As the country?s economy grows and population swells, the annual consumer spend is tipped to touch $3.6 trillion by 2020 from the current $990 billion, say industry experts. While categories like food and staples, children?s goods, personal care and wellness are likely to see maximum trading up, others like restaurants and fast food, apparel and fashion accessories, consumer durables and electronics will witness trading down in the next ten years, as urban consumers look to reduce their discretionary spends. A study titled Winning Indian Consumers in 2011 conducted by the Boston Consulting Group (BCG), indicates that the share of the consumer economy will be significantly higher in 2020, with an increase of 15-18% in the average spend of consumers. At present, the annual spends for the lower level, the mid-level and the premium consumer stand at $3,000, $6,200 and $12,500 respectively. They are poised to grow to $6,000, $15,000 and $32,000 respectively in the next decade.
While inflation will continue to remain at 6-7% or even higher, it is unlikely to impact consumption in a big way, especially in rural India.
Abheek Singhi, partner & director ? consumer goods & retail practice, BCG, said, ?Inflation is maximum in food and oil. Food inflation does not impact the lower segment consumer. Urban and mid-level consumers are the worst hit. They will cut down their discretionary spending on items like durables, electronics, apparel and jewellery. Consumption is not going to stop but it will reduce in these categories. Those firms will feel the pressure and will have to squeeze in their margins.?