 2004
Indian Consumer Changing Demographics and Attitude
India Is Young...
Lowest Median Age of 24 for its 1 Bn+ Population
Source: Population Division, DESA, United Nations
Largest “Young” Population
Source: Merrill Lynch : India Economics
Changing Demographics Driving Growth
• • • •
44% of population less than 19 years Estimated literacy rate for this segment is over 75% Working population (19 – 60 years of age) will increase from 485 mn to 615 mn by 2010 Educational base of 21 mn professionals and 90mn graduates / post graduates by 2010
Source: U.S. Bureau of the Census, IPC, International Database, & GOI, BIU, Statistics as per Feb 2004
People Are Getting Richer…
GDP & Disposable Incomes Are on the Rise
Population (mn)
• GDP Per head is expected to increase by 57% in 2008 over 2003 • Personal Disposable income is expected to almost double by 2008
GDP per head (US$ at m
Source: Executive Briefing: India, ECONOMIST INTELLIGENCE UNIT, 2004
A Demographic Transformation is Occurring
• Addition of 100mn to the Consuming Class during 1996-2002 • Reduction in Aspirants and Destitutes by about 225 mn in 10 years
Source: Indian Market Demographics Report 2002, NCAER
GDP Per Capita is Slated to Approximately Double by 2010
Source: Merrill Lynch : India Economics, I USD = Rs. 45
Consumer Sentiment and Confidence in the Economy is Highest in India
Source: AcNielsen Asia Pacific Consumer Confidence Survey, 1st Half 2004
The New Indian Consumer
Business Standard, 2004 India leads Asia-Pacific in consumer confidence. Indians also appear to display the highest degree of confidence in their economy than consumers in other Asia-Pacific countries.
Time Magazine, 2003 “…a new breed of consumer in India - young, increasingly wealthy and willing to spend on everything from mobile phones to speakers to French fries.”
The New Indian Consumer Confederation of Indian Industry, 2004 The internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, and are expected to immensely contribute to the growth of the retail sector in India.
The New Indian Consumer “…one of the most significant changes has been the transformation of households into dual- and even triple-income ones. With young people in new professions in the services and BPO industries, beginning to work at an early age, spending habits have changed. There has also been the Mr Arvind Singhal Chairman KSA Technopak
influence of media and travel on consumer spending habits, not to mention connectivity
and
communication.
Demographics
too
will
influence
consumer behavior. Half of the Indian population is below 20 years of age, youth marketing is in essence "mass marketing"…”
Overall Metamorphosis in Mindset
Enabled by an Explosion of Lifestyle Spending Options Availability of lifestyle spending options are increasing and inducing higher spends on “status acquisition”
Over 400 malls under construction across 60 cities; 70-80 million square feet Growth in multiplexes: Number of screens to grow by over 1000 in 2004
Converging Aspirations Converging aspirations: Differences in wants and desires of consumers in conventionally defined segments like metros vs. small towns, SEC’s diminishing.
Credit Friendly Indian
• Radical change in Indian consumer mindset: credit no more a feared entity • Personal Credit off take has increased from about US$ 11 bn in 2000 to about US$ 36 bn in 2003, giving an unprecedented boom to high ticket item purchases e.g. housing and automobiles • 12% people in urban SEC A/B are currently paying EMI’s for loans, of which40% have taken a home loan • “…there are 0.9 mn cardholders in the country who swiped almost US$ 3 bn worth last year. Of this, US$ 2 bn was spent on retail and only US$ 240 mn of this spending was through malls…” - V. Vaidyanathan, Managing Director (Retail Asset Product group), ICICI Bank. I USD = Rs. 45
Card Market in India Witnessing Robust Growth
Growing affluence levels and consumer sophistication, which are the usual developments accompanying a booming economy, are the main factors contributing to the robust growth of financial cards in India. The fact that the young generation is pro towards spending coupled with the perception that financial cards are a status symbol in India, serve as a contributing factor to the healthy performance of credit and debit card industry. Source : Business World – Oct 2004, Outlook Money Sept 2004
RETAIL: AN ENGINE FOR FUTURE ECONOMIC GROWTH
Retail Sector in India
Total Ret Source : KSA Technopak Feb 2004
Retail Chains are Showing Impressive Growth
Source : BusinessWorld, 14 June 2004, Source : BusinessWorld, 25 Oct 2004, Rs. 1 crore = US$ 0.2 mn
Capital Expenditures Becoming Revenue Expenditure
Consumer Share of Wallet
The Steep Upward Curve of Indian Consumer Spending
*Figures represent consumer spending on discretionary items
Conspicuous expenditure rising; spends on durables, home textiles risen. Consumer seeking value for grocery, personal grooming items and eating out.
Indian Consumer Spending Basket Expanding
The New Indian Consumer is on a Spending Spree 1. Consumer spending by Indians is up 16 per cent over last year, the GDP per capita is expected to double by 2010 and with the ever-increasing availability of lifestyle-spending options, more and more people are spending on what is known as `status' acquisition. 2. Ninety per cent of the 539 Indian consumers polled in the bi-annual study of 7,230 consumers said they would spend their disposable incomes on non-essentials. 3. Overall, Indian consumers display a proclivity to spend that is greater than the regional average. 4. A KSA Technopak study found that among the product categories that registered significant growth last year, mobile phones topped the list since their sales almost doubled, followed by consumer durables at 53 per cent. This was followed by books and music (32 per cent), movies and theatres (38 per cent) and home textiles at 29 per cent.
Advertising and Commerce Revenues
Advertising
Total Advertisin Print
With consumer incomes and willingness to spend on the rise, more and more advertisers are spending on different types of media. Online (Internet) ad spends show the highest growth over the eight year period (2000 – 2008). Mobile revenues are expected to grow the fastest among both advertising and commerce revenues, highlighting that more and more consumers are expected to spend online or through the mobile. Source: Pyramid Group, 2004
Emergence of the Two Faced Customer
Emergence of the Two Faced Customer A quick review of Indian urban consumer shopping basket reveals
Emergence of the Two Faced Customer
Overall consumers spending power is increasing
Value is more
Indian Consumers of the Next Decade
Indian Consumers of the Next Decade 8 to 19 years “Technologies’
20 to 25 years
26 to 50 years
“Impatient aspirers”
“Balance seekers”
Babies”
32 million Source: KSA
16 million Universe = Urban, SEC A/B/C
41 million
Technologies’ Babies •
India’s urban tweens and teens are growing up midst a growing economy surrounded by feel good factors.
•
Born to be wired and tech savvy.
•
Knowledge seekers.
•
Growing up with the Indian value system but high degree of western influence as well.
•
Desire to set themselves apart from the other age segments
What are They Spending On?
TEENS (15-19 YEARS)
Wired Generation
Influence on Household Purchases •
In India, there is a high degree of influence of the tweens and teens on household purchases and brand choices, as seen globally
•
48% of parents agree that their children play a major role in decisions about household purchases and what brands to buy.
•
The guilt factor of urban upper and middle class “time pressed” parents leading to increasing ‘pester power’ influence of tweens and teens on household purchases
•
Implications for marketers – cannot afford to exclude targeting kids in marketing plan.
Teen Attitude
% indicates people agreeing
Targeting the Young…
Targeting the Young…
Impatient Aspirers
New Economy; New Avenues of Income
What are they Spending On?
Young Adult Attitude
Balance Seekers
What are they Spending on ?
Mature Adult Attitude
Targeting Mature Adults
Indian consumers of the future…
It’s Not All About Money ITEMS: The 5 Consumer Currencies
Back to Basics
Consumers Shall Look For Solutions • Consumers shall look for solutions and not merely problems • Solutions which can add value in terms of – – – –
Saving Time Enriching Quality of Life Enhancing Productivity Lifestyle Aspirations
Conclusion Indian Economy – A change in Guard •
The Indian economy is expected to grow at more than 7% in 2003-04, a rate the economy has not clocked since the mid1990s.
•
In the long term, India’s GDP is expected to triple by 20013-14
Demographic Trends •
There has been a net addition of 41 Million to the urban population in India between 1996 – 2001 and between 2001 – 2011 it is expected that there will be a net addition of 84 Million people to the urban population.
Indian consumer – Changing demographics and attitude •
Lowest Median Age of 24 for its 1 Bn+ Population
•
Largest “Young” Population of approximately 250 million people. 44% of population less than 19 years
Rising Incomes •
GDP Per head is expected to increase by 57% in 2008 over 2003
•
Personal Disposable income is expected to almost double by 2008
•
GDP Per Capita is Slated to Approximately Double by 2010
•
Among Asia-Pacific countries Consumer Sentiment and Confidence in the Economy is Highest in India
•
Personal Credit off take has increased from about US$ 11 bn in 2000 to about US$ 36 bn in 2003, giving an unprecedented boom to high ticket item purchases e.g. housing and automobiles
Conclusion Consumer Share of wallet •
Conspicuous expenditure rising; spends on durables, home textiles risen. Consumer seeking value for grocery, personal grooming items and eating out.
•
Consumer spending by Indians is up 16 per cent over last year, the GDP per capita is expected to double by 2010 and with the ever-increasing availability of lifestyle-spending options, more and more people are spending on what is known as `status' acquisition.
•
Overall, Indian consumers display a proclivity to spend that is greater than the regional average.
Indian Consumers of the Next Decade Three Types •
8 to 19 years: “Technologies’ Babies”
•
20 to 25 years: “Impatient aspirers”
•
26 to 50 years: “Balance seekers”
•
Overall consumer spending of the above up on Mobile phones, Housing, Automobiles, Durables & Education
•
And spending less on Grocery, Personal care, Eating Out
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