global.

trends
India on a glimpse. A stable economy. Over the last decade, the Indian economy has shown high and stable growth rates. In the nancial year 2010-2011, the growth rate was above 8 % and even during the nancial crisis in 2008, the economy grew by 5-6 %. Indias consuming class has been a major key driver. A young popula6on. Currently, India is one of the most populous countries in the world. With a predicted populaKon of 1.5 billion in 2025, India will overtake China as the worlds most populous country. AddiKonally, 45% of India's populaKon is under the age of 20 which is equal to 550 million Indians. This development reveals a young, digital and largely untapped consumer potenKal. A trend-se8ng na6on. The dynamic and the surge of the rising middle class is apparent across various markets. From the increasing demand of electronic goods to the latest in luxury cars, the country progressively follows global trends, whilst seSng its own at the same Kme.

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Picture: Isabelle-Jasmin Roth

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Trend 1 Digital Revolu6on

With the world s 4th largest internet usage (over 121 million users) and an expected growth to 500 million users by 2020, India will conKnue its digital growth in 2012. However, that number covers less than 10 % of Indias populaKon, leaving more than 1 billion without access to the web. Especially the e-commerce industry is oering vast potenKal due to a growth of 47 % in 2011, whilst generaKng employment opportuniKes for about 10 million people at the same Kme. Foreign companies like Amazon and Walmart made signicant investments in 2011. Homegrown companies, such as Flipkart and Snapdeal, which know the Indian market well enough to tailor their services to its quirks for instance a predilecKon for cash over credit cards have been growing at an impressive rate. The mobile market is growing at an even larger rate, with the worlds second largest mobile phone usage, including over 881 million acKve users in 2011. In 2012, the growth scenario is esKmated to conKnue with +8,5 %. Sources: Economic Times, Business Standard, EFY Times.
Facts India, ve million new In subscribers are signing up for mobile phone connecKons every month, especially in rural areas. (Source: India News, 01/2012) Rural internet usage is esKmated to grow +94% from 2011 unKl 2012. (Source: Referral Candy, 12/2011)

Rural Mobile Connec6vity

Business Opportuni6es
(1) E-Commerce: The potenKal of Indias e-commerce market is esKmated to grow. Hence, a wave of internaKonal investments, acquisiKons and partnerships in 2012 is expected. As e-commerce grows, the demand for online faciliKes and services will increase. (2) Rural Markets: Rural India is expected to fuel the growth in mobile phone services, as cell phones become a vital tool for the government in its nancial inclusion program. In addiKon, rural internet usage is esKmated to grow +94% from 2011 unKl 2012.

Picture: Watblog.com Facts 2016, smartphone sales By are expected to reach 30 million handsets in India. (Source: Renub Research, 01/2012) Two thirds of overall e- commerce transacKons in India are ordered via mobile phones. (Source: BBC, 01/2012)

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Trend 2 Luxury Market

India makes up just 2 % of global luxury good sales, but the market is expected to grow 25 % per annum. In 2011, the esKmated worth of the overall luxury market was USD 5.75 billion. It is expected to reach USD 14.8 billion in 2015. Therefore, India is no longer a mere tesKng ground but a lucraKve market for internaKonal luxury brands. The key driver behind this change is a new spending paeern of India s growing middle class. However, the market is sKll at a nascent stage, concentraKng on the three major metro ciKes New Delhi, Mumbai and Bangalore. In the wake of the Government allowing 100 % foreign direct investment (now, only 51% is allowed) in the single brand retail, many foreign luxury brands would soon enter the Indian market. The country is esKmated to become a manufacturing hub for global luxury brands within the next 5 years. This also makes sense in view of the fact that up to 130 % tax is applicable on imported luxury goods. Sources: Financial Chronicle, Ernst & Young, Times of India, BizNews, CII-AT Kearney
Facts Due to the tradiKon of invesKng in precious jewellery for weddings, India is the largest consumer of gold and diamonds in the world. (Source: IBEF, 11/2011) Indian men are catching up: The country is the 4th desKnaKon in the world that hosts a men's fashion week. (Source: Hindustan Times, 01/2012) 79% of Indians prefer logoed luxury items. (Source: Synovate, 12/2009)

Business Opportuni6es

(1) Non-Metro-Customers: Tier-2-CiKes, such as Chandigarh, Ludhiana, Pune or Lucknow show vast potenKal for luxury brands. The majority of luxury companies are eying to aggresively enter smaller Indian ciKes. The luxury market in smaller towns is growing 15-20 % anually. (2) Interna6onal wardrobe for Indian men vs. localized wardrobe for Indian women: While Indian women sKll focus on tradiKonal oulits such as saris, Indian men contribute the bulk of global brands revenues, turning convenKonal wisdom about fashion completely on his head.

Picture: Hermes India, 2008

Example Hermes launched a saree line in India in 2011, providing a luxury item to meet the Indian markets needs. With sarees made in Paris and sold at starKng prices of USD 2000, Hermes is en-route to being both an internaKonal and naKonal luxury brand.
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Trend 3 Urban Age

India is witnessing an urban transformaKon of an enKrely novel scale and speed. It is esKmated that the countrys urban populaKon will increase from 286 million in 2001 to 320 million in 2011 and 530 million in 2021. But the urban centres are already under strain. PopulaKons of new megaciKes such as Bangalore (currently 5.5 million) or Chennai (currently 4.7 million) will increase, and exisKng mega-ciKes such as Mumbai (19 million) and New Delhi (16.7 million) will triple in size by 2050. Around 10 million Indians migrate from rural areas to ciKes each year, which creates massive needs of urban housing, infrastructure and employment opportuniKes. Hence, for the rst Kme in India, the poliKcal power shims from the rural countryside to the ciKes. But the countries growth scenario also oers a set of new business opportuniKes for rms focusing on the variety of target groups in urban markets, starKng with Boeom-of- the-Pyramid-customers to middle-class-clients. Source: Ministry of Urban Development, New Delhi, World Bank
Facts 30 rural migrants will arrive in Indias ciKes every minute over the next 20 years. Therefore, India has to build 500 new ciKes. (Source: World Bank, 05/2010) Indias urban areas account for about 60 % of the overall energy consumpKon, but at the same Kme, the producKvity of the urban sector contributes 60 % to Indias GDP. (Source: TERI,AFD, IDDRI, 12/2010) About Avantgarde India Avantgarde is a global communicaKons agency with a focus on experienKal markeKng. In 2012, Avantgarde India will start its operaKons in New Delhi. Contact Isabelle- jasmin.roth@avantgarde.de

Business Opportuni6es
(1) Urban Innova6on: Due to the speed of transformaKon, India funcKons as laboratory for urban products and services: in the private sector through entrepreneurship; in the public sector through new and innovate policy guidelines and implementaKon strategies. (2) Urban Transporta6on Market: The potenKal for smaller but safer city cars and new private-public transportaKon models will increase as the demand of urban mobility will rise drasKcally in exisKng and upcoming mega-ciKes.

Isabelle-Jasmin Roth Managing Director

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