Mumbai: Belief that India’s new government will provide a stable policy regime, the ensuing optimism among consumers, and the slowdown in China have combined to help India unseat China at the top of Credit Suisse Research Institute’s Emerging Consumer Survey study released on Wednesday.
The survey conducted across nine emerging economies saw India jump four ranks while China slipped to fifth place as its economy slowed.
The mood of consumers in 2015 across the emerging economies is “not brimming with confidence”, said the Credit Suisse survey. More consumers believe this is a bad time to make a big purchase (the difference between those who believe it is and those who say it is a good time is 4.4 percentage points).
India, though, has seen a change in momentum after 2014’s general election, said the study.
In 2014, the Bharatiya Janata Party-led National Democratic Alliance, perceived to be business-friendly, came to power with a comfortable majority in the parliamentary election.
Average household incomes increased 10% in India in 2014 after remaining nearly the same for two years, the study claimed.
This revival in consumer sentiment has primarily been driven by urban India, where household incomes went up 12%, the study added.
“We are seeing broad based growth across all segments,” said Nilesh Gupta, managing director of Vijay Sales, an electronics retail chain in western India. Sales of most products from high-end flat panels to entry-level refrigerators and washing machine sales have picked up towards the end of 2014 and the trend will accelerate in the coming months, he added, attributing the change to positive consumer sentiment.
Over the years, India’s rural consumers have also moved up (uptrading, in marketing lingo) to higher-priced branded offerings.
Still, the Credit Suisse study’s results need to be seen in the context of most of the countries studied being well ahead of India in terms of the maturity of their consumer markets. India has the lowest consumption of beer, meat and cigarettes; the lowest ownership of cars; and the lowest access to the Internet, the survey added.
For the fifth edition of the survey, Credit Suisse partnered with global market research firm Nielsen, which conducted nearly 16,000 face-to-face interviews with consumers across the emerging economies of Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, Turkey and South Africa.
The survey also looked at mobility and connectivity as one of the key themes. E-commerce across these nine countries could become bigger as a share of total retail sales than in developed economies, with a possible $3 trillion retail market developing, said the study. This would represent a seven to ninefold increase.
With global Internet penetration quoted at 42%, and assuming that Internet usage across the developing world matures to developed country levels, there will be an increase in total Internet users across the surveyed countries of over one billion. India and China are arguably the biggest contributors with 538 million and 258 million additional Internet users, up from the current levels of 243 million and 642 million, respectively, said the survey.