Middle-class Indians earning Rs 2.5-10 lakh to drive e-commerce growth

Middle-class now accounts for 31% of the Indian population and is expected to increase to 38% by 2031 and 60% by 2047

The retail boom in India will be driven primarily by those earning between Rs 2.5-Rs 10 lakh per year, and will present a $1.3 trillion opportunity by 2030, reported The Economic Times (ET) citing a new report.

This 'mass' consumer segment is expected to drive $1.3 trillion in the overall Indian retail market and nearly 45 per cent of the $300 billion e-commerce opportunity in India by 2030, it said.

By 2030, 'mass' consumers may drive more than $135 billion gross merchandise value (GMV) of India's total e-commerce opportunity of $300 billion.

The report by Redseer found that 75 per cent of mass consumers are millennials and Gen-Z consumers.

"While Gen-Z, who are young and independent, show purchase preference for apparel, beauty and personal care [BPC], and electronics, the value-driven independent millennials tilted towards BPC, food & grocery, and apparel," said the report.

"Gen-X constituted about 13 per cent and spent a higher share on food and grocery, followed by health and wellness. Although Gen-Z consumers have distinct characteristics from older generations, they are also value-conscious at the core," the report added.

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The survey also discovered that this segment (Gen-X) is willing to buy unbranded items if the quality is good. Prices/deals and discounts on e-commerce platforms, product quality, and trust in the platform are the three factors that influence purchase decisions in this segment.

Fastest-growing major segment of India

The middle class (earning up to Rs 10 lakh) is the fastest-growing major segment of the Indian population in both percentage and absolute terms, growing at a rate of 6.3 per cent per year between 1995 and 2021.

It now accounts for 31 per cent of the population and is expected to increase to 38 per cent by 2031 and 60 per cent by 2047. When India turns 100, more than one billion Indians will be in the middle class. These are the results of PRICE ICE 360 degree surveys based on primary data.

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Strivers, a sub-group of the Indian middle-class with an annual household income of between Rs 15 lakh and Rs 30 lakh, grew at a rate of 6.4 per cent per year between 2015-16 and 2020-21.

The Seekers, another sub-group of the middle-class earning between Rs 5 lakh and Rs 15 lakh per year, grew by 4.8 per cent annually during this period, said the PRICE survey.

By the end of this decade, the country's demographic structure will shift from an inverted pyramid, indicating a small rich class and a very large low-income class, to a rudimentary diamond, indicating that a significant portion of the low-income class will move up to become part of the middle class, it added.

Thus, population growth will act as a catalyst for e-commerce industry in India.

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