Emerging Consumer Demand: Rise of the Small Town Indian

This White Paper from Confederation of Indian Industry (CII) and Nielsen India, titled Emerging Consumer Demand: Rise of the Small Town Indian (2012) takes a closer look at how the smaller Indian towns are leading the demand surge and shopping like metros. I believe, one of the inherent strength of the Indian economy – private consumption expenditure, will continue to remain the strongest pillar of the Indian growth story. Sustaining this consumption story is the rise of the small town consumer.

The Indian consumption landscape in the small towns is dramatically changing – higher disposable income, demographic dividend of a younger generation, heightened aspirations, increasing urbanization resulting in a growing number of nuclear families – all important and key factors leading this development.

Eight thousand towns, 630,000 villages, over eight million stores and 1.2 billion people! In such a diverse consumer universe, how do you measure demand, where is it strongest? North vs. South, the metros vs. Rural – the choices are endless. Nielsen has found that despite current inflationary environment, tier II and tier III towns are showing strong momentum with an improved demand appetite.

Rethinking the rural

An article of The Indian Express (23 May 2013)

India is urbanising away from the big cities. This trend calls for policy changes, Say “rural India”, and the image that flashes in our minds is that of a buffalo tied outside a mud hut. After all, for most if not all of us, rural equals agriculture. Imagine the surprise, therefore, when told that while all agriculture by definition is rural, the converse is no longer true. Now only one-fourth of rural output comes from agriculture. Fifty-five per cent of India’s manufacturing output comes from rural India. Seventy-five per cent of all manufacturing plants that started in the last decade started in rural India.

K.C. Pradhan from the Centre for Policy Research estimates that in the last decade almost 30 per cent of the increase in urban population came from the reclassification of villages into new census towns. Add that to the natural population growth in cities/towns (that is, urban-dwellers having kids), and it would seem that the conventional view of urbanisation, that of a poor migrant worker sitting in a train moving to a city, is fast becoming outdated.