Consumer Lifestyles in India

CONSUMER LIFESTYLES IN INDIA

Euromonitor International

June 2015

C O N S U M E R L I F E S T Y L E S I N I N D I A P a s s p o r t I

E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Lifestyles in India .......................................................................................................................... 1

Chart 1 Datagraphic in India ..................................................................................... 1

Top Five Consumer Trends .......................................................................................................... 1

the Gym Generation ................................................................................................................. 1 Consumer Segmentation .............................................................................................................. 4

Babies and Infants .................................................................................................................... 4

Chart 2 Babies and Infants in Focus 2000-2020 ....................................................... 5

Kids ........................................................................................................................................... 6

Chart 3 Kids in Focus 2000-2020 ............................................................................. 7

Tweenagers .............................................................................................................................. 7

Chart 4 Tweens in Focus 2000-2020 ........................................................................ 8

Teens ........................................................................................................................................ 9

Chart 5 Teens in Focus 2000-2020 ......................................................................... 10

Young Adults .......................................................................................................................... 10

Chart 6 Young Adults in Focus 2000-2020 ............................................................. 12

Middle Youth ........................................................................................................................... 12

Chart 7 Middle Youth in Focus 2000-2020 .............................................................. 13

Mid-lifers ................................................................................................................................. 14

Chart 8 Mid-Lifers in Focus 2000-2020 ................................................................... 15

Late-lifers ................................................................................................................................ 15

Chart 9 Late-Lifers in Focus 2000-2020 .................................................................. 16

Housing and Households ........................................................................................................... 17

Home Ownership .................................................................................................................... 17

Chart 10 Home Ownership 2000-2020 ..................................................................... 18

Household Profiles.................................................................................................................. 18

Chart 11 Household Profiles 2000-2020 ................................................................... 19

Running Costs ........................................................................................................................ 19

Chart 12 Household Running Costs 2000-2020........................................................ 20

Money and Savings .................................................................................................................... 21

Attitudes Toward Payment Methods ....................................................................................... 21 Savings ................................................................................................................................... 22 Loans and Mortgages ............................................................................................................. 22

Chart 13 Borrowing and Saving 2000-2019 .............................................................. 23

Eating and Drinking .................................................................................................................... 24

Eating Habits .......................................................................................................................... 24

Chart 14 Food Expenditure Profile 2000-2020 .......................................................... 25

Drinking Habits ....................................................................................................................... 26

Chart 15 Drinks Expenditure Profile 2000-2020 ........................................................ 27

Grooming and Fashion ............................................................................................................... 28

C O N S U M E R L I F E S T Y L E S I N I N D I A P a s s p o r t I I


Female Grooming and Fashion Trends .................................................................................. 28 Male Grooming and Fashion Trends ...................................................................................... 29

Chart 16 Grooming and Fashion Expenditure 2000-2020 ......................................... 30

Health and Wellness .................................................................................................................. 30

Attitudes To Health and Well-being ........................................................................................ 30

Chart 17 Health of the Nation 2000-2020 ................................................................. 32

Shopping Habits ......................................................................................................................... 32

Main Household Shop ............................................................................................................ 32 Shopping for Big-ticket Items and Personal Goods ................................................................ 33

Chart 18 Where Households Shop for Essentials 2000-2019 ................................... 34

Leisure and Recreation .............................................................................................................. 35

Leisure Time ........................................................................................................................... 35 Vacations ................................................................................................................................ 36 Public Holidays, Celebrations and Gift-giving ......................................................................... 37

Chart 19 Possession of Selected Home-Tech and Mobile Phones 2000-2020 ......... 38

Getting Around ........................................................................................................................... 38

Private Transport .................................................................................................................... 39

Chart 20 Getting Around on Private Transport 2000-2020 ........................................ 39

Public Transport...................................................................................................................... 39 Commuting ............................................................................................................................. 40

Chart 21 Getting Around on Public Transport 2000-2020 ......................................... 41

C O N S U M E R L I F E S T Y L E S I N I N D I A P a s s p o r t 1


CONSUMER LIFESTYLES IN INDIA

LIFESTYLES IN INDIA

Chart 1 Datagraphic in India

Source: Euromonitor International

TOP FIVE CONSUMER TRENDS

the Gym Generation

According to the CEO of Fitness First Group, A new generation of Indian consumers is

waking up to the benefits of fitness and well-being. A fitness trainer adds, A lot of people are

getting more health conscious. Socially, everyone wants to look good. A combination of rising

disposable incomes, growing social image consciousness and awareness of diseases such as

obesity and diabetes has led to a huge fitness craze in India, which can clearly be seen in the

proliferation of gyms across the country, in both rural and urban India. Many gyms and studios,

catering to different levels of fitness, budgets and glamorous tastes, have opened in the past



few years. In fact, in an article in November 2014, The Financial Times dubbed the current

generation Indias Gym Generation. This growth is reflected in the numbers: according to a

report released by the Federation of Indian Chambers of Commerce and Industry (FICCI), the

Indian fitness and slimming industry is expected to increase from INR60 billion in 2012 to at

least INR100 billion in 2015.

The Indian film industry is also believed to have played a part in driving this trend. A

writer/actor comments, Bollywood should be thanked for the way India is starting to view

fitness. I remember growing up in Delhi in the 1990s and rarely seeing gyms. Movie stars

tended to be rather plump. She adds that currently, Bollywood seems to be un-attracted to the

anorexic look so the focus does seem to be shifting more towards a healthy lifestyle than simply

thinness. As a result, a large number of fashion-conscious young consumers have been drawn

to fitness after being inspired by looking at the well-toned bodies of celebrities and sports stars.

Going to gyms also provides an outlet for youngsters to show off branded clothes and high-end

footwear and other accessories.

Fitness activities among Indian consumers are not restricted to gyms. People are also

involved in outdoor running, biking, and hiking groups. Activities like Cross-fit and Zumba have

become popular, along with kick-boxing, spinning, aerobics, Pilates and mixed martial arts

(MMA) classes. Additionally, Indias first fitness station was launched on the Worli Promenade in

Mumbai in 2013.

According to the director of Golds Gym India, The fitness oriented customer is mostly in the

age group of 20-40 years right from their college days to their professional days mainly to look

good. He adds, Earlier it was predominantly dominated by the male population. Today we see

45% of the members being female. Education and access to the Internet has changed the views

of women to take up gymming.

Indian consumers bitten by the travel bug

According to a 2013 Economic Times article, Indians have emerged as the fastest growing

outbound consumer segment in the world. The number of Indians travelling abroad is expected

to rise from nearly 17 million in 2013 to 50 million by 2020 second only to China in terms of

absolute numbers. This growth is reflected in consumer spending figures: per capita consumer

expenditure on outbound tourism increased by 14% over 2012 to 2014 to reach INR626.

Higher disposable incomes and the increasing presence of budget airlines have driven

consumers towards cheap international trips. Countries such as Thailand, Malaysia, Vietnam

and other Southeast Asian nations are popular destinations among consumers mainly owing

to their affordability, geographical proximity and limited visa entry requirements. In fact,

travelling to these countries can work out to be cheaper than travelling to domestic tourist

destinations in India such as Goa and Kerala. At the same time, some consumers are willing to

spend extra on unique travel experiences, such as adventure trips, sporting events, culinary

tourism and volunteerism. As the founder-director of Stark Tourism Associates points out, The

Indian traveler is increasingly seeking immersive holidays in exotic destinations that will help

him tell new stories of people, cultures and food.

Growing openness and exposure to the outside world has also stimulated this trend,

especially among the younger generation. Another reason behind the increase in foreign travel

is the large number of Indians living in different parts of the world for work and study. According

to the Economic Times article, 43% of leisure travellers from India cite visiting friends and

relatives as the main reason for overseas travel.

Travelling is expected to become even more popular and according to a consumer survey

carried out by TripAdvisor in 2015, More than half (53%) of Indians will increase their travel

budget in 2015. Of those planning to increase their travel spend, 52% indicate that they plan to

do so because they feel vacations are something they or their family deserve and 46% say it is



because they are going somewhere on their wish list this year. Destinations on the wish list

include countries like Australia, France, Switzerland and New Zealand. The survey further states

that the average number of international trips for Indian consumers is set to increase by a

massive 45%, in comparison to the global average of 15%.

Indian consumers take to internet shopping

Internet retailing has really taken off in India and changed the way Indians approach

shopping. According to the secretary general of the Associated Chambers of Commerce of India

(ASSOCHAM), Customer behaviour is changing dramatically. People are not only using the

Web to book air tickets and movie tickets but also do not hesitate in placing orders for mobiles,

laptops and other consumer electronics and home appliances. He adds, The challenges of

worsening automotive traffic, rising fuel prices and the increased difficulty of time management

in modern families have made going to the mall a planned activity which nobody has as much

time for anymore.

The big change happened in October 2014, when the big three e-commerce retailers Flipkart,

Snapdeal and Amazon offered huge pre-Diwali discounts in an effort to win customers. In fact,

nearly 1.5 million consumers bought goods worth over INR6 billion from Flipkart on the Big

Billion Day sale on October 6. According to a report released by ASSOCHAM, 40 million

consumers made an online purchase in 2014 a number that is expected to rise to 65 million in

2015. This was despite the fact that internet coverage in India is still quite low only 12.9% of

households had access to internet enabled computers that year. In terms of expenditure, per

household spending on internet retailing increased from INR953 in 2013 to INR1,591 in 2014

a jump of 67%. This is expected to almost quadruple to INR5,405 by 2019.

The ASSOCHAM survey further states that shopping via tablets and smartphones increased

by 15% in 2014 and accounted for roughly 20%-25% of overall consumer purchases. Around

76% of respondents stated, It is much easier from the comfort of your own desk or even from

your smartphone or tablet to type out a search phrase and click buy than have to undergo a

mall excursion. More than 50% of online sales happen during lunch time and office closing

hours on Tuesday, Wednesday and Thursday. According to the survey, People are done with

the day's work and use the last hour to browse and buy from shopping sites, while on

weekends, sales in retail outlets are higher.

Some 35% of regular shoppers are in the 18-25 age group, 55% in the young professional

age group of 26-35, 8% between 36 and 45, and 2% in the 45-60 cohort, while the split between

male and female shoppers is 65-35.

Growing image consciousness among men

Men in India have become more image conscious and have begun to invest more time and

money to look well-groomed. The executive director of Baccarose Perfumes and Beauty

Products Pvt. Ltd, says, Men in India really spend time and money for grooming. They are also

brand conscious and spend money on the latest launches as they are well versed with the

trends due to the Internet and their travel overseas. Additionally, as the marketing head of

beauty care at Dabur India says, Today men believe that not just social acceptance but also

career success is linked to how a person presents himself to the external world.

There was a time when mens grooming products were pretty much restricted to after-shave

balms or a spot of moisturizer. This is no longer the case. Indian men are investing in cosmetic

enhancements, as well as products such as specialised skin creams, shampoos and bleaches.

Beauty salons and parlours have also seen a big spike in the number of male customers. The

interest in grooming products is also reflected in spending figures. Per capita expenditure on

male grooming products almost doubled over a decade, from INR24.1 in 2005 to INR42.4 in



2014. The growth is expected to intensify, with per capita spending forecast to increase to

INR64.1 by 2019.

Instead of using womens grooming products, male consumers are beginning to demand

products specifically designed for them. As a result companies have launched products such as

beer shampoos, whitening creams and face wash designed exclusively for men. Men are even

beginning to outspend women in certain categories such as colognes and deodorants. One 20-

something noticed on a recent weekend trip that the men in the group carried more grooming

products, such as shampoos, hair gels, body wash and deodorants, and that it was the women

who were borrowing these products from their male friends. The managing director of Indian

retail chain Shoppers Stop confirms this trend: 50% of the chains overall consumers are men,

while for categories such as colognes, it is over 60%.

Changing face of the rural consumer

According to the group product manager at Parle Products Pvt. Ltd, There is no difference

between the urban and the rural consumer. Consumers in rural India are beginning to match

their urban counterparts: they have become more aspirational and are looking to purchase

branded, high-quality products. They are also less willing to accept inferior products simply

because they cost less. The manager adds that increased media and telecom penetration in

rural areas has played a huge role in changing the way rural consumers shop. Additionally,

migrants with jobs in urban areas are sending a lot more money back home, leading to greater

discretionary incomes for rural family members. The rural economy has also shifted, with better

paying non-farm work on the rise, again contributing to higher disposable incomes in rural

areas.

With the growth in smartphone and internet penetration in small towns, online shopping has

also seen a boost. According to an April 2015 Economic Times article, Small towns are the new

big market for e-classified portals like Quikr, OLX. The CEO of OLX says, The overall traffic on

our website, like any other websites in the country, would be dominated by the top 50 cities of

the country. But the interesting thing is that about 30%-35% of our traffic is coming from very

small towns of India. He adds, If you look at the internet penetration in the smaller towns as

compared to big cities, these numbers are highly significant.

This change is reflected in other areas as well. Parents in affluent, urban areas have

traditionally favoured enrolling their kids in private schools. But this trend is now emerging in

rural India as well. According to the Annual Status of Education Report (ASER) released in

January 2014, more than 25% of new enrolments in rural India were in private schools. Parents,

who are very often illiterate themselves, are now willing to invest in their childs education.

Growing health consciousness and image consciousness among rural consumers is also

mimicking the trend from urban India. Rising affluence in small towns and villages and a greater

awareness of health and nutrition are driving the demand for healthier products. Additionally,

fitness centres have gone beyond big cities and are now expanding heavily in smaller towns to

cater to the growing demand among young rural consumers.

CONSUMER SEGMENTATION

Babies and Infants

The number of babies and infants has decreased slightly with numbers falling from 75.7

million in 2012 to 75 million in 2014 a drop of nearly 1%. This has led to a fall in the share of

babies and infants in the overall population, from 6.2% in 2012 to 5.9% in 2014. This share is

further expected to decline to 5.4% by 2020, a reflection of the declining birth rates.



Indias population growth is finally slowing down. The birth rate decreased from 24.7 in 2005

to 21.2 in 2014, while the fertility rate decreased to 2.5 births per woman in 2013, in comparison

with 2.8 in 2005. The main reasons behind this were government campaigns and programmes

to spread awareness of population control, higher literacy rates (both among men and women)

and a higher number of women in the workforce (15.4% in urban areas in 2011 compared with

11.9% in 2001). According to the 2013 Sample Registration survey of the Census of India,

states with high literacy rates such as Goa and Kerala recorded the lowest fertility rate at 1.6,

while Bihar, which suffers from widespread female illiteracy, had the highest fertility rate at 3.4.

Although the number of women working after marriage has increased in India, it is still quite a

small proportion. Therefore childcare remains primarily the responsibility of the mother. A

shortage of good childcare facilities means that many women have no option but to stay at

home approximately 40% women drop out of the workforce after childbirth. But this is slowly

changing, as more companies begin to provide childcare facilities. Leading corporations like

CSC and Mahindra set up an onsite childcare facility at their campuses in 2014, with many more

expected to follow suit in the near future.

Where both parents work, especially in urban areas, it is common for grandparents to take

care of the children, enabling the parents to maintain a work-life balance. Hiring a domestic

maid to take care of childcare duties is also a popular option.

Alternatives to disposable diapers emerge

The trend of modern cloth diapering is beginning to catch on in India. Though disposable

diapers are currently the norm, there is growing concern among parents over their

environmental impact. An increasing number of consumers on blogs, Facebook groups and

articles are discussing the negative impact of disposable diapers on landfill sites and workers,

and calling for the greater usage of cleaner and cheaper cloth diapers.

Consumer demand for online baby care products grows

Parents in India are increasingly shopping online for baby care products. Time constraints, a

wide range of discounts and offers and services such as next-day delivery and easy returns

have made online shopping a convenient option.

One young mother says online shopping is a practical solution for todays busy mothers. She

adds, Initially, I used online shopping to stock up on diapers and other essentials as they were

offered at attractive prices. But now, I browse through toys and clothing sections as well and I

am pretty satisfied with the variety these sites offer.

Chart 2 Babies and Infants in Focus 2000-2020



Source: Euromonitor International from national statistics/UN

Kids

There was a marginal increase of 0.3% in the number of children (aged 3-8) in 2014. The

number of kids increased from 148.2 million in 2013 to 148.7 million in 2014. It is expected to

decline to 148.3 million by 2020, a consequence of declining birth rates. This segment

accounted for 11.8% of the population in 2014, and is estimated to decrease to 10.9% by 2020.

From the age of three to five, children in India attend nurseries or kindergartens. An

expanding economy and an increase in the number of working women have seen a rise in the

number of nurseries and day care centres. As there is no child benefit system in India, parents

have to pay for these services. Most parents want to enrol their kids in these schools and private

schools. Admission is quite competitive due to the limited number of places. Enrolment rates in

pre-primary school were 58%, as of 2011.

Kids in India start primary school at the age of six. Schooling became compulsory and free for

children from the ages of six to 14, after the passing of the Right to Education act in 2009.

Primary school enrolment levels reached 96.5% in 2013, with girls making up 56% of new

students between 2007 and 2013, according to the data released by the 2013 Annual Status of

Education Report (ASER).

There is also demand for private schools, with 29% of students in this age group receiving

private education. Both private and public schools have compulsory uniforms and may admit

children of both genders. Privately educated students have access to computers in school, while

a majority of students in public schools do not.

Kids demand customised products

There is a whole new consumer class of products and services such as sunscreens,

perfumes, special light fixtures, pricey hair clippers and expensive haircuts for children.

According to a 2014 article in the Economic Times, Kids-only products and services that were

once always bought by and for adults are the hottest new market trend in India.

The director of Lotus Herbals says, Families are smaller, parents have more disposable

income, and information about specialised products is spreading. Kids in urban India are

demanding such products from their parents. Even if parents are scrimping on things for

themselves, they are more than happy to indulge their children. Inflation might have hit spending

by adults on adults, but not spending on kids.



Junk food enters the school tiffin box

According to a 2015 article in the Times of India, With working parents pressed for time and

children being too choosy about their lunches, ready-to-eats and processed food have invaded

tiffin boxes. Favourite meal options now include chips, wafers, cupcakes, wraps, pastas,

popcorn and mayonnaise sandwiches.

One mother of two says The kids can't do without junk food. No matter how much I try to feed

them homemade items like chirwa or parathas, they just won't have it and bring the packed tiffin

back home. She adds, They prefer chips, biscuits, popcorn and mayonnaise sandwiches,

which weren't considered as lunch options in our times!

One fitness consultant warns about the side effects, Child obesity is at an all-time high

compared to even a decade ago, because parents used to pack nutritious food for lunch back

then. Children now have greater access to sugar-enriched food and snacks. This, coupled with

a lack of physical activity, is leading to high blood pressure, type 2 diabetes and many other

ailments among kids. Parents need to watch what they pack in tiffin boxes. Also, they should cut

down the pocket money so kids can't buy junk food with it.

Chart 3 Kids in Focus 2000-2020


Tweenagers

The tweens segment accounted for 7.6% of the Indian population in 2014. The number of

Tweenagers (aged 9-12) in India increased by 0.6%, from 96.1 million in 2012 to 96.7 million in

2014. It is estimated to rise by 2.5% to 99.1 million by 2020.

According to a 2014 article in The Times of India, primary school pupils spend 51 hours more

in classrooms per academic year than students in OECD countries. A typical school day for a

Tweenager would last from 08.00-14.00hrs. Tweens usually take the school bus or walk or cycle

to school. Uniforms are mandatory in both private and public schools.

Parents do not have to pay fees or pack lunches for their kids in public schools, as this is

provided by the government. The midday meal scheme in Indian public schools is the largest

such programme in the world, serving food to 120 million children in over 1.2 million schools.

This scheme has increased girls school attendance and improved nutrition among children. In

private schools, students usually carry their own lunch boxes or eat in the school canteen. A

standard lunch would consist of rice, lentils and vegetables.



According to McAfees Tweens and Technology Report 2013, Indian tweens are

enthusiastically adopting the Internet using multiple devices. On average, online tweens in India

are using between three and four devices that can be internet-enabled laptop, mobile and

desktop predominantly. While 61% of respondents said they use desktops, 40% use tablets and

68% use mobiles to access the Internet, the survey found. Tweens have a clear preference for

not only the devices used for Internet connectivity but also the type of activity on these devices.

So while desktop is preferred mainly for homework, tablets are dominant when it comes to

exchanging pictures and playing games.

It is unusual for children from middle-class families to have part-time jobs. As a result, tweens

often receive spending money from parents, relatives and grandparents. Pocket money, ranging

from INR400 to INR5,000, is sufficient to purchase products like food, sweets, books and

games. Parents generally decide upon any big-ticket purchases. However as the managing

partner of GroupM says, In nuclear families and especially ones where we have both parents

working, parents are spending quality time with the tweens and making them a part of lot of

decisions. The influence of tweens in purchase decisions has been increasing by the day. As a

result, tweens are increasingly able to persuade parents to buy them the products they want,

such as the latest clothing and footwear, music, video games and other forms of entertainment.

Indian tweens on social media despite age restrictions

According to a 2014 report released by ASSOCHAM, nearly 73% of teens in tier-1 and tier-2

cities are on Facebook and other social networking sites despite age restrictions. Children sign

up on these sites with the help of their parents. According to the report, Close to 82% of the

4,200 parents involved in the survey assisted the children in creating the social media account,

and 75% of these parents are meanwhile aware of the sign-up of their children on Facebook.

The study also found that families where both parents work tended to have children who are

more addicted to technology.

'Wired and looped' tweens increasing influence on purchasing decisions

Despite lacking the spending power to fulfil their wish list, tweens in India are increasingly

playing a major role in brand choices. According to a 2013 article in the Times of India, they are

children of the digital age, independent and with a mind of their own. The director of Turner

International says, Parents are accepting that this age group has a role in influencing purchase

decisions.

The VP of marketing at Ford India agrees: When a family visits their showroom to evaluate a

car, research has shown that each member plays a role in influencing the decision tweens,

for instance, influence their parents on features or choice of colour. Parents too seek their

counsel as they live in the digital space as much as in the physical world because of which they

are most likely to have actively secured product information, reviews, opinions etc.

Chart 4 Tweens in Focus 2000-2020




Teens

There was a marginal increase of 0.22% in the number of teens (aged 13-17) in India in 2014,

taking the number to 119.6 million from 119.3 million in 2013. This age group accounted for

9.5% of the overall population in India in 2014. Declining fertility will reduce the proportion to

8.9% by 2020.

According to a 2014 McAfee Intel Security report, about 70% of kids surveyed spent more

than five hours on the Internet in a normal week: 36% used laptops, 27% used smartphones,

while the remainder used desktops. The most popular sites with teens were Facebook,

YouTube and WhatsApp. Other popular sites/apps include Snapchat, Vine, Pinterest, Tumblr

and even Tinder. Getting online and on social media sites is a way of getting social approval.

According to the survey, 64% of kids tried to re-invent their online personas by making

themselves appear older.

According to a ASSOCHAM study published in 2013, the average expenditure among urban

Indian youth increased from less than INR1,500 in 2003 to more than INR6,000 in 2013. Earlier,

teens would look to their parents for all their needs as there was no concept of pocket money.

But with rapidly changing lifestyle coupled with growing costs, we cannot expect teenagers to

manage with figures of the old times, says the national secretary general of ASSOCHAM.

Around 75% of urban Indian teens (16-18 years) spend more than INR6,000 on cosmetics,

apparels and mobiles. Out of this, INR4,500 is said to be spent on cosmetics alone. Looking

good and keeping up appearances is becoming increasingly important to consumers in this age

category: girls start buying cosmetics from the age of 13-14 as compared to 18-19 a few years

ago, while boys aged 16-18 spend more than girls on grooming products such as hair care and

deodorants.

Teenagers also spend a lot of time on school and school-related extra-curricular activities.

According to a 2014 Times of India article, an average eighth grader in India spends 130 hours

more in school in an academic year than students in OECD countries. As the education system

is extremely competitive, with a greater focus on higher education, there is a lot of pressure on

kids to excel in studies and other activities like inter-school competitions (such as sports or

debates) to improve their chances of gaining admission into a good college.



Online shopping booms among Teens

According to McAfee Indias Tweens & Technology Report 2013, shopping is among the

favourite activities that teens perform online. Shopping online is no longer restricted to low-value

items like movie tickets and books. Many teens have started to order high-value items like

apparel, footwear and electronics as well.

The report states that Indian teenagers are more brand conscious than adults when shopping

online. At the same time, teens are less loyal and change brands frequently. Their purchasing

decisions are heavily influenced by friends and social media. Since teens in India mainly depend

on their parents for money, they like to secure discounts and special offers online to save

money and spend on more products.

Teens drive smartphone sales

The availability of cheaper smartphones in the range of INR5,000-INR6,000 has led to a big

spike in the number of smartphone users in India. This trend is especially seen in the teenager

segment: according to a 2013 article in the Times of India, smartphone ownership figures

among 16-18 year olds went from 5% in 2012 to 22% in 2013. Due to the greater availability of

low-cost smartphones, teens can now demand such products from their parents.

One online commentator said, In India, mobile devices are considered fad toys among the

youth. If you don't have the means to drive around in a swanky car, at least you should outdo

your peers and have the best mobile device.

Chart 5 Teens in Focus 2000-2020


Young Adults

The number of Young Adults has been steadily growing over the past decade. It rose from

240 million in 2005 to 272 million in 2014 and is projected to increase to 283 million by 2020.

This segments share in the overall population has remained almost constant at around 21.6%,

making it the largest consumer segment in India.

According to statistics released by the University Grants Commission of India, there were 20.3

million students enrolled in higher education in 2013, out of which 86% were under-graduates,

while only 12% and 1% were enrolled in post-graduate and doctoral programmes respectively.

Even though higher education enrolment rates are still low, there has been massive growth over



the past decade. An expanding middle-class has raised aspirations among parents and children.

Furthermore, the increasing importance of the services sector in the overall economy has

underscored the need to pursue higher education to match global standards. As a result, there

has been an upsurge in the number of private institutions offering professional courses such as

engineering and MBAs. However, this is the segment worst hit by unemployment. According to

a survey released by the National Sample Survey Office (NSSO) in 2014, 5% of rural youth, and

8% and 13% of urban males and females respectively were unemployed, with youngsters

having only secondary and higher secondary educational qualification the worst affected. At

this level of educational qualification, there is maximum competition for jobs, says an NSSO

official.--

This is also the age when the majority of Indians get married and have kids. The average age

for marriage was 26.7 for men and 22.3 for women in 2014. The average age for marriage is

two years lower in rural areas, as a significant proportion of women (60%-70%) marry before the

age of 18. However, with more urban women entering higher education and the workforce,

marriages in urban India are being postponed, though not by much. A representative of the

International Institute for Population Sciences says, A small segment of women who are

educated and in well-paying jobs are now able to postpone childbirth, but they remain a

minority.

According to a January 2015 article in the Hindustan Times, the number of couples under the

age of 30 getting divorced has risen sharply. The number of divorce applications in cities like

Delhi and Mumbai has doubled since 2010. There are many reasons behind this trend, but the

biggest factor, according to counsellors, is the greater willingness to end a marriage that is not

working. One lawyer says, Has the number of divorces gone up? Of course. But has the

breakdown of marriage increased? No. Marriages have been breaking down with much the

same regularity over the years. But couples have been continuing with the marriage to keep up

appearances. The growing rate of divorce is an indication that the stigma associated with it is on

the wane.

In terms of spending habits, Young Indians want it all but they are unsure how much is too

much. This was the finding of a youth survey conducted by the Hindustan Times in 2014.

According to the survey, 59% of young Indians would like to be rich, but at the same time accept

that they (31%) need to be on the lookout for bargains. Some 47% like high-fashion brands (3%

more than 2013), while dressing well seems less a priority (48% in 2014 vs. 51%).

Consumerism in this age segment has emerged as a big marker of personal identity rather than

just governing purchases. The CEO of Futurebrands India says that young consumers have

moved from a collective past into a personal present: Its no more about being from a good

family, its now about who I am. The survey further states that Indian youth have become

highly experimental particularly with regard to food, media and personal care.

Young urban couples opting for nuclear families

Young couples in India are slowly moving towards the concept of a marriage of equals

wherein it is not necessary for the woman to live with her husbands family after marriage.

According to a survey conducted by Shaadi.com in 2015, 64.1% of women and 43.9% men said

that they would prefer to live separately with their spouse after marriage. The COO of

Shaadi.com says, It is very interesting to see young India think beyond tradition and society

norms.

The general perception among young urban couples is that it is easier to set up a nuclear

family after marriage many consider it an ideal arrangement to raise children. According to a

2014 Times of India article, the primary reason behind this trend seems to be greater availability

of space for family members. Another reason why young couples are gravitating towards



nuclear families is that they believe that their children would be more independent and

responsible in such an arrangement.

Young entrepreneurs on the rise

According to an article from 2013 published on YourStory.com, more and more young people

in India are taking the entrepreneurial route. An improvement in the ecosystem for

entrepreneurship has led to the launch of several technology and e-commerce start-ups such as

Oravel, Vidoofy, BetaGlide and Bluegape by budding entrepreneurs in their early 20s.

The founder of Oravel explains the motivation behind starting his own company: I always

wanted to build a product which did better than academic programmes. I was very inspired by

young leaders and entrepreneurs like Mark Zuckerberg of Facebook and Mark P, Zynga and felt

I could build something and solve problems in India.

These start-ups have been helped by the fact that Indias first generation of e-commerce and

mobile entrepreneurs has donned a new hat as angel investors and mentors for the new crop

of entrepreneurs. The MD at VC fund Matrix Partners India says, Who better to know the high

potential and market opportunities than existing entrepreneurs? This is great for the ecosystem.

It also highlights the fact that this new breed of young entrepreneurs is truly putting its money

where its mouth is. I find this very exciting for the future of value creation in the Indian market.

Chart 6 Young Adults in Focus 2000-2020


Middle Youth

The proportion of Middle Youth in the total population has been increasing steadily since the

turn of the century. From 19.4% in 2000, the share of Middle Youth increased to 21.1% in 2014

and is expected to increase to 22% by 2020. The growth in this segment has outpaced overall

population growth. From 261 million in 2013, the number of Middle Youth increased to 266

million in 2014 a rise of 2.1% in comparison to overall growth of 1.4%.

Having entered the labour market in their 20s, this is the age group where the transformation

to making big-ticket purchasing decisions such as buying a house or a car takes place.

According to a 2012 article in the Economic Times, the entry age of a four-wheeler buyer has

reduced from 45 to 30, as low unemployment rates in this age segment and rising disposable

incomes have made such purchases much more affordable for consumers. Additionally, well-



travelled men and women in their 30s, with global exposure and education, are looking for the

good life and are willing to spend on luxury products.

Consumers in this segment are quite comfortable with making online purchases as well.

According to a 2013 comScore report, although about 75% of online shoppers are under the

age of 35, individuals aged between 35 and 44 shop the most.

The number of women having kids in their 30s has declined, with the bulk of pregnancies

occurring in a womans 20s. As a result, Middle Youth is a stage where couples are looking after

their school-going children. One of the biggest problems that parents face is getting their child

into a good school. According to a 2013 survey conducted by ASSOCHAM, parents have to pay

a donation fee of between INR300,000 and INR800,000 to get their child enrolled. One parent

says, I was dead against paying a donation, but as a parent one has many considerations. We

did a lot of research and found very few schools meeting our requirements. Such schools

invariably came with a huge price tag as they know they are in demand. Another adds that

schools insist that parents pay cash: I remember having a hard time withdrawing so much cash.

My husband and I had to do it using multiple accounts, over a couple of days.

Luxury car ownership increases

According to a representative of Audi India, The average age of an Indian luxury car buyer

has come down to 35-40 years from the earlier average of 50 years. An increasing number of

young entrepreneurs and professionals from various fields are buying luxury cars and this

affluent segment has been boosting sales volumes. With the consumer profile reshaping and

expanding, the luxury car market in the country is also getting redefined.

According to a survey conducted by major car companies, consumers with a budget of INR1.5

million to INR3 million are looking to buy an entry-level luxury sedan rather than a premium

passenger car model. The Audi representative explains the reason behind the fall in average

consumer age: Most of these individuals hail from premium business schools as well as from

foreign universities and are well travelled. Their love for luxury and high aspirations is a factor

for them to own a luxury car. They want to make a style statement at a relatively affordable

price. It is also an affirmation and celebration of their achievements so early in life.

Keenest use of online services

The CEO of Indian mobile manufacturer Micromax considers the middle-aged urban crowd in

India quite tech-savvy. This is reflected in the comScore India e-commerce 2013 report as well.

Although this segment (35-44 years) accounts for only 16.2% of online shoppers in India, it is

the demographic with the highest usage.

Even consumers who are not tech-savvy use Internet cafes as facilitators for online bill

payments and shopping. A cafe owner says, The middle aged and aged, especially socially and

economically backward families, are approaching us with the request to help them to e-file their

application forms. E-krishi and e-commerce are also attracting many middle aged persons to our

cafes, which have changed their face as facilitation centres.

Chart 7 Middle Youth in Focus 2000-2020




Mid-lifers

The Mid-lifers segment is growing faster than the overall population. The number of Indians in

this age group increased from 174.3 million in 2013 to 178.4 million in 2014, a growth of 2.3%.

This trend is expected to continue to 2020, when it is predicted that this segment will consist of

204.5 million people. As a result the proportion of Mid-lifers in the total population is expected to

increase to 15% by 2020 in comparison with 14% in 2014.

Consumers in this age group are significantly different from younger consumer segments.

According to an article in The Economic Times, they work longer than the average Indian and

have considerably higher purchasing power. However, with the focus on Young India, this

consumer group tends to get ignored. According to the director of Max Life Insurance, World

over, Baby Boomers are darlings and doyens of medical and healthcare services, pension and

annuity plans. They are also heavy consumers of travel, tourism and vacation services.

Unfortunately, the opportunity has not been tapped in to aggressively here. She adds that Mid-

lifers are more concerned about quality and reputation and less about the image or emotional

component of brands.

A majority of consumers in this segment could be categorised as spenders. Mid-lifers have

the responsibility of paying for their childrens higher education and then their wedding. Once

this is taken care of, they tend to splurge on themselves for example on international holidays

and new cars. According to one Bangalore-based consultant, Far from slowing down, the 40s

are living lifestyles normally associated with consumers in the 20s and 30s. Plus, they have the

financial means to splurge on what they probably missed out when they were in a career

building mode. The CEO of Marico adds, The 40+ age group has made a shift from a scarcity

mind-set to an abundant mind-set.

Growing number of adventurous travellers over 50

According to an article in the Economic Times, adventurous travellers over the age of 50 have

emerged as the fastest growing and most affluent group. Consumers in this segment seek new

experiences, and demand services that meet their needs without labelling them as old.

According to a survey conducted by travel site yatra.com, middle-aged consumers in India are

game for authentic travel experiences. The survey found that people in their 40s find local food

and experiences much more appealing than the younger generation, which is considered to be

the experimental one. Around 60% of respondents in the 51-60 age group said that they would



prefer to go sightseeing, while only 18% voted for relaxation. This age group also rated trekking

over sampling local charms and shopping.

Health-conscious MAMIL trend reaches India

Affluent middle-aged men in their 40s are embracing the MAMIL (Middle Aged Men in Lycra)

trend. A large chunk of the premium bicycle demand is dominated by this age group. The CEO

of Sprint Sports Pvt. Ltd, says, Based on empirical evidence, I'd say MAMILS comprise 65%-

70% of the premium bike market.

Biking is the new golf. Just as there are golf widows, there are cycling widows too, quips one

cyclist. MAMILs spend hours searching for fancy cycling accessories and can spend anything

between INR25,000 and INR1 million on their bikes.

The MD of Firefox Bikes says that this is a demographic segment with high disposable

incomes and growing fitness concerns: As a kid, everyone is a cyclist, but as they reach

college, most gradually give up cycling and switch to other modes of transport like cars and

motorbikes. Fitness concerns too are not that severe in the 20s. But they become important

during one's 30s and 40s, which is when a lot of people return to cycling.

Chart 8 Mid-Lifers in Focus 2000-2020


Late-lifers

Even though India currently has a predominantly young population, a 2014 Financial Times

report states that the country is sitting on an elderly demographic time bomb. This is reflected in

the statistics. The number of Late-lifers increased from 102.1 million in 2013 to 106.5 million in

2014, a strong growth of 4.2%. The proportion of Late-lifers stood at 8.4% in 2014 and is

expected to increase to 9.8% by 2020. Interestingly, it is the three older age segments (Middle-

youth, Mid-lifers and Late-lifers) that are going to see an increase in shares, while the proportion

of all the younger age groups (below age 30) will decline over the next few years.

According to one author, India's elderly are splurging after having saved all their lives. Things

turned out well for them and they now have their savings to spend. A retirement home

consultant says, The 65-year-olds of today are very different from what 65-year-olds were 15

years ago. They know what a good life is. A 2015 Forbes article notes of this segment, Theres



a new generation of age 60 plus Indians on the block. Theyre independent, financially stable,

have travelled the world, and now theyre looking for somewhere to retire comfortably.

At the other end of the spectrum, lack of social security and pension coverage means that

many Late-lifers are forced to continue working to make ends meet. According to a 2014 Times

of India report, over 30 million people over the age of 60 were working full time, while a further

10 million were marginal workers. Many people over the age of 80 work as well. Close to 2.5

million octogenarians worked either full-time or part-time to eke out a living.

Traditionally, Late-lifers in India would either stay in their own homes or live with their children.

The idea of living in a retirement home would evoke horror among Indias elderly as it was

perceived as abandonment. Children would also feel guilty for not being able to take care of

their parents. However, old-age homes are now gaining acceptance among families. These

homes are increasingly being looked at as a practical solution to a difficult problem. One new

resident of a retirement village says, I wanted to live my retirement phase on my own terms and

I have no qualms about it. My wife and I love to read and write, we enjoy nature and love to mix

with like-minded people. If we were staying with the children, our lives would be governed by

their will. This is not on.

Health-wise, it is not a very rosy picture. Even though life expectancy has increased, the

number of years that Indians stay healthy has decreased. According to an article in The Times

of India in 2012, 25% of Indias elderly population are depressed, 33% suffer from hypertension

and arthritis, while the prevalence of other diseases such as diabetes is extremely high as well.

Late-lifers drive a new wave of business

According to a 2014 article published on cnbc.com, Late-lifers in India are beginning to

demand products and services that cater specifically to their needs. From match-making

bureaus for the elderly to tailor-made travel packages, late-lifers are seeking new life

experiences after retirement. According to a 2015 article in the Times of India, senior citizens

have become a much smarter lot who are thoroughly enjoying the twilight years thanks to a

rapidly changing social milieu and conveniences that technology offers.

Greater financial stability has given Late-lifers more confidence to pursue different activities

like travelling. One retiree says, Ageing should not be the reason to give up your

independence. Both my wife and I keep fit and are not bothered about who will care for us in our

advanced old age. Today if you have the money and organising capacities, it can all be

arranged.

Luxury retirement homes welcome Late-lifers

As more affluent Indians enter the Late-lifers age group, the demand for luxurious retirement

homes has grown. These homes have facilities like clubhouses, gyms and walking tracks. The

businessman who runs the Sri Ramanashraya retirement homes near Hosur, says, The

concept works around a type of assisted care living, wherein all key facilities like medical,

nursing, security and help with paying bills, etc, are aided by the retirement homes. He adds,

Its all about being independent and spending your retired life among other retired folks by

engaging in activities that one could not indulge in during the hectic working years.

A retired banker explains why he is looking to move into a luxury retirement home: Its not an

old-age home where people are left out of desperation. Here we ourselves come out of sheer

willingness to live in a healthy environment, where organic food is served and meditation and

yoga is practised. He adds that there is no stigma attached to this concept, unlike old-age

homes. My daughter is in fact helping me find such a home.

Chart 9 Late-Lifers in Focus 2000-2020



Source: Euromonitor International from national statistics/UN Note: Old-Age Dependency Ratio: % of persons older than 65 per persons aged 15-64

HOUSING AND HOUSEHOLDS

Home Ownership

According to a property blogger and the chairman of JLL India, Indians still consider owning a

home of their own as the ultimate investment and goal in life... for both traditional and practical

reasons, the desire and need to own a home is hard-wired into the Indian psyche. This is

reflected in the statistics: a substantial 91.6% of households in 2014 lived in a house that they

owned. Furthermore, 93% of these homes were mortgage-free.

The division of people living in houses and apartments has remained fairly constant since

2005, with 75% living in houses and 10% living in apartments. Although India has seen rapid

urbanisation in the past decade, 70% of the population still live in rural areas with lower

population density and more open spaces. As a result, a large proportion of consumers in India

still live in independent homes.

According to a 2014 report in the Indian Express, the real estate industry in India was under

pressure due to low absorption levels, high interest rates and prices. In addition to this, the

major cities face a grave supply-demand mismatch. Urban India has a housing shortage, while a

large stock of houses remains vacant because high property prices make buying a home

unaffordable for many. To counter this, cities including Mumbai are planning to introduce the

concept of a variable FSI (Floor Space Index), which would make the city skyline taller and

denser. This is being done to resolve the demand-supply mismatch for affordable housing in

cities.

But with the election of a stable central government, The winds of change are now blowing

more perceptibly, says the JLL chairman. Inflation, including the house price component, has

now been reduced to the lowest level in recallable history. Property buyers are back in force in

most cities as inquiries have rebounded, and developers are finally reading the writing on the

wall more accurately and coming in with the kind of supply that is relevant to demand. Stable

property prices, lower borrowing rates and good deals being offered by developers to clear their

inventory are encouraging signs for time-biding buyers to proceed.

First-time home buyers are shifting towards buying property that is ready to move into rather

than a home under construction. This is a big change from previous generations and has mainly



come about due to construction and possession delays faced by a large number of buyers.

Another emerging trend among first-time buyers in urban cities is the preference for a flat or an

apartment. Many consumers feel that apartments offer security and community living benefits,

which would not be the case with a stand-alone home.

It was quite common for stand-alone homes in urban India to have a small garden along with

a balcony and a terrace. However, with increasing urbanisation and a lack of space in the big

cities, this trend had begun to die out. An interest in gardening has seen this trend come back in

the form of terrace gardening. Consumers are willing to invest time and money into making their

balconies and terraces greener. One high school teacher and garden enthusiast spends an hour

a day in her terrace garden to keep her childhood hobby alive. Terrace gardening is economical

and eco-friendly, she adds.

Home loans become more transparent

The last few years have seen significant public anger over black market money and

corruption. This is reflected in increasing transparency in property transactions, in line with the

growth in Indias home loan demand, which doubled from US$24 billion in 2010 to US$48 billion

in 2014. Previously, property transactions in India were usually funded through savings or black

market money. However, the modern Indian homebuyer does not mind taking out a home loan.

According to an article in online magazine Siliconeer.com, over 80% of property transactions in

IT-dominated cities such as Bangalore and Pune have no black market money element.

Chart 10 Home Ownership 2000-2020

Source: Euromonitor International from national statistics

Household Profiles

The concept of joint families, especially in North Indian states, and lower awareness of

population control measures in villages mean that currently almost half of the households in

India have more than five members. However, with the growth in the number of nuclear families

in cities, this trend is moving towards three- and four-member households, as more parents

decide to have only one or two children. According to the 2011 Census figures, the median

household size in cities dropped below four for the first time in recorded history, while in rural

areas it was between four and five, but closer to four than it has ever been. According to one

demographer and fertility expert, this trend is not surprising: As the demographic transition



progresses and fertility declines, household sizes will decline. In addition, we are seeing a rise in

the number of nuclear families compared with multi-generational families

The number of urban households increased from 62.4 million in 2005 to 87.5 million in 2014.

As a result, the proportion of urban households increased from 29.3% to 33.2% and is estimated

to rise to 36.2% by 2020, as more people move to cities. India has one of the lowest

percentages of people living alone globally, at less than 4%. This is something that is looked

down upon in Indian society. According to one author, Living solo has usually been regarded as

something profoundly abnormal, especially in a culture where a parent's job is not done until the

children are settled, ergo married.

Pet care in India is nascent, with the country having one of the lowest rates of pet ownership

globally. But this is changing: increasing affluence and urbanisation have made India one of the

fastest growing markets for pet ownership. Urban consumers are now willing to splurge on their

animals. Pet care is becoming more sophisticated, with owners looking after their pets

healthcare, grooming and leisure needs, in addition to just buying pet food. One pet store owner

says, Pet owners are asking for new varieties of food, grooming products, toys and

accessories. In clothing, they ask for stylish jackets, neck bandanas, creative collars and

designer sweats.

With a share of 85%, dogs are by far the most popular choice as pets in India. According to a

blog post on animalswecare.com, popular breeds in India include Indian Pariah, Labrador

Retriever and Golden Retriever. Apart from dogs, people also keep cats, parrots, fish and

rabbits as pets.

Chart 11 Household Profiles 2000-2020

Source: Euromonitor International from national statistics

Running Costs

Political pressures and subsidies have meant that energy costs in India have not been passed

on to consumers and therefore have largely remained constant in the past few years. Per

household spending on water and other domestic services increased marginally from INR1,922

in 2013 to INR1,924 in 2014, while household expenditure on electricity, gas and other fuels

increased from INR10,275 to INR10,424 during the same period.

According to a survey published in the Economic Times in 2014, consumer attitudes towards

green energy sources are changing for the better. Almost half of the respondents to the survey



said that they believed it was very important for India to develop and generate more solar

energy, which appears to be the favoured renewable energy source among Indians. Frustration

with frequent power cuts, government subsidies and the fact that solar power is cheaper than

alternatives like coal in some parts of India have made it a popular option among consumers. In

another survey published on eco-business.com, over 90% of respondents said that they would

prefer to buy energy-efficient electronics and appliances even if it were more expensive. At the

same time, government initiatives and energy conservation drives have led to an increase in the

usage of LED bulbs. The Power Ministry is selling these bulbs for INR10 substantially reduced

from the market rate of INR400 to encourage users in rural India.

Recycling is not only a habit but part of daily life. It is quite common for households to collect

their magazines, newspapers, old furniture and gadgets and give them to the neighbourhood

raddiwala or kabariwala, who re-use them for various purposes.

DIY is not a major part of Indian culture. Access to cheap labour allows the majority of Indians

are able to keep their homes in good shape. Many urban households hire domestic help to

clean their homes on a daily basis. Additionally, it is quite common to outsource heavy repair

and maintenance work to low-cost contractors. Increasing urbanisation and disposable income

have made consumers willing to spend on their homes. The managing director of Asian Paints

says, Theres been a massive transformation in the Indian consumer. Earlier, people used to

paint when the walls were peeling. Now its about decor.

Home solar demand growing at 60% annually

In 2014, the newly elected government announced plans to make India the largest solar

power producer by 2022. This solar power revolution is not going to be restricted to large-scale

power projects, but would also include consumer-level off-grid solutions like solar lanterns and

community-level power plants.

With about 100,000 villages in India lacking access to electricity, solar power has become a

popular off-the-grid alternative for consumers in these places. Solar power is also proving to be

cheaper and more reliable than alternates such as coal and diesel, making it even more popular

with consumers.

Dharnai village in Bihar became energy-independent in 2014 with the launch of a solar-

powered micro grid. One resident says, We had tried everything in the book to get electricity for

the last 30 years. But we havent seen a single speck of hope. While India was growing leaps

and bounds, we were stuck here with kerosene lamps and expensive diesel generators. But

now I can proudly say that Dharnai is a leader in innovation. We have established our identity as

an energy-self-sufficient village and can compete with the country in its race to growth.

Chart 12 Household Running Costs 2000-2020



Source: Euromonitor International from national statistics/UN Note: In constant 2014 prices

MONEY AND SAVINGS

Attitudes Toward Payment Methods

India is primarily a cash-based society, with such transactions amounting to INR40.4 trillion in

2014. However this was approximately 7% less than the cash transactions in 2013, as Indian

consumers become increasingly at ease with modern payment methods.

Card-based transactions using debit, credit and pre-paid cards have gained greater

acceptance among consumers due to the increased penetration of ATMs, point-of-sale

machines and the marketing efforts of banks and telecom operators. This can be gauged from

the phenomenal growth in the number of financial cards in circulation: the number of ATM cards

increased from 335.7 million in 2012 to 460.8 million in 2014. Consumers mainly use ATMs to

withdraw cash and check their bank balance.

Consumers use debit cards for routine expenses like utility payments, while for discretionary

purchases credit cards are preferred. Cash is typically used for purchases under INR500, debit

cards for cash withdrawal and payments under INR1500 and credit cards for big-ticket items.

According to a 2015 article in the Economic Times (ET), credit card usage is increasing due to

the boom in e-commerce. According to a manager at a private sector bank, Customers are

increasingly buying tickets online, booking hotels and vacations, which has increased credit card

spends. Banks have tied up with many electronic chains and mobile companies, giving EMI

(equated monthly instalment) options to customers on purchase of phones and other electronic

items on credit cards. The EMI option has also helped increased spends.

The president of consumer banking at Axis Bank, says, After couple of years of dip in credit

card spends post the 2008 global crisis, credit card spends have been showing consistent

growth since 2013. Another article in the ET from 2013 states, About 30% of the credit card

spend is being revolved today and a large chunk of it is in the EMI schemes that banks have

launched with companies. NPAs too have fallen from a peak of 25% to under 5%.

Increasing awareness of online banking, combined with the growth in Internet and low-cost

smartphone penetration, has caused a tremendous growth in electronic transactions, especially

in urban areas. At the same time, cheques and other paper-based transactions are still quite



common in India. However with the growth in online banking, the value of these transactions

has been falling since 2012.

Alternate payment methods such as PayPal are popular among freelancers in India, but their

widespread use is hampered by strict government and banking regulations. One freelancer

commented, You cant send PayPal payment from one Indian PayPal user to another one, you

cant use PayPal money for buying stuff, and there are lot more restrictions like adding your Pan

Card and others.

The Reserve Bank of India launched an integrated bill payment system in 2014, which would

enable all consumers to pay their bills at the same window. Under the Bharat Bill Payment

System (BBPS), people can pay all their bills online or at a single location. This system is

expected to make bill payments easier for the large un-banked population, who would usually

have to pay cash in various locations.

Savings

Consumers in India have one of the highest saving rates in the world. From INR31 trillion in

2013, consumer savings reached INR32.6 trillion in 2014 and the sum is predicted to increase to

INR44.5 trillion by 2019. Consumers saved 31.2% of their disposable income in 2014, in

comparison to 28.4% in 2005.

Consumers typically save money for big-ticket investments. According to one corporate

advisor and commentator on economic and political affairs, The savings habit of Indians in a

risk-free investment model is a product of the family system. We need to promote, sustain and

protect this relationship-based model, which is unique to India. Owning a house is considered

one of the biggest priorities for Indians, so it is a priority for savings. Another motivation is that

parents take care of their children until they are financially stable. Parents save money not only

to educate their kids, but also to spend later on big occasions like a wedding. Additionally, a lack

of effective government social security schemes and poor public health services mean that

consumers also have to save for their retirement and healthcare costs.

While the savings ratio has been more or less constant since 2013, a 2014 article in Livemint

states that there has been a shift from saving in financial assets to physical assets such as gold

and real estate. For the 600-700 million consumers with no bank account, gold is an important

saving instrument. Even urban consumers have moved towards gold, as many believe that the

formal financial system, with its low real returns, is stacked against them. Additionally, a host of

problems (including mis-selling) with insurance products have seen consumers move to physical

assets.

According to an article in Youth Incorporate Magazine, young Indians are more focused on

spending than saving. This is partly because pay packages and disposable incomes have

increased substantially over the past decade. The number of households with an annual income

greater than US$5,000 has nearly doubled since 2005. As a result, people can spend more

without having to compromise on their savings.

In the government budget announced in February 2015, the Finance Ministry announced

various tax incentives and a new pension scheme, with the objective of creating a pensioned

society. In order to boost retirement savings, the investible limits and tax deduction limits for

pension products were increased substantially.

Loans and Mortgages

The outstanding consumer credit balance reached INR7.7 trillion in 2014, while mortgage

debt stood at INR10 trillion. Mortgage debt is projected to rise to INR17 trillion by 2019 due to

the steady increase in the number of homeowners with mortgages. Approximately 7% of home

owners had mortgages in 2014, a number expected to rise to 8% by 2020.



Traditionally, People in India are very debt averse, says the chief executive officer of HDFC.

On average, loans have an initial duration of 13 years, but are usually repaid within five-six

years. A project manager at an IT firm took out a 20-year home loan to buy a two-bedroom

apartment in Mumbai, but plans to repay it within three years. He says, I dont want to have

debt for long, I want to be in control. Interest rates matter too. If I continue my loan for a longer

tenure, my interest payments will be higher than the principal loan amount.

Positive sentiment among consumers regarding the economy and the fact that more young

people are moving to and working in urban areas have boosted consumer demand for real

estate, which in turn has increased demand for home loans in India. However, according to

Mumbai-based brokerage firm Emkay Global Financial Services Ltd, home loan debt levels in

India, though rising rapidly, are still only at about a tenth of the levels seen in the US and

Europe.

As the lending market in India gets more organised, it has become easier for consumers to

borrow from banks instead of having to rely on personal savings or local money lenders. Apart

from mortgages, which account for almost half of the retail loans by the banking sector, demand

for car loans and loans for consumer durables have also increased.

A consequence of the spread of credit facilities is an increase in the number of households in

debt. According to figures released by the National Sample Survey Organisation in December

2014, 22% of households in cities and 31% in villages were in debt. The average debt per family

increased by seven-fold in cities and more than four-fold in rural areas between 2002 and 2012.

Some 82% of the debt in urban areas is incurred to finance housing, education, weddings

amongst others an indicator that the urban housing boom has partly been driven by debt.

Zero-balance savings accounts to boost rural spending

According to a 2015 article in the Hindustan Times, over 115 million bank accounts have been

opened under the Pradhan Mantri Jan Dhan Yojana scheme since the new government was

elected in May 2014. Under the scheme, account holders are eligible for loans after six months

and subsidies from other government schemes that will be directly transferred to their accounts.

These subsidies were earlier primarily cash-based, leading to a lot of leakages due to

corruption, which hampered rural growth. According to research conducted by the State Bank of

India, these new bank accounts are likely to boost rural activity and demand, increasing rural

discretionary spending.

Mobile payments gain popularity among the poor

A payment method that has been popular in some African villages for a few years now is

finally gaining traction among Indias poor. With many breadwinners leaving their families behind

to earn a living in cities, mobile payments are turning out to be a convenient method to send

money to people back home.

A resident of one of Mumbais slums, who lives alone, says, I have to go to a bank and fill out

a form. That takes an hour. The bank is only open when I am supposed to be working, so I lose

an hours pay. Thanks to m-payments, he can now send money instantly to his family a few

thousand miles away in rural Siddharthnagar, near the Nepal border, without having to waste

time at a bank. With almost 75% mobile phone penetration in India, m-payments are expected

to play a big role in the near future.

Chart 13 Borrowing and Saving 2000-2019



Source: Euromonitor from trade sources/national statistics Note: Outstanding balance in constant 2014 prices

EATING AND DRINKING

Eating Habits

Eating habits in India differ across the various classes. According to a 2014 report in The

Hindu, the top 5% of urban India spent an average of INR26,400 per capita annually on

groceries. A further INR9,600 was spent on eating out, while INR2,472 went on snacks like

chips, chocolates and other processed foods. By contrast, the bottom 5% spent an average of

INR4800 every year on groceries, out of which over 25% went on cereals alone.

Consumption of cereals and bread overall has declined from INR3,479 per capita in 2004 to

INR2,965 in 2014. According to one economist and director of a research firm, this was in line

with expected trends: As countries get richer and as individuals have more money and are in

less strenuous activities, consumption of carbohydrates goes down, and the intake of fruits and

vegetables as well as foods with other micronutrients including milk products and meat rises.

India has traditionally been a largely vegetarian country, with very low meat consumption.

However, this trend is changing. Consumption of meat and fish has risen and is expected to

increase further through to 2020. A hike in income, more foreign holidays and an increasing

willingness to experiment with different global cuisines (such as Japanese, Peruvian and

Mexican) is expected to drive this trend.

As lifestyles get busier, consumers continue to slowly move away from home-cooked food. As

a result, eating out has evolved from being an occasion-driven activity to being an almost

everyday activity. The popularity of fast foods among Indian consumers continued to rise in

2015, with a number of international food chains either expanding or entering the Indian market.

The Indianisation of menus has proved to be a hit among Indian consumers. For example,

McDonalds introduced a Masala Grill burger in 2013, while Starbucks introduced localised

Indian food such as murgh kathi wrap (chicken wrapped in Indian flatbread), and tandoori

paneer roll (a cheese wrap grilled in an Indian style) in 2014.

Traditional street food gets makeover

In a market where consumers are heavily influenced by modern and international tastes and

retail shelves are stocked with modern packaged food such as pasta and spreads, the market



for traditional Indian food items continues to remain strong, under new brands. Retailers are

increasingly stocking branded versions of popular Indian street food items such as Gol Gappa,

Bhel and Aam Panna. As the CEO of value retail at Reliance Retail says, Tradition and

rootedness is also a vector of modernity and upgrade for the consumer, as she becomes more

confident in making her choices. So we now see packaged aam panna and golgappa pani being

stocked with bhel as well as pasta. We believe modern retail has to be a celebration platform

that gives consumer the choice she wants to exercise. Just because you like niche products like

Meswak toothpaste or palak soup, you don't have to be underserved with narrow availability

compulsions of traditional trade.

Additionally, as health awareness among Indian consumers grows, there is a greater demand

for sanitary versions of Indian street food. As the CEO of Food Bazaar, Future Group, says, As

consumers become affluent, hygiene, health and convenience start taking centre-stage, which

explains this rise. However, currently, by and large, it's a trade-off consumers make for better

quality of product that's convenient and hygienic in exchange for the form of the product which is

the experience which one gets at a panipuri-wala/dabbawala (street vendor).

Niche products becoming mainstream

From having limited options less than 10 years ago, the average urban Indian consumer

today is spoilt for choice. Growth in large-format stores has meant that international products

such as Tang, Ferrero Rocher and Pringles, which were once only available in a few kirana

(neighbourhood) stores or via friends and family travelling abroad, are now on shelves

everywhere and cater to the growing consumer preference for speciality food products. A

representative of retailer HyperCity explains that the price of such niche products is no longer an

issue with the urban Indian consumer the issue is with product availability. Earlier, although

customers knew the products they preferred, the same brand wouldnt always be on the shelves

each time they visited a supermarket. Product availability was an issue because of poor supply

chains and distribution channels. But international players in the niche food segment have

invested in these and availability is way better than some years ago.

Consumers going Glocal

More travelling and international exposure along with a greater appetite to try out new foods

has led to a trend of fusion cuisine. According to various Indian online blogs, this was one of the

biggest food trends of 2014. Consumers are beginning to use international ingredients in Indian

dishes and Indian spices/ingredients in international favourites. While there is a consumer

segment that still prefers traditional food, there is also a newer, adventurous diner segment that

is willing to experiment in order to find newer and finer flavours.

Customisation is the buzzword

According to an article in DNA India, customisation w

Consumer Lifestyles in India

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