Published: Mint dated 4h July, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat mark...
In India, it is not just the rural-urban divide that is striking in consumer markets, butalso the diverse income segments ...
On an average, the three items that make up the largest share in the householdexpenses are travel and conveyance, consumer...
For these ‘new-comers’, high end purchases are a sign ofmaking it into the elite and all the latest in services, brandsand...
The two western states of Maharashtra and Gujarat house the highest shareof these rich households, with more than 10% of t...
The broad segment of households earning morethan Rs. 10 lakhs per annum will have within itvarious categories of household...
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Top end urban consumers

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In India, it is not just the rural-urban divide that is striking in consumer markets, but also the diverse income segments within the urban centres. Income-wise segments can be created in many ways, the Indicus Urban Consumer Expenditure Spectrum takes five cuts – households earning less than Rs. 1.5 lakh per annum, between Rs. 1.5 lakh and Rs. 3 lakh, between Rs. 3 lakh and Rs. 5 lakh, between Rs. 5 lakh and Rs. 10 lakh and finally, households earning more than Rs. 10 lakh per annum. The top-end of urban consumers, that is the households earning more than Rs. ten lakhs per annum is a small segment, comprising around 5% of all urban households in India and around 6% of urban population. Yet despite being a small group, this segment contributes to a third of total urban consumer expenditure, making it one of the most sought after markets in India. This segment also constitutes close to half of the total urban household savings, with the highest disposable income and earning opportunities.

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Top end urban consumers

  1. 1. Published: Mint dated 4h July, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat marketerswould like tounravel in order totarget theirproducts andservices precisely.In this fortnightlyseries, IndicusAnalytics willpresent the variousfacets of urbanconsumers, acrossgeographies andsocio-economicgroups Indicus Consumer Data Products
  2. 2. In India, it is not just the rural-urban divide that is striking in consumer markets, butalso the diverse income segments within the urban centres. Income-wise segmentscan be created in many ways, the Indicus Urban Consumer Expenditure Spectrumtakes five cuts – households earning less than Rs. 1.5 lakh per annum, between Rs.1.5 lakh and Rs. 3 lakh, between Rs. 3 lakh and Rs. 5 lakh, between Rs. 5 lakh andRs. 10 lakh and finally, households earning more than Rs. 10 lakh per annum. Thetop-end of urban consumers, that is the households earning more than Rs. ten lakhsper annum is a small segment, comprising around 5% of all urban households inIndia and around 6% of urban population. Yet despite being a small group, thissegment contributes to a third of total urban consumer expenditure, making it one ofthe most sought after markets in India. This segment also constitutes close to half ofthe total urban household savings, with the highest disposable income and earningopportunities.
  3. 3. On an average, the three items that make up the largest share in the householdexpenses are travel and conveyance, consumer services and rent. Households inthis segment can afford to own more vehicles, travel at resorts around the country orholiday abroad. The high income also makes for large expenses on consumerservices, especially salaries of maids, drivers, tailoring and personal care services,telephone and other communication expenses and so on. Even within personal careservices, these households would tend towards the high-end of the spectrum as theycan well afford such luxuries. Apart from those who have always been in the upperincome segments, the ‘old rich’ of urban India, there would be those households whohave made it into this category in the last decade or so.
  4. 4. For these ‘new-comers’, high end purchases are a sign ofmaking it into the elite and all the latest in services, brandsand gadgets are on the shopping list. The third categorythat makes it into the big-ticket expenditure is rent – upperincome households would prefer to stay in neighbourhoodsand apartment societies that are again on the top-end ofurban real estate. In cities like Mumbai, renting is often stillan easier alternative to owning a flat in a good locality, areflection on the high real estate values. Paying top endrents however eat into household budgets. For these ‘new-comers’, high end purchases are a sign of making it into theelite and all the latest in services, brands and gadgets areon the shopping list. The third category that makes it intothe big-ticket expenditure is rent – upper incomehouseholds would prefer to stay in neighbourhoods andapartment societies that are again on the top-end of urbanreal estate. In cities like Mumbai, renting is often still aneasier alternative to owning a flat in a good locality, areflection on the high real estate values. Paying top endrents however eat into household budgets.
  5. 5. The two western states of Maharashtra and Gujarat house the highest shareof these rich households, with more than 10% of the urban rich Indians in thissegment. Looking at the distribution region-wise, the largest share overallcomes from the northern region, which also has the largest population; hereit is the cities of Delhi, Chandigarh, Faridabad etc. which have a high shareof rich households. While Mumbai and Delhi top the list of cities with thehighest share of urban Indian rich households in this segment, apart from theother large metros cities like Ahmedabad, Surat, Vadodara, Rajkot, Nagpur,Ludhiana, Vishakhapatnam, Faridabad and Coimbatore rank amongst thetop 20.
  6. 6. The broad segment of households earning morethan Rs. 10 lakhs per annum will have within itvarious categories of households whoseexpenditure and savings characteristics would varydepending on region, city, occupation and life-stageof the chief wage earner etc. While there would beeven finer income cuts possible in this segment, byand large this broad segment is the one seen to beshopping in the malls, eating out often,experimenting with the new tastes and fashions andso on - this is the class all urban Indians ultimatelyaspire to belong to.

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