According to a report by IBEF (India Brand Equity Foundation) published in August 2019
India is the world’s fifth-largest global destination in the retail space.
The Retail market in India is projected to grow from an estimated US$ 672 billion in 2017 to US$ 1,200 billion in 2021
Total consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824 billion in 2017
The retail boom that has hit India in recent years has not been limited to the Metropolitan cities alone; there has been an influx of organized retail formats in the form of Hypermarkets, Branded Outlets, Premium car showrooms, shopping complexes, etc., in smaller towns as well.
Other favorable changes in smaller towns are
- An increasing number of families are going nuclear in smaller cities. The share of nuclear families has risen from 50.7% in 2001 to 52.1% in 2011 census This implies more households who demand more variety of goods to satisfy their varied needs
- Around 54 million households with low disposable income ranges are likely to shift to the next higher bracket in the next forecasted period.
- Rising spend by households across categories especially in clothing, footwear, and household goods
The graphs clearly depict that the elite and affluent groups in the metro cities are now being challenged by the talent and resources available in the rural and semi-urban areas.
Main Features That Are Contributing To The Retail Boom Closer To Home
Kerala is one of the largest consumer markets in the country and presents the retail players with mind-blowing opportunities. With its ability and aspiration to emulate highly successful technology-driven states and countries, it is creating its own world-class cities. The dynamic and fast-paced transformation that the consumers in the state have undergone should be taken into account while catering to their ever-growing needs.
Living the e-life
Kerala is the first state in India to be declared as ‘Digital State’ and is well ahead of the other states in e-matters. The state has started reaping the benefits from the visionary measures by the government like The Akshaya project and IT@School that were formulated back in 2002. The well-connected state covers about 20% of households through broadband and other 15% through mobile (as per Telecom Regulatory Authority of India).
Kerala paints the prettiest picture when it comes to the education system in India. The highly efficient government schools that impart quality education to everyone has been the cornerstone of the high literacy rate that the state boasts of. The highly educated, well-read Keralites have created a vast pool of informed consumers who demand high-quality goods and services.
The Smart consumer
In an interesting statistical report, a strong co-relation between literacy rates and smartphone sales has been identified. A study conducted by Mobilytiks, a data-driven analytics program at CyberMedia Research, shows that people in states with higher literacy rates prefer smartphones over feature phones. So Kerala with its literacy rate of 94% has the most no of people who opt for a smartphone over other phones.
Wallowing in wealth
The huge success of Malayalees in the State as well as outside India have created enormous potential in Kerala. As a market, the state has opened its doors to luxury and lifestyle retail. The Forbes Indian Billionaire’s list has eight names from Kerala. This has given rise to a breed of informed affluent consumers who wish to indulge in luxury like never before.
In Kerala, a major part of income comes from the NRI population. Data from the World Bank shows that in the year 2018, India was the top recipient of remittances on a global scale. The statistical reports below prove that even though Kerala does not send half as many migrants abroad as Uttar Pradesh, the state has the biggest share of remittances.
Hopping on the luxury bandwagon
Kerala is on the threshold of a luxury revolution. The steadily improving reputation of India as a global lifestyle hub has facilitated the entry of premium global brands in India, including Kerala. The upscale elegance and status quo of designer clothes, bags, wallets, shoes, and accessories is no longer restricted to metros only but has also caught the fancy of tier II and tier III cities.
Five Indian brands from India have been featured in Deloitte’s Global Luxury Top 100 listings of which two are from Kerala –Kalyan Jewellers India Pvt. Ltd. (#Rank 35) and Joylukkas India Pvt. Limited (#Rank 47). The rise of state-owned brands to a global scale shows the penchant of Keralites for luxury. Malayalees are also known to splurge on premium living spaces, with more than 55% owning large residential properties and only 5% living in dilapidated homes (According to a report by JLL).
The urge to flaunt high-end cars is driving the sale of luxury brands despite the challenges posed by demonetization and floods. Kozhikode, after Kochi, has emerged as the state’s growing market for luxury cars likes BMW, Audi, Mercedes, Porsche and Jaguar Land Rover. Thanks to the increasing remittances from non-resident Keralites and the people’s urge to splurge on such brands, the city has been witnessing booming sales of luxury cars.
According to Volvo Cars India, the growth was largely been driven by new product launches. Also, the opening of five new showrooms in Calicut, Raipur, Kolkata, Indore, and Mumbai, further propelled the sales of the company.
Want for more
Due to the lack of options in physical stores at their hometowns, this traveling, aware and affluent class is trying to emulate the lifestyle of their metro counterparts by turning to e-commerce, which offers them goods from all over the world right at their doorstep. This has resulted in an e-commerce boom in tier-I and tier-II cities. India is expected to become the fastest-growing e-commerce market in the world. This will be driven by robust investment in the sector and a rapid increase in the number of internet users.
Exposure to new-age gadgets and fashion is growing at a fast pace due to high Internet connectivity and an increase in DTH and paid TV penetration in India. Young people from less developed cities and districts with limited or no access to branded products are turning to online stores. Cash On Delivery (COD) has made it very convenient for people to pay for products even if they do not own a debit or credit card. All these factors have played a role in this growth.
This land of opportunities with their steadily increasing market demand is sending out an open invitation to the retail players which unfortunately the supply has not yet been able to reach.