With New Behaviors, India’s Consumers Bring Change to a Dynamic Market

MUMBAI—Fifty percent of people living in Indian cities bypass internationally famous brands to buy something with an Indian manufacturer’s name on it. More than a third forgo product purchases in order to be able to afford experiences that they find personally enriching. And almost a fifth prefer to rent something that they previously would have bought. These are among the findings of a new study by Boston Consulting Group (BCG), detailed in the article “Ten Trends That Are Altering Consumer Behavior in India,” which is being released today.

The new behaviors aren’t limited to high-income households or to consumers in India’s biggest, most sophisticated cities, the study shows. Indeed, people who live in India’s smaller tier 2 and tier 3 cities are almost as likely to exhibit the behaviors as those in the country’s tier 1 cities and metros. Household income has even less impact on the prevalence of the behaviors. The article is based on interviews with some 5,000 urban consumers in 16 cities, ranging in size from Mumbai (population 19 million) to Panipat (300,000). BCG’s Center for Customer Insight (CCI) oversaw the study.

“The surprise isn’t that high-income consumers are adopting these behaviors or that people in big cities are doing so,” said Nimisha Jain, a BCG partner in New Delhi, who leads CCI in emerging markets. “To a large degree, we knew that. The surprise is in the extent of the behaviors in urban centers of every size. Mumbai and Delhi might be leading. But you see the same things happening all over India.”

Social recognition—being perceived favorably by others—was one of the big themes of the study. “People in India are making no secret of the satisfaction they get by publicizing their activities via social network postings,” said Kanika Sanghi, a BCG partner who leads CCI in India. “Social recognition was the key motivation for half of the behaviors we found.”

Shining a Light on India’s Urban Consumers

India’s increasing wealth, urbanization, and changing gender roles, along with shifts to smaller family units, have coincided with the emergence of some significant new behaviors:

• Information-Centered Shopping. Eighty-five percent of Indian consumers check at least two data points before they make purchases. The most common data points are product reviews and (for perishable items) expiration dates.
• Shopping to Stay Trendy. Sixty-two percent of consumers shop to stay on top of the latest trend. The behavior is most prevalent in categories with some kind of public visibility, including jewelry, gadgets, and cars.
• Adoption of Time-Saving Services. Fifty-seven percent of Indian consumers access time-saving products or services, such as eating prepackaged food or shopping online versus going to a mall. These behaviors reflect a desire to create time for activities seen as more intrinsically rewarding.
• Health and Wellness. Fifty-seven percent of consumers also spend money on food or services that have a health focus. This is one of the behaviors that has a strong payoff in terms of social recognition. Many of the Indians who spend on health and wellness do so in order to look better.
• Use of Customized Products. Paying extra to get something unique has become a well-entrenched behavior in India: 56% of consumers do so. It is particularly common in apparel, relating to specific fabrics or colors, and in purchases of 2- and 4-wheel vehicles.
• Women as the Principal Decision Makers. In India, women now have the final say in the majority of household purchasing decisions (54% of the time).
• A Preference for Indian Brands over International Ones. Fifty percent of Indian consumers said that they consciously seek out Indian brands in at least one category. This is a far cry from the day when an Indian traveling abroad would be besieged with requests from family and friends to bring back international products. The preference for domestic goods is particularly visible in food and personal-care categories.
• Valuing Experiences over Products. Seventy-seven percent of respondents paid for at least three different types of experience last year. Increased income accounts for some of that behavior, but 37% percent of consumers traded down in certain product categories—such as jewelry, mobile phones, and home furnishings—in order to spend more on experiences.
• Exclusivity Adds Value. Indian consumers are famously value conscious, and 37% of them now believe that exclusive brands enhance the value of a product.
• Renting over Buying. Seventeen percent of urban Indians have rented a particular item in the past year that they previously would have purchased. Among the popular new rental categories are clothes and technology.

The findings have implications for a wide variety of multinationals and local B2C companies that want to succeed in India, which is on track to be the world’s third-largest economy within a decade. “These behaviors are creating a new landscape for corporations to navigate,” said Sanghi. “Companies that don’t move quickly to make adjustments are going to have a hard time.”
A copy of the report can be downloaded Ten Trends That Are Altering Consumer Behavior in India.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About the Center for Customer Insight

Boston Consulting Group’s Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG’s Marketing, Sales & Pricing practice and Global Advantage practice. For more information, please visit www.bcg.com/expertise/centers-accelerators/center-customer-insight/default.aspx