A nation that has a rich history of more than 5,500 years, since the beginning of the Indus Valley civilisation, has obviously been through several extraordinary years, decades, and centuries. Yet perhaps how India manages the coming decade will probably give an indication of how the nation could fare in the rest of the 21st century. Indeed, the last 10 years give little indication of how the next 10 will play out, simply because a number of changes, some not connected directly, are all likely to converge during this coming decade to create many tipping points, whether they relate to socio-economic and political landscape or to consumer behaviour and private consumption.
From private consumption perspective, India has been seeing a sustained expansion of a number of categories across which Indian consumers, all but those at the fringes of poverty line and those with incomes just allowing consumption on basic necessities, are allocating their disposable spending. From 9 categories that accounted for 80% of private consumption in 1991, there are now 22, and in the coming decade some more will be added. Indeed, if the economy continues to grow at about 8% for each of the next 10 years, then at today?s prices and exchange rates, the discretionary private consumption shall cross $1.2 tn by 2020 of the total private consumption projected at about $1.7 tn by then.
With this remarkable addition of more than $700 bn (at today?s prices) in consumers? hands by 2020 compared to what they had in 2010, India will see a noticeable increase in the depth of spending within each category of spending. This is already visible in categories such as automobiles, consumer electronics, clothing & footwear, travel & leisure and even education, where there are enough consumers at all price points from deep value to ultra-premium and luxury?with strong growth across all segments.
Further, while there will be a very remarkable increase in consumer incomes across almost the entire spectrum of the population, for those in the top 50 mn households of the 250 mn expected in 2020, their spending will dramatically shift towards spending on lifestyle and aspirational categories, which include housing & home decor, health & wellbeing, travel & leisure, education & coaching, including those related to hobbies, grooming, eating out and other forms of entertainment and recreation. Hence, the next decade shall see an unprecedented boom in start-up/growth of lifestyle-focused goods and services.
Very interestingly, most of this new lifestyle consumption consumes not only financial resources but also another strictly finite resource??time?. Indian consumers, again across all socio-economic strata but the very rich or the very poor, will be the time-poorest ever. This time poverty will be further accentuated on account of a large quantum of women (especially in urban India) entering a career-oriented workforce (different from sheer manual labour-oriented workforce), be it in BPOs, retail, healthcare, grooming, or dozens of other vocations across dozens of industries. Hence, saving time will perhaps have the same priority for most as saving money.
This will transform the consumption and consumption-channel landscape beyond recognition. The Gayatri mantra of success for those engaged in consumer goods and services industries would be ?convenience?. Whatever/whoever can save time for the consumer relating to product information, purchase decision, product or service acquisition, transaction and utilisation will be the preferred product and the preferred supplier.
Coupled with generational changes, technological and telecommunication enablers, increasing traffic congestion across most major urban centres, and increasing paucity of land for traditional (brick & mortar) retail per se, the next decade shall see an unprecedented compacting of the value chain from the producer/delivery provider of most consumer goods and services to the end- consumer, with even a question mark coming up over the very raison d??tre for conventional retail as we are used to seeing it today. Instead, India should see the emergence of some very strong new business models where most producers may directly compete for getting the attention and the business of their consumers rather than going through intermediaries such as retailers or be an aggregator of different types of goods and services across multiple consumption categories with a levy of a transaction charge for their facilitation, rather than the conventional retail mark-ups that are taken for granted today.
Like all other epochal eras of the past, the next one?the coming decade?will ruthlessly displace those who are mere spectators of these changes, and will throw up new winners who will either enthusiastically straddle these changes or even better, force the pace of some of these changes!
?The author is chairman of Technopak Advisors Pvt Ltd
