India, today is the fourth largest and second fastest growing economy in the world. The Indian working class base is getting wider with deeper pay pockets as well. As income grows, propensity to save drops – USA a case in point.
Indian consumer always thought that Debt was a burden. However, these days we have seen a shift in attitude and some consumers say – I can spend EVEN more – LEVERAGE effect. Retail credit card and portfolio exposure growing at 25% are helping him leverage. This may be visible only in the new generation who are carefree.
More than 35% of population born in post liberalization era – slice of pizza, a drive to the mall, the hottest new jeans.
The era has changed from Save Now – Spend tomorrow to Indulge Today. Hopefully, they won’t spend their tomorrow like the Americans.
They are also creating new themes of life moving from Unorganized to Organized Retailing, Country liquor to IMFL etc. Luxury [Cars / Aviation], Leisure [Travel, Multiplex entertainment, etc] and Indulgence[ Spa and Beauty Salon, Fashion Accessories] have become the new choice of consumers. The growth of organized retail to $7 bn at the end of 2006 is a witness to the changing behavior.
However, we have many hurdles in our way – Fragmented land holdings (more than 70% of holdings is less than 1.5 hectares), Inefficient agri-marketing chain – too many intermediaries. Ath the consumer front, they prefer prefer fresh over packaged food, Weak & fragmented retail
distribution and extremely poor front end infrastructure. Hopefully, we converge on our ideas and overcome these hurdles faster to High levels of processing, low wastage and Higher returns.