With the nominal year-over-year (y-o-y) expenditure growth at 12 per cent and with consumption set to triple to $4 trillion, India will be the third largest consumer market by 2025, a report said on Tuesday.
“Consumption in India is set to triple to $4 trillion by 2025 as rising affluence drives changes in consumer behaviours and spending patterns that have big implications for companies,” said the report, released by the Boston Consulting Group’s (BCG) Centre for Customer Insight (CCI).
“Nominal year-over-year expenditure growth of 12 per cent is more than double the anticipated global rate of five per cent and will make India the third-largest consumer market by 2025.”
According to the report, titled “The New Indian: The Many Facets of a Changing Consumer”, among the factors that will shape consumption is the country’s unique pattern of urbanisation, in which emerging cities are the fastest growing.
“About 40 per cent of India’s population will be living in urban areas by 2025, and city dwellers will account for more than 60 per cent of consumption,” the report said.
“Expenditures in these cities are already rising by nearly 14 per cent a year, while consumer spending in India’s biggest cities is increasing at about 12 per cent a year,” it added.
The report noted that another important trend is shifting family structures to nuclear households, the proportion of which has been on the rise during the past two decades, reaching 70 per cent and projected to increase to 74 per cent by 2025.
“This ongoing shift is significant to marketers because nuclear families spend 20 per cent to 30 per cent more per capita than joint families,” it added.
The report pointed out that digital influence on broader consumer spending is significant and growing rapidly.
“Digitally influenced spending is currently about $45 billion to $50 billion a year, and that figure is projected to increase more than tenfold to $500 billion to $550 billion-and to account for 30 per cent to 35 per cent of all retail sales-by 2025,” the report said.
The BCG CCI’s most recent consumer survey in India included 10,000 consumers in 30 locations nationwide and studied consumption in more than 50 categories.