Over the next decade, India is poised to enter a new era of economic prosperity as a result of increasing consumer spend and digital technology. That is according to a new report by the World Economic Forum, which explores emerging markets, making up 40% of the global population.
Working with management consultancy Bain & Company, WEF surveyed 5,100 households in 30 Indian cities and towns. The research showed that, by 2030, Indians will be richer and possess a bigger appetite to spend. However, new technology-enabled business models will make their preferences more specific. What impact will this have on the built environment?
An advancing nation
Centuries of economic hardship for India seem to be coming to an end. By 2030, it is expected that 80% of households (140 million) will be classed as middle class, driving 75% of consumer Spending. According to the report, this demographic will spend 2-2.5 times more on essential categories such as housing and 3-4 times more on services like household care. Meanwhile, ownership of items such as washing machines, refrigerators, TVs and personal vehicles will grow by 20%.
While Indians will continue to increase spending, greater access to online services will mean that their decisions are highly informed and specific. The WEF research suggests that “value-for-money brands” will be commonplace. Consumers will adopt services and products based on features and prices that are convenient to them.
Digitally savvy consumers
By 2030, more than 1bn Indian citizens will be connected to the internet, transforming the way they consume products and services.
The report identified 4 new models of consumption:
- Sharing and rentals
- Service aggregators
- Digitised services for wellbeing
As a result of these, the Indian household will transform dramatically over the coming years. Consumers will frequently rent furniture, clothes and other goods via online services. What’s more, affordable home service providers such as cleaning, washing, repairs and maintenance will rise in popularity – becoming a $100bn business opportunity.
Digitally influenced consumption will be widespread in 2030, with consumers making 40% of purchases through online platforms compared to 20-22% today. When it comes to spending, the report claims that connected consumers will purchase more products and services while less connected people adopt a more frugal attitude.
Inclusion will be paramount
Although connected technology will be prevalent within Indian society, there will be a large proportion of consumers who are vernacular-speaking, rural and older. The report makes it clear that “innovative ways will be necessary to build a trustful relationship with these consumers”. The onus will be placed on voice-assisted purchase pathways, simple interfaces, communication through video content, and customer service through vernacular chatbots.
Traditionally, the rise of e-commerce has been attributed with the death of the brick-and-mortar retail store. But taking this changing demographic into account, there could be a unique opportunity for Indian retailers to transform their stores using Internet of Things sensors, video displays and other interactive technologies.
Eradicating the urban-rural divide
For centuries, India has been divided by its prosperous cities and poorly connected rural areas. Although the country’s top 40 cities will continue to flourish with a $1.5tn spending opportunity by 2030, towns could unlock $1.2tn of spend through improved infrastructure and organised retail systems.
Just like their urban peers, 240 million consumers living in rural households expect to lead similarly convenient and healthy lifestyles. They, too, want to leverage the opportunities offered by digital media, e-commerce and technology-enabled consumption.
However, rural areas will only witness change if governments and businesses transform existing infrastructure such as roads and power supplies. Statistics show that 30% of villages are without access to all-weather roads, while only 8% of Indian villages receive reliable electricity to all homes. There is also a real challenge around digital infrastructure. Despite the fact that large amounts of rural Indians want to adopt new technologies, just 18% can actually access the internet.
India’s cities may be economic drivers, but they also have growth challenges. Residents not only face the stark reality of polluted air, dirty water and congested roads, but rising populations
are resulting in scarce housing.
These barriers, along with those experienced by rural areas, could result in the rise of large-scale infrastructure development projects such as smart cities; industrial corridors; road, rail and shipping hubs; and power initiatives.