Consumption in India is set to triple to USD 4 trillion by 2025 as rising affluence drives changes in consumer behaviour and spending patterns, says a study.
It pegs nominal year-on-year expenditure growth at 12 percent, more than double the anticipated global rate of 5 percent making India the third-largest consumer market by 2025.
As per a Boston Consulting Group (BCG) study, 'The New Indian: The Many Facets of a Changing Consumer', the country's unique pattern of urbanisation, in which emerging cities are the fastest growing, rising number of nuclear families and advent of digital media will play a key role in the growth.
The report highlighted that elite and affluent income segments will constitute 40 percent of all spending by 2025.
"For the first time, the wealthy will represent the largest consumption segment," it added.
Emerging cities (those with populations of less than 1 million) will be the fastest growing and will constitute one-third of total consumer spending by 2025.
As per the report, digital channels will influence 30-35 percent of all retail sales by 2025 and 8-10 percent of retail spending will be online.
Digitally influenced spending is currently about USD 45-50 billion a year, and that figure is projected to increase more than 10-fold to USD 500-550 billion and to account for 30-35 percent of all retail sales by 2025.
"As a result, omni-channel interaction is more and more important, but its significance varies by category. Consumers purchase pathways also are increasingly complicated," the report said.
"Another important trend is shifting family structures.
The extended Indian joint family has given way to nuclear households. The proportion of nuclear households, which has been on the rise during the past two decades, has reached 70 percent and is projected to increase to 74 percent by 2025.
"This ongoing shift is significant to marketers because nuclear families spend 20-30 percent more per capita than joint families," BCG said.
The BCG survey in India included 10,000 consumers in 30 locations nationwide and studied consumption in more than 50 categories.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
