Blogs from Capital Portfolio Advisors

As the Indian economy has evolved and socio-economic dynamics have undergone transformation, consumer preferences and spending patterns have witnessed significant changes. This is evident from the rising purchasing price points of several products across the consumption industry. Some of the factors that are catalysts of this change are given below:

  1. Rising Middle Class and Urbanization : India’s expanding middle class and rapid urbanization have been instrumental in shaping changing consumption patterns. With a rising disposable income, the middle class has experienced an increase in purchasing power, leading to a shift in consumption choices. For example, the demand for automobiles, branded apparel, and electronic gadgets has surged in urban areas. Urbanization has brought about lifestyle changes, leading to increased demand for branded products, convenience goods, and services.

Illustration: According to a study by Nielsen, the urban middle class in India is expected to reach 567 million by 2025, driving significant consumption growth in various sectors.

  1. Shift from Necessity to Aspiration : As the Indian economy has grown, consumer priorities have shifted from meeting basic necessities to pursuing aspirational lifestyles. Consumers are allocating a larger portion of their income to discretionary spending on travel, leisure activities, fashion, and personal care products. The desire for improved living standards and enhanced experiences has fueled the demand for premium and luxury goods.

Illustration: Luxury car sales in India have been on the rise, with brands like Mercedes-Benz, BMW, and Audi witnessing significant growth in demand. This shift indicates the increasing aspiration among Indian consumers for premium products.

  1. Emergence of Digital Commerce : The widespread adoption of smartphones and the internet has given rise to digital commerce in India. E-commerce platforms have transformed the way consumers shop, offering convenience, a wide range of products, and competitive pricing. Online shopping has gained popularity across urban and rural areas, allowing consumers to access products and services at their fingertips. This shift towards digital commerce has also resulted in increased price transparency and product awareness among consumers.

Illustration: According to a report by Statista, India had over 700 million internet users in 2020, making it a significant market for online retailers. E-commerce giants like Flipkart and Amazon have experienced tremendous growth in India, reflecting the increasing preference for digital shopping.

  1. Health and Wellness Consciousness : Indian consumers are increasingly prioritizing health and wellness, leading to changes in their consumption patterns. There is a growing awareness of the importance of a balanced diet, exercise, and overall well-being. This has resulted in a surge in demand for organic and natural products, plant-based alternatives, fitness equipment, and wellness services. FMCG companies are responding to this trend by introducing healthier product variants and expanding their offerings in the wellness segment.

Illustration: Companies like Patanjali and Saffola have capitalized on the health and wellness trend by introducing a range of natural and functional food products. The demand for yoga studios, fitness apps, and organic food stores has also witnessed significant growth.

  1. Sustainability and Conscious Consumerism: Indian consumers are becoming more conscious of the environmental impact of their consumption choices. They are actively seeking sustainable and eco-friendly products and are willing to support brands that align with their values. This has led to increased demand for products with recyclable packaging, renewable energy sources, and ethical sourcing practices. Businesses that prioritize sustainability and transparency in their operations are gaining a competitive edge in the Indian market.

Illustration: Companies like Amul and Dabur have embraced sustainability by implementing green initiatives and promoting responsible sourcing of ingredients. The demand for eco-friendly clothing brands, organic personal care products, and ethical fashion has also witnessed significant growth.

  1. Regional and Cultural Preferences: India’s diverse cultural landscape gives rise to distinct regional consumption patterns. Consumer preferences vary across different states, with preferences for regional cuisines, traditional clothing, and local brands. Understanding these regional nuances is crucial for businesses seeking to penetrate diverse markets within India.

Illustration: In South India, the demand for traditional silk sarees like Kanjeevaram and Banarasi sarees is high, while in North India, Punjabi suits and lehengas are popular choices. Food preferences also vary, with the popularity of dosa and idli in the South, and parathas and biryanis in the North.

In conclusion, changing consumption patterns in India are having a profound impact on the Indian consumption industry. Businesses in India are adapting their strategies and operations to align with the changing consumption patterns. They are leveraging innovation, digital technologies, and sustainability initiatives to meet evolving consumer demands. By embracing personalization, localization, and customer engagement, businesses are staying competitive and effectively capturing the opportunities presented by the constantly shifting consumer landscape in India. Those who cannot adapt to these changes are enabling consolidation in the industry.

Disclaimer:

Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Past performance is not indicative of the future.

This article has been written by Team Capital Portfolio Advisors. Any part of the content of this article should not be construed as, an offer or solicitation to buy or sell any securities or make any investments. The content shall not to be relied upon as advisory or authoritative or taken in substitution for the exercise of due diligence and judgement by any user nor should it be used as a basis for making any decisions, without exercising user’s own judgment or diligence. As a condition for using this Blog, the user agrees that Capital Portfolio Advisor (CPA), its Founder or any of it’s employees make no representation and shall have no liability for any loss or damage, direct or indirect, arising from the use of the Blog. CPA reserves the right to change the content of the Blog without prior notice.

Leave a Reply

Your email address will not be published.