The online retail market will see over 30 percent growth per annum till 2021, driven by the millennials, said a report.
Since 2010, the share of online retail in total retail market has grown at a rapid pace to reach 3 percent in 2015, Deloitte noted in a report.
“It is further expected to grow at a compounded rate of above 30 percent from 2016 to 2021, driven by the shift of millennials and younger population from traditional retail to online channels,” it said.
India is home to the largest population of 18-35- year-olds globally and at over 440 million, they account for 34 percent of the national population.
These youngsters being better educated, better connected and also chief wage earners accounting for nearly 71 percent of household income, are driving consumption, the report said.
“Millennials’ increasing usage of the Internet for shopping has driven online retail growth in emerging countries much faster relative to the developed ones,” it said.
The report, however, feels that growth in digitization doesn’t necessarily convert into the growth of e-retail in its entirety as the Internet is also used as a means to make product searches, compare prices, brands and other products to facilitate the purchases at a physical store.
The report noted that millennials spend most of their money on monthly essentials, followed by education and spending on utilities. Any incremental income is spent towards eating out and entertainment (32.7 percent), apparel and accessories (21.4 percent) and electronics (11.2 percent).
Savings account for about 10 percent of the overall incremental income of the millennials, highlighting a shift towards consumption economy, from a savings economy which was a predominant feature of the preceding demographic cohort, born between mid-1960s and the early-1980s, the report said.
Interestingly,it also said with the rapid growth of millennials as a major consumer segment, the perception of product value and premiumisation has also altered.
“Consumers no longer consider a product premium based on just a high price tag. Globally, less than one-third, or about 31 percent of the consumers consider a product premium only because it is expensive, pointing to a clear demand for value-for-money emerging amongst the younger consumers,” the report noted.