1. ANTH 393 – 01
The Americanization of India
Bhagya N. Bandaranayake

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Retailing In India: Has It Led To An Americanization Of Indian Culture?
According to a research study done by the McKinsey Global Institute, India was
the twelfth largest consumer market in 2007 (executive summary). At the rate at which
it is growing, the country will climb from this position to fifth by 2025. “India’s retail
industry accounts for 10 percent of its GDP and 8 percent of the employment to reach
$17 billion by 2010” (RNCOS 2005). The current economic situation places India
among the top countries suitable to invest in Asia, and everyone is contemplating location
in India. The country, on the other hand, has gone through a considerable transformation
because of western companies entering the Indian market. Some think it has led to an
‘Americanisation’ of the major Indian cities (e.g. Boo, 2004), similar to the
Americanization of other Asian cities like Tokyo. As retailing develops in these Asian
cities and take on a more western appearance, one might think that it paves the way to a
homogenized world. However, even homogenous American entities such as McDonald’s
and Coca Cola have adapted to an Indian environment rather than continue American
business practices in their entirety. Therefore, American retail in India points to more
creolization than homogenization, and it has not, at least not yet, brought about a
complete Americanisation of the Indian way of life.
India used to be an agricultural society; indeed, 17.5% of gross domestic product
(GDP) for the fiscal year 2006-07 was from agriculture or agriculture-related industries
such as live stock development, but down from 25.2% in 1998 (The Economist
Intelligence Unit [EIU]). However, they have been on the transition to a more service-
based industry, e.g. information and communication technology. In the same fiscal year,

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54.6% of GDP was produced by the tertiary sector, as opposed to 44.6% in 1998. The
manufacturing sector is also significant, making up 27.9% of GDP in 2006-07 (EIU,
2007). This break down of the three sectors of the economy is an important factor in
understanding the behaviour of the general Indian consumer.
After the British colonial era, India’s economy was struggling to discover an
identity of its own. The start of India’s retail industry can be traced to the emergence of
corner stores that catered to the immediate needs of consumers in the neighbourhood
(Retail Reality, n.d.). Change was slow, but the next big shock came when India opened
up its economy in the 1980s. Retail store chains began to appear with the expansion of
textile companies, when manufacturing firms began to add retail stores to their
distribution chains. 1995 onwards saw the emergence of shopping centres, mostly in
urban areas, with facilities like parking lots, to cater to a wider consumer base. As
markets expanded, these shopping centres evolved into supermarkets and hypermarkets,
providing customers with the 3 Vs: value, variety, and volume. Another marketing
revolution came in the form of packaging in smaller quantities, or sachets, allowing firms
to move their focus onto people in lower-income groups, who were not previously
targeted. The sachet revolutionised the marketing world and widened targeted consumer
segments (Reality Retail, n.d.).
For a long period of time, India was in economic isolation, and not integrated into
world economics. Before the economy opened up, foreign and branded products were
scarce and considered to be luxuries. Companies seeking new markets in India had to
create whole new lifestyle choices for Indian consumers. For example, Kellogg’s, when
they entered the Indian market, first had to promote cereal as an alternative breakfast (as

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opposed to rice), before they could sell their own brand (Roy, 2008). As of 2005,
retailing was closed to foreign direct investment (FDI). This meant that the multinational
corporations (MNC’s) based in India had to participate in the Indian consumer economy
by way of franchises, or having a manufacturing base in India (KPMG, 2005). However,
these companies, Pizza Hut and Unilever (or the Indian Hindustan Lever) for example,
have been instrumental in transforming the habits of urban consumers. Although a
complete abolition of FDI restrictions is not visible in the near horizon, the Indian
government is now in the process of loosening the laws and lessening the negative
impacts.
Companies based in India expect the retail industry to expand faster than GDP in
the next few years. They believe that changing lifestyles, favourable demographic
patterns and the growth of personal disposable income will encourage this expansion.
India’s middle class population is estimated to increase ten times and household income
to increase three times, bringing aggregate consumer spending to US$ 1.76 trillion in
2025 (India Brand Equity Foundation, 2008). The choices people make about products
have changed: they now place more importance on quality and value-for-money, rather
than price or quantity. Retailers who provide the best products accordingly, obtain the
most sales. However, more people in India are supposed to be living in poverty and more
live in rural areas (KPMG, 2005). Income is also distributed less equally, compared to
other similar economies. At the end of 2006, only 17.5% of households were earning
more than $25,000 (middle class), while 46% were earning less than $10,000 (as cited in
Ryan, 2006).

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The biggest new opportunities are opening up in rural markets where nearly 75%
of India’s population, which is around 240 million households, are located (Balakrishna
& Sidharth, 2004). These markets were untapped in previous years, but with the
spreading popularity of television, rural consumers are now more knowledgeable about
what the market has to offer. Marketers can no longer attract rural consumers with just
posters and cinema commercials; they have to work as hard on their rural advertising
campaigns as they do in urban markets (Kannan, 2001). Anugraha Madison, who has
been credited with introducing the concept of rural marketing in India, thinks that the
urban-rural divide is slowly thinning, and that around 50% of rural people are now
occupied in businesses other than agriculture (as reported by Warrier, 2005). Therefore,
some areas such as Punjab, Tamil Nadu, and Kerala have been classified as ‘developed
rural India’. Even if around half of the rural population is still agrarian, favourable
weather conditions have increased disposable incomes in the past few years, and pushed
more expensive products through to the ‘affordable’ category.
However, moving into rural markets is still risky for any major MNC, as it is
expensive and more or less likely to hurt private profit margins. Rural consumers are not
very different from their urban counterparts, but reaching them takes special effort on the
companies’ part, as rural infrastructure is not yet strong enough to support international
business. Entering this market without proper knowledge of conditions can spell disaster
for foreign companies. Most MNC’s have tried to incorporate the 4A approach:
availability, affordability, acceptability and awareness (Balakrishna & Sidharth, 2004).
To ensure availability, some firms have ‘gone native’, using such local transportation
methods such as bullock carts and boats. Affordability has turned out to mean packaging

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in ready-to-use small quantities and selling for a few Indian rupees a piece. For example,
Coca Cola’s introduction of the returnable 200ml glass bottle that sells for five rupees has
resulted in 80% of new drinkers coming from rural areas. The product is the same as it is
in America, but as far as rural Indian consumers are concerned, they are not exactly being
Americanized, since most of them have no knowledge of ‘how it is done’ in America.
Since most MNC’s will be promoting previously unfamiliar products, being
accepted by the rural consumer is critical to the success of business. Therefore,
companies like LG Electronics have customised their products to suit the rural market,
and given those products names in local languages. Creating awareness still takes some
work as only 41% of the rural population have access to television (Balakrishna &
Sidharth, 2004). A combination of TV, radio, wall writing, posters, banners, vans and
other road shows and the like would be the most effective. So far, Coca Cola has
managed to access every local form of entertainment for their promotional activities.
Advertisements for such products, especially Coca Cola, focus more often than not on the
Indian culture and its values and beliefs rather than promoting any Americanization.
On the other hand, the improving economy has also given the opportunity for
more Indians to travel abroad, and when they return, they “bring back new attitudes and
preferences” (KPMG, 2005). In 2007, over 84,000 Indian students enrolled in higher
education in the United States (Madaan & Co., n.d.). Another trend that is emerging in
the changing economy is as a result of American organizations outsourcing work to India.
India has now become the outsourcing capital of the world, with a number of major
organizations locating their call centres and back office processes in the country. The
trend has affected the lifestyles of the younger Indian generation, who are most likely to

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be employed by these firms. Since they start work later in the day, and finish late at night
to keep up with American time zones, their lifestyles have evolved to include more
western choices such as night clubs (Bombay Calling, 2006). They are also becoming
aware of the American way of life, learning about the opportunities and lifestyle choices
available for American consumers. This creates demand for American products, and
thus, places like Pizza Hut are ‘hotspots’ for affluent young urban consumers. Just as
James Watson reports in China’s Big Mac Attack (2000), although fast food restaurants
like McDonald’s are havens for low income groups such as students in America, they are
the most prestigious in India.
Managers of these firms which undertake outsourced work, who are either
foreign-educated Indians or are foreigners themselves, value open organizational
structures as opposed to tight conventional hierarchies, and so are almost idolised by their
employees (e.g. Joseph Sigelman in Boo, 2004). Western ideas such as love marriage is
also gaining popularity among young Indians who are rejecting traditional concepts of
arranged marriages and the set of laws and regulations that come with it (e.g. dowry).
For this generation of Indians, being Americanized has positive meaning, and hopes of
brighter independent futures. Their incomes are also higher than average, making more
expensive and branded products affordable. As a result, kinship systems are also
changing in more urbanised areas, which have resulted in a reversal of traditional roles.
Extended families break up as younger members of a household move to the city to work
in ‘American’ companies. More and more of them are warming up to the idea of
individualism, as opposed to collectivist norms.

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Thus, a new and important market segment would be the younger, educated
generation between the ages of 20-34 who live in urban areas (Research and Markets,
2005), and they are most likely to imitate the behaviour of western consumers. The use
of information and communication technology (ICT) is also increasing in India, with the
internet being used for most business and household needs. Therefore, e-tailing will
increase in popularity in the very near future. Website design and e-commerce has to
advance in order for the online market to expand. As lifestyles change, so do consumer
attitudes and choices. The success of dating websites such as shaadi.com that cater
specifically to the younger Indian generation is an excellent example.
India’s current population boom calls for an 8% economic growth over the next
few years, to be able to provide employment to all new entrants in to the workforce. The
country is also projected to have a smaller ageing population compared to other countries.
Therefore, the Indian retail industry is less likely to follow patterns seen in similar
economies. Research on consumption patterns show that as average income grows, the
Indian consumer tends to spend outside of home; they spend more on vehicles, cell
phones, and eating out at restaurants rather than on household goods and personal care
items. More companies planning to set up business in India in the near future is more
likely to promote products and lifestyle choices for the younger generation than an older
one. The Indian economy’s fast growth has been the topic of discussion in the business
world for the past few years. RNCOS (2005) reports that:
According to this year’s Global Retail Development Index India is positioned as the
leading destination for retail investment…. A large young working population with
median age of 24 years, nuclear families in urban areas, along with increasing

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working-women population and emerging opportunities in the services sector are
going to be the key growth drivers of the organized retail sector in India
(researchandmarkets.com).
In conclusion, although the Indian retailing industry is on a rapid growth path to
promote consumerism, it is taking its own localised route. American and other foreign
brands are indeed becoming more popular, as are other westernised ideas. However,
these products and ideas are almost always modified to suit Indian values and beliefs that
have been rooted in Indian culture for years. The Americanization of India is only
progressing very slowly, if taking place at all. Consumer tastes will change and so will
other values and priorities, and they might increasingly seem similar to western
equivalents. Nevertheless, a complete homogenisation by way of Americanization will
not occur, as this requires much more than the mere acceptance and adaptation of
American products by the Indian market.

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