Why Aren’t More Companies Targeting This Market with More Than One Billion Consumers?
India is the seventh largest populous country with a whopping 1.25 billion people. Take a second to let that set in. The United States has a population of 316 million, which India dwarfs by almost four times. As reported by Trading Economics, “Consumer spending in India averaged $146 billion USD from 2004 until 2016, reaching an all-time high of nearly $250 billion in the first quarter of 2016.” It’s numbers like these that convince companies to start to take notice of a customer base that is worth the expansion to South Asia for.
Saks is one of the big retail names that have plans to open brick and mortar stores in India. The company has partnered with Aditya Birla Group and – along with the help of their parent company, Hudson’s Bay Co – are working on leasing 100,000 square feet in Worldmark 2 shopping center in New Delhi. The company plans to open doors in 2017-18.
They’re not alone. It’s a growing trend over the last decade for companies with the proper infrastructure to open stores in India to tap into the huge (and still growing) consumer-base. Companies like Walmart, Ikea, H & M, Zara, and the Gap have all made the jump over the pond as customer spending in India continues to rise.
Let’s talk demographics
Nearly 41% of India’s population falls between the 25-54 years, with the total median age of 27. In addition, 60% of the population was born after 1980. This includes 443 million millennials and 393 million Gen Zers – both with disposable income that’s left companies salivating. Retail is one of the largest industries in India, representing almost a quarter of the national GDP. India is also investing in itself as companies flock to its shores by not allowing any foreign investor to own more than 40% of local businesses, and implementing laws to for corporations to spend 2% of their net profits on Corporate Social Responsibility.
The possibilities are endless for companies who are considering the move. Cars, home items, technology, and especially clothes are all possible industries that would fair well. Goldman Sachs reported that “packaged snacks, baby products, premium personal care, scooters, SUVs and jewelry” are all examples of what the Indian consumer-base often spend their money on. With all this in mind the question is, how many more western companies are going to make the jump, and why haven’t more already?
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