SlideShare a Scribd company logo
Emerging
Rural & Small Town India
1
Pradeep Kashyap
Founder & CEO, MART
Presentation to CEO forum
September, 2013
1 Million +
< 1 Million
< 10,000
48
large cities
7,834
towns
640,000
Village
50%
25%
25%
GDP
share
12 %
18%
70 %
Population
Where Does India Live
Source : Census of India 2011,, India Urbanization Econometric Model -McKinsey Global Institute ,MART Knowledge centre 2
Growing Rural Demand
Source: NSSOPercentage increase in monthly per capita expenditure
Per capita rural GDP grew at 6.2% CAGR against 4.7% in
urban since 2000
3
Rural Growth Drivers
•Government Initiatives
oNREGA
oBharat Nirman
oImproved Infrastructure (all 500+ population villages
connected by road)
•Transformation in Agriculture
•Rural becoming a non farm economy
•Emergence of services sector
•Emergence of small towns
4
Agri Transformation in Last Decade
•50 mn tonnes increase in food grains production
from 196 to 245 mn tonnes
•Eight good monsoons
•More than two fold increase in support price of food grains
5
Emergence of Service Sector
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
Mar-00 Mar-03 Mar-06 Mar-09 Mar-12
Service (40%)
Industry (30%)
Agriculture (30%)
Source: Government of India
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
6
Retail trade
39%
Manufacturing
26%
Community, social and
personal service
Education
Hotels and resturants
Transport and storage
Health and social work
other
12%
Non-agriculture Establishments in Rural India
Source: NSSO 7
2%
4%
4%
5%
8%
Manufacturing shifting to Rural
•Out of 36 million non-agri enterprises in India,
20 million in rural (55%)
•75% of new factories in last decade in rural
•70% of all new manufacturing jobs created in rural
8
Rural Employment in millions
Source: NSSO and CRISIL Estimates
Agriculture,
hunting &
forestry &
fishing
Industry Manufacturing Construction Services
1990-00 218.3 32.6 21.2 9.4 35.5
2004-05 249.4 47 27.8 16.8 46.7
2009-10 229.0 58.6 24.2 31.7 49.5
9
Small Towns
Cities &
Towns
No. Pop Strata
(in Million)
% Share of
HH
Income/H
H in INR
% Share of Total
Disposable Income
Tier I 8 > 4 29 1,86,000 39
Tier II 40 1 - 4 15 1,36,000 14
Tier III 53 0.5 - 1 9 1,29,000 9
Tier IV 7781 < 0.5 47 1,14,000 39
Total 7882 100 100
…NOT SO SMALL
10
Now
Rudrapur
Then..
11
Rudrapur
Radisson Blu
SIDCUL
(Rudrapur outer/Pantnagar, on NH 87)
….Now
Budget Hotel- Hotel Ginger,
a Tata enterprise in Sidcul
OMAXE & METROPOLIS CITY
(Back side of Radisson)
12
Migration to metros slowing down
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Delhi Mumbai Kolkata Chennai Bangalore Hyderabad
1981-1991
1991-2001
2001-2011
Source: Census Bureau of India
Growth in Urban population,
2001 to 2011
13
Rural Economy
One Trillion
14
Rural Economy
or
15
150
500
250
900 million
2020
50
350
400
> 5
1-5
< 1
800 million
2010
Per capita Income – USD/Day
Pyramid Morphing to Diamond
16
Share of Household Spending
rural catching up fast
45
5
11
9
7
5
55
5
10
6 7
5
Food Health Transport &
leisure travel
Education Clothing Durables
Urban Rural
Source: Max NCAER Survey, 2007 17
Changing
Consumer Behavior
18
Shift from
Loose to Packaged
loose
Packaged
19
Multi Brands within family
& by Individual
20
Shift from
Affordability to Economy
21
Regional Players gaining ground
22
Aspiration matching Urban
23
Buy Value for Money
24
English Medium Private School
25
Private Tuitions
26
Ready Stitched No Tailoring
27
Challenges of Reach, Acquire & Retain
Go to Market
28
• Problem
o Dispersed geography,
o Poor infrastructure - Leading to high logistics
costs
Reach
• Solution
o Identify high potential states ,towns
and villages
o Urban clusters (NCR + other metros)
o Large towns as hubs for villages
o Innovative ‘last mile’ reach
o Feet on street
29
Tale of 3 Rural India’s
Developed
Goa, Gujarat, Haryana , Maharashtra, Punjab,
Delhi
Developing
Arunachal Pradesh, Himachal Pradesh, West
Bengal, Tamil Nadu, Karnataka
Under Developed
Bihar, Madhya Pradesh, Uttar Pradesh, Odisha,
Rajasthan, Chhattisgarh, Jharkhand, NE States
30
TV
Ownership
%
4 wheeler
ownership
%
GDP Share
%
Population
%
Population
Mm
Developed
50 4 30 20 170Goa, Gujarat, Haryana , Maharashtra,
Punjab, Delhi
Developing
25 1.5 34 30 240Arunachal Pradesh, Himachal Pradesh,
West Bengal, Tamil Nadu, Karnataka
Under Developed
12 0.9 36 50 400Bihar, Madhya Pradesh, Uttar Pradesh,
Odisha, Rajasthan, Chhattisgarh,
Jharkhand, NE States
Tale of 3 Rural India’s-Potential
31
Cities & Towns 2011
Source: NSSO
Population
Cities/Towns
(2011)
4 mn and Above 9
1-4 mn 44
0.5-1 mn 53
0.1-0.5 mn 507
50-100 k 612
20-50 k 1726
10-20 k 1436
5-10 k 1057
< 5 k 2491
Total 7935
32
Population No of villages % of total
villages
Less than 200 96,855 15.7
200-500 1,36,454 21.4
501-1000 1,56,737 24.6
1001-2000 1,40,751 22.0
2001-5000 87,206 13.7
5001-10000 20,363 3.2
Total no of villages 6,38,365 100.0
Hardly any shops in
these 230,000
villages
17% of villages
account for 50% of
rural population &
60% rural wealth
Distribution of Villages
33
• Solution
o Segment market on social, cultural, economic factors
o Engage with wide set of stakeholders
o ‘Word of mouth’ critical in acquiring consumers, so
identify appropriate influencers
Acquisition
• Problem
o Same value proposition as for urban
o Treating rural consumers as a homogeneous mass
o Skills of sales force to operate in complex, closely knit
communities, collective decision making
o Seasonality, credit
34
• Problem
o Building trust
o After sales service
Customer Retention
• Solution
o Building trust
 Focus on satisfying customer needs and not on
sales
 Offer products suitable for local conditions and
preferences
o Device low cost model of after sales support
 Customer feedback on products & sales process
 Market intelligence on competitors
 Strengthen bonds with consumers/community
o Invest in community development
 Create jobs
 Build social infrastructure
 Provide business opportunities 35
36
Thanks
Pradeep Kashyap
098109-48397
pradeep.kashyap@martrural.com
www.martrural.com
Old New

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Emerging Rural & Small Town India

  • 1. Emerging Rural & Small Town India 1 Pradeep Kashyap Founder & CEO, MART Presentation to CEO forum September, 2013
  • 2. 1 Million + < 1 Million < 10,000 48 large cities 7,834 towns 640,000 Village 50% 25% 25% GDP share 12 % 18% 70 % Population Where Does India Live Source : Census of India 2011,, India Urbanization Econometric Model -McKinsey Global Institute ,MART Knowledge centre 2
  • 3. Growing Rural Demand Source: NSSOPercentage increase in monthly per capita expenditure Per capita rural GDP grew at 6.2% CAGR against 4.7% in urban since 2000 3
  • 4. Rural Growth Drivers •Government Initiatives oNREGA oBharat Nirman oImproved Infrastructure (all 500+ population villages connected by road) •Transformation in Agriculture •Rural becoming a non farm economy •Emergence of services sector •Emergence of small towns 4
  • 5. Agri Transformation in Last Decade •50 mn tonnes increase in food grains production from 196 to 245 mn tonnes •Eight good monsoons •More than two fold increase in support price of food grains 5
  • 6. Emergence of Service Sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 Mar-00 Mar-03 Mar-06 Mar-09 Mar-12 Service (40%) Industry (30%) Agriculture (30%) Source: Government of India 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 6
  • 7. Retail trade 39% Manufacturing 26% Community, social and personal service Education Hotels and resturants Transport and storage Health and social work other 12% Non-agriculture Establishments in Rural India Source: NSSO 7 2% 4% 4% 5% 8%
  • 8. Manufacturing shifting to Rural •Out of 36 million non-agri enterprises in India, 20 million in rural (55%) •75% of new factories in last decade in rural •70% of all new manufacturing jobs created in rural 8
  • 9. Rural Employment in millions Source: NSSO and CRISIL Estimates Agriculture, hunting & forestry & fishing Industry Manufacturing Construction Services 1990-00 218.3 32.6 21.2 9.4 35.5 2004-05 249.4 47 27.8 16.8 46.7 2009-10 229.0 58.6 24.2 31.7 49.5 9
  • 10. Small Towns Cities & Towns No. Pop Strata (in Million) % Share of HH Income/H H in INR % Share of Total Disposable Income Tier I 8 > 4 29 1,86,000 39 Tier II 40 1 - 4 15 1,36,000 14 Tier III 53 0.5 - 1 9 1,29,000 9 Tier IV 7781 < 0.5 47 1,14,000 39 Total 7882 100 100 …NOT SO SMALL 10
  • 12. Rudrapur Radisson Blu SIDCUL (Rudrapur outer/Pantnagar, on NH 87) ….Now Budget Hotel- Hotel Ginger, a Tata enterprise in Sidcul OMAXE & METROPOLIS CITY (Back side of Radisson) 12
  • 13. Migration to metros slowing down 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Delhi Mumbai Kolkata Chennai Bangalore Hyderabad 1981-1991 1991-2001 2001-2011 Source: Census Bureau of India Growth in Urban population, 2001 to 2011 13
  • 16. 150 500 250 900 million 2020 50 350 400 > 5 1-5 < 1 800 million 2010 Per capita Income – USD/Day Pyramid Morphing to Diamond 16
  • 17. Share of Household Spending rural catching up fast 45 5 11 9 7 5 55 5 10 6 7 5 Food Health Transport & leisure travel Education Clothing Durables Urban Rural Source: Max NCAER Survey, 2007 17
  • 19. Shift from Loose to Packaged loose Packaged 19
  • 20. Multi Brands within family & by Individual 20
  • 24. Buy Value for Money 24
  • 27. Ready Stitched No Tailoring 27
  • 28. Challenges of Reach, Acquire & Retain Go to Market 28
  • 29. • Problem o Dispersed geography, o Poor infrastructure - Leading to high logistics costs Reach • Solution o Identify high potential states ,towns and villages o Urban clusters (NCR + other metros) o Large towns as hubs for villages o Innovative ‘last mile’ reach o Feet on street 29
  • 30. Tale of 3 Rural India’s Developed Goa, Gujarat, Haryana , Maharashtra, Punjab, Delhi Developing Arunachal Pradesh, Himachal Pradesh, West Bengal, Tamil Nadu, Karnataka Under Developed Bihar, Madhya Pradesh, Uttar Pradesh, Odisha, Rajasthan, Chhattisgarh, Jharkhand, NE States 30
  • 31. TV Ownership % 4 wheeler ownership % GDP Share % Population % Population Mm Developed 50 4 30 20 170Goa, Gujarat, Haryana , Maharashtra, Punjab, Delhi Developing 25 1.5 34 30 240Arunachal Pradesh, Himachal Pradesh, West Bengal, Tamil Nadu, Karnataka Under Developed 12 0.9 36 50 400Bihar, Madhya Pradesh, Uttar Pradesh, Odisha, Rajasthan, Chhattisgarh, Jharkhand, NE States Tale of 3 Rural India’s-Potential 31
  • 32. Cities & Towns 2011 Source: NSSO Population Cities/Towns (2011) 4 mn and Above 9 1-4 mn 44 0.5-1 mn 53 0.1-0.5 mn 507 50-100 k 612 20-50 k 1726 10-20 k 1436 5-10 k 1057 < 5 k 2491 Total 7935 32
  • 33. Population No of villages % of total villages Less than 200 96,855 15.7 200-500 1,36,454 21.4 501-1000 1,56,737 24.6 1001-2000 1,40,751 22.0 2001-5000 87,206 13.7 5001-10000 20,363 3.2 Total no of villages 6,38,365 100.0 Hardly any shops in these 230,000 villages 17% of villages account for 50% of rural population & 60% rural wealth Distribution of Villages 33
  • 34. • Solution o Segment market on social, cultural, economic factors o Engage with wide set of stakeholders o ‘Word of mouth’ critical in acquiring consumers, so identify appropriate influencers Acquisition • Problem o Same value proposition as for urban o Treating rural consumers as a homogeneous mass o Skills of sales force to operate in complex, closely knit communities, collective decision making o Seasonality, credit 34
  • 35. • Problem o Building trust o After sales service Customer Retention • Solution o Building trust  Focus on satisfying customer needs and not on sales  Offer products suitable for local conditions and preferences o Device low cost model of after sales support  Customer feedback on products & sales process  Market intelligence on competitors  Strengthen bonds with consumers/community o Invest in community development  Create jobs  Build social infrastructure  Provide business opportunities 35