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Next level of consumer growth in India in 2019 through e-commerce

Deloitte consumer report

Mumbai, February 26, 2019: Stating that the e-commerce will be the engine of the next level of Indian consumer growth beginning this year, a Deloitte India and Retailers Association of India report pegs the India's ecommerce marketplace at $200 billion and is poised to grow to US$1.2 trillion by 2021.

The Deloitte’s 2019 consumer business focused reportUnravelling the Indian Consumer was released today. According to the report, India’s e-commerce marketplace is currently growing at CAGR 32% and would further rise as the e-commerce space grows at a massive pace, boosting to the overall consumer segment growth in the country.

Some of the factors listed out in the report which attribute growth projection include the following:

  • Changing purchase patterns:  With increasing internet penetration in India, online buyers are rapidly increasing. Moreover, m-commerce is growing at an exponential pace: m-wallets transactions in India increased from INR 200 billion in FY16 to INR 3,000 billion in FY18.
  • High intensity online shopping pattern and heightened use of smartphones, given the increase in internet penetration across the semi-urban and rural segments, helps boost the sales outcome.
  • The millennial population of India has mostly championed this trend across tier one, tier two, and tier three markets.
  • Interestingly, social-commerce in India has been on the rise. According to the report, 28% millennials purchase products due to social media recommendations, and 63% millennials stay updated on brands through social media.

Speaking at the launch of the report, a Deloitte India spokesperson said, “India continues to hold a strong position as far as its market potential is concerned and is on its way to becoming the third largest consumer market in the world, poised to grow close to US$ 1.2 trillion by 2021.

The Indian consumer is truly empowered with the decision-making capability and adoption uptick going beyond the urban areas. This is further facilitated by digital technology.

Moreover, use of innovation by way of offering experiential retail has picked up of late with the use of advanced data analytics, bots and drones, beacons, cloud-platforms, AR and VR to understand the real need of the consumer.

This further shows the maturity of business and the solid platform existing in the country for all types of market players such as consumers, distributors, logistics service providers and development of the ancillary sectors including transportation, logistics, cold chain facilities, etc., that will help India consumer business to the next level of growth.”

The Deloitte report emphasizes that despite the stress faced by the Indian rupee and the rising crude oil bill, Indian retail market would grow at a CAGR of 7.8% between 2021 and 2026.

  1. Further analysis brings key characteristics of the new-age age consumer by highlighting the following points:
    1. Experiential shopping: Consumers increasingly prefer to buy from modern retail stores with spacious layouts. While there are multiple options from where a product can be bought, shopping experience is becoming the key differentiator amongst channels.
    2. Healthy choices: Increasing sedentary lifestyle and changing eating habits has made way for healthier choices including natural, herbal, and organic and Ayurvedic Research indicates that 36%of the Indian millennials have a fitness app installed on their phones and about 45%think leading a healthy life is essential. Therefore, even though ‘eating out’ as a concept has significantly increased, specifically amongst millennials, focus on healthy alternatives is also on the rise.
    3. Importance of convenience: Convenience is an important consideration for millennials on account of their hectic lifestyle. For the working younger generation, dearth of time is one of the key reasons for the growth in online shopping and online ordering from restaurants. It is for this reason that the ‘ready to eat’ product category has grown exponentially at the rate of over 28%per annum over the last five years.
  2. Even though the retail industry is growing, its convergence is evident from the number of M&A deals that rose by 25% between 2017 and 2018.

In terms of sub–sector performance within consumer retail, the report highlights interesting insights. While the F&B and apparel, footwear and accessories space contribute a bigger share to the consumer retail pie, FMCG and automotive companies have much higher numbers for total market 

Media contact:
Mou Chakravorty
Deloitte Shared Services India LLP
M: +91 (0) 8454042392

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