India India: C Consumer & R Onsumer & Retail R Etail Report Eport

Q2 2020
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India
Consumer & R
Retail
etail R
Report
eport
Includes 5-year forecasts to 2024
India Consumer & Retail Report | Q2 2020
Contents
Key View............................................................................................................................................................................................ 4
Consumer Outlook ...................................................................................................................................................................................................................... 4
SWOT .................................................................................................................................................................................................. 7
Consumer & Retail SWOT .......................................................................................................................................................................................................... 7
Industry Forecast........................................................................................................................................................................... 9
Consumer Spending ................................................................................................................................................................................................................... 9
Household Characteristics .....................................................................................................................................................................................................18
Consumer Demographics.......................................................................................................................................................................................................21
Market Overview..........................................................................................................................................................................28
Retail Trends .................................................................................................................................................................................................................................28
Consumer & Retail Glossary.....................................................................................................................................................36
Consumer & Retail Methodology............................................................................................................................................40
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Key View
Consumer Outlook
Key View: The outlook for the Indian consumer sector is expected to be more positive over 2020 compared to 2019. This comes
on the back of a more positive macroeconomic outlook, where GDP growth is expected to grow at 5.9% over 2020, higher than the
5.1% growth posted in 2019. Private consumption will grow at a slightly faster rate than in 2019, as India recovers from the short-
term effects of the bad harvests as a result of the monsoon rains in 2019, as well as from the lowered personal income taxes that
Indian consumers will pay. However, we note that business optimism regarding retail sales is slipping in the near term, which may be
a cause for concern for the Indian retail sector if consumers do hold back their purchases temporarily over Q220 and beyond.
Household spending will improve on the back of stronger economic growth, as India recovers from poor harvests. We forecast real
household spending to grow at a higher rate of 5.9% over 2020, an improvement over the 5.5% growth posted in 2019. We
attribute this improved performance to a relatively positive economic growth outlook (projected at 5.9% in 2020), after India
recovers from poor harvests in the second half of 2020.
Strong Growth In Consumption Amid Upturn In Economic Growth

India - Real Economic Growth & Household Spending, % y-o-y (2017-2024)
e/f = Fitch Solutions estimate/forecast. Source: Central Statistics Organisation, Fitch Solutions
Our Country Risk team noted in 2019 that the poor harvests in the past year increased food prices and inflation, thus weakening the
growth of consumer spending power in 2019.
As India recovers from the poor harvests in the past year which increased food prices and heightened core inflation in 2019, we
expect that consumer spending power will recover slightly in 2020 compared to 2019. The poor harvests resulted in higher food
prices, especially for crops like onions, a staple in the Indian diet. As such, we see that food inflation was the main contributor for
inflation throughout 2019. Unsurprisingly then, Indian consumers had to spend a larger proportion of their incomes on food,
which weighed on overall private consumption growth over 2019 as they had less income to spend on other consumer categories.
Hence, without the price pressures as a result of the poor harvests this year, we expect that private consumption will grow at a faster
rate as compared to 2019.
Inflation Being Driven By Food Price Increase

India - Consumer Price Inflation, % chg y-o-y (2014-2019)
Source: Bloomberg, Fitch Solutions
Personal Income Tax Breaks May Increase Consumption Spending As Well
India's FY2020/21 Union Budget, announced on February 1, will allow citizens to opt for a new personal income tax structure with
lower tax rates, if they choose to give up some of the deductions and exemptions that the existing tax structure offers them. This
reduction comes as a direct result of the Indian government trying to reverse the slowdown in 2019, in hope that a tax cut will
stimulate consumer spending. As consumers across the board pay less tax, we expect that this will increase their disposable
incomes, and thus lead to a higher level of consumer spending.
PERSONAL INCOME TAX CUTS MAY STIMULATE CONSUMER SPENDING

Income Bracket (IDR) Existing Tax Rate Exempt New Tax Rate Exempt
0-250,000 5% 5%
250,001- 500,000 20% 10%
500,001-750,000 20% 15%
750,001- 1,250,000 30% 20%
1,250,001-15,000,000 30% 25%
>15,000,000 30% 30%
Source: Budget Documents, Fitch Solutions
Business Expectations Of Retail Sales Drop Further
In the near term, poor consumer sentiment may reduce consumer spending and retail sales. Business optimism towards the total
volume of retail sales has dropped to a low of 61% for Q120 (latest available data), down from 65% in Q319. While the figures for
Q220 are not out yet, we note that if business optimism towards retail sales continue on their downward trajectory, and if
consumers do behave in the same way that businesses expect, there may be some negative impact on private consumption and
spending in the short term, especially in Q120 and Q220.
Business Optimism Regarding Consumer Sales Slides In The Short Term

India - Business Optimism Index (2017-2019)
Source: Wind, Fitch Solutions
SWOT
Consumer & Retail SWOT
SWOT Analysis
Strengths • India has a very large domestic market, and rising domestic demand is a major driver of economic growth.
• India is the second biggest country in the world in terms of population size and will overtake China in 2024.
This large and youthful population provides a big consumer base for retailers.
• The middle class is growing in number, which increases spending on aspirational, non-essential goods.
• The government is liberalising regulations surrounding foreign direct investment (FDI) in the retail industry,
allowing 100% FDI in single-brand retail under the automatic route.
• The online retail segment is strong, supported by high mobile penetration and high internet usage among
young urban spenders.
• The populist stance of the incumbent and opposition in India's Lower House election is positive for
consumer spending in the country.
Weaknesses • The Indian middle class remains relatively small, with only slow growth projected in income levels at the
upper end of the scale.
• Essential goods are still the bulk of retail purchases, which shows that the development of the retail sector
still has a long way to go.
• The rural population is forecast to represent 65.5% of the total in 2019, falling only slowly to 64.1% by 2023,
meaning that a large section of the population is outside modern retail channels.
• Foreign retailers that are new to the sector must compete with more established independent local stores,
which have already built up a certain level of customer loyalty.
• Infrastructure in India remains poor, increasing costs for retailers. Logistics can account for up to 20% of the
cost of a product because of the reliance on road transport.
• The government opposition to FDI in the multi-brand retail sector continues.
Opportunities • India's large rural population, currently under-served by modern retail, could provide opportunities for
retailers willing to accept the logistical challenges.
• Over our forecast period, the number of households with a net income of more than USD5,000 a year is set
to rise.
• The key demographic for modern retail - the 20-39 years old group - is growing fast, presenting significant
opportunities for retailers to expand and develop brand loyalty.
• Prime Minister Narendra Modi, who is considered to be pro-business, is continuing to liberalise the economy,
further facilitating foreign companies' entry into India's market.
• The online retail sector is expanding rapidly as internet connectivity increases.
• Investment in technology is expected to grow in the immediate future, building the capacity for retail firms
to take advantage and offer high-tech and modern services to increase their productivity.
• India improved the most in the World Bank's Ease of Doing Business 2019 report, ranking 77th out of 190
countries, an improvement from its ranking of 100th in the 2018 report.
• There are opportunities for retail development outside the main cities, particularly in Tier II and Tier III cities.
Threats • Ingrained social hierarchy means that opportunities for social mobility are not equal, hindering the upwards
social mobility of the low-income groups.
• Though Modi has been seen as a force for liberalising the Indian economy, there is pressure from within his
party to maintain the restrictions regarding FDI in the retail sector.
• Despite the government's efforts, corruption remains high. If it continues to be prevalent in Indian society
and its economy, it will incur costs for retailers and put off investors.
• India is struggling to improve the strength of its intellectual property rights, which will affect the
SWOT Analysis
performance of retail firms looking to build a strong brand or to successfully differentiate their products.
• Rental rates are high and predicted to rise in Tier I cities in particular, as space is limited, which puts more
pressure on retailers' bottom lines.
• Inflation fears are emerging as a result of the rise in global oil prices and high food prices, which will weigh on
consumer spending on non-essential categories.
Industry Forecast
Consumer Spending
Key View: Within the South Asia region, we expect that India's consumer spending will see some of the strongest growth. Non-
essential spending will see its share of total spending increase over the medium term, even though we expect that essential items
will still continue to dominate spending. Over the medium term, personal and insurance spending will see the highest average
growth rate over the medium term, followed by education as well as clothing and footwear spending. Communications, alcoholic
drinks, as well as recreation and culture expenditure will be the laggard categories within consumer spending.
Total Household Spending
Real household spending will grow by 6.4% y-o-y, over 2020, higher than the 2.6% estimated for 2019. The sharp drop in 2019 was
due to the poor harvests in India caused by prolonged monsoons, leading to lower incomes and spending among the rural
population who now earn less from their crops. The poor harvests also depressed private consumption further when the reduction
in food harvests resulted in the inflation of food prices (especially onions, a key ingredient in the Indian diet), thus crowding out
spending elsewhere. Over the medium term, we expect real household spending to recover, growing by an average of 5.7%
throughout the forecast period to 2024. Increasing access to consumer credit, rising incomes and softer inflation bodes well for
continued robust growth in spending by Indian households over the coming years.
Total Household Spending, Real Growth, % y-o-y

Total Household Spending, Real Growth, % y-o-y (2014-2024)
e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions
In value terms, this will see total household spending rise from INR131.9trn in 2020 to INR195.9trn in 2024, an impressive trajectory,
averaging 10.3% a year in INR terms over this period. This will convert to USD1.8trn in 2020, rising to USD2.4trn by 2024. This overall
growth in spending will be driven by significant increases in income, as the improving economy filters down to Indian households.
TOTAL HOUSEHOLD SPENDING (INDIA 2018-2024)

Indicator 2018e 2019e 2020f 2021f 2022f 2023f 2024f
Total household spending, INRbn 111,653.4 120,032.5 131,944.7 144,736.8 160,110.7 177,117.7 195,931.1
Total household spending, USDbn 1,629.65 1,704.46 1,807.46 1,929.82 2,079.36 2,270.74 2,449.14
Total household spending, INR % y-o-y 11.53 7.50 9.92 9.70 10.62 10.62 10.62
Total household spending, USD % y-o-y 6.01 4.59 6.04 6.77 7.75 9.20 7.86
Total household spending, INRbn, 2010 prices, % y-o-

8.13 2.60 6.42 6.55 6.47 6.62 6.62
y
Essential And Non-Essential Spending
Essentials will continue to dominate household spending in India, with essential spending accounting for 67.9% of total spending in
2020, falling to 67.4% in 2024. The fall in the share of household spending on essentials comes on the back of non-essential
spending outperforming, with average growth of 10.8% a year compared to 10.1% average year-on-year growth for essentials
spending. As a result, non-essential spending will grow from 32.1% of total spending in 2020 to 32.6% in 2024, a growth of 0.5
percentage points for categories of personal, insurance and other; furnishing and home; alcoholic drinks and tobacco; recreation
and culture; restaurant and hotels; and health and education.
In addition to an improving economic outlook and rising incomes, growth in consumer credit will also be a key driver of non-
essential goods, as households will be able to buy these 'big ticket' items on credit. In total value terms, non-essentials will reach
INR64.0trn in 2024, up from INR42.3trn in 2020. However, this will be only half of the total value of essentials spending, which will
reach INR132.0trn in 2024, up from INR989.6trn in 2020.
Essential And Non-Essential Spending

Essential & Non-Essential Spending (2014-2024)
Essential spending will be dominated by three categories (food and non-alcoholic drink, housing and utilities and personal,
insurance and others spending), making up 59.7% of overall household spending in 2020. Food and non-alcoholic drinks is the
largest spending category by a significant amount, accounting for 29.7% of household budgets in 2020. We do not believe that
spending habits will dramatically change in this sector over the coming years, with diets fairly stagnant and a low demand for
premiumisation.
The second highest spending category is housing and utilities at almost 14.7% of total household budgets in 2024, down from
14.9% in 2020. Utility costs are comparatively low, although the country's utilities networks are in need of extensive investment, and
consumers are vulnerable to the repeated interruptions of the supply of key utilities such as electricity and water. While
improvements to supplies have been made in recent years, the current infrastructure cannot keep up with the pace of urban
population growth.
The third highest spending category is transport. India's public transport network is extensive and by far the main mode of transport
for most of the population. Passenger car density remains extremely low, at about 28 cars per 1,000 people in 2020, but will rise to
35 per 1,000 people by 2023 on the back of rising incomes, lower interest rates and greater availability of credit. We forecast that
passenger car sales will grow by more than 7.2% a year over the medium term to 2024, outpacing almost every major emerging
economy, bar China. We expect this growing car and bike ownership to be reflected in overall transport spending, which will rise
from INR18.8trn in 2020 to INR25.1trn in 2024.
ESSENTIAL AND NON-ESSENTIAL SPENDING (INDIA 2018-2024)

Essentials spending, INRbn 76,173.9 81,731.9 89,622.6 98,094.0 108,270.0 119,524.0 131,970.5
Non-Essentials spending, INRbn 35,479.5 38,300.6 42,322.1 46,642.8 51,840.7 57,593.7 63,960.6
Essentials spending, % total 68.22 68.09 67.92 67.77 67.62 67.48 67.36
Non-Essentials spending, % total 31.78 31.91 32.08 32.23 32.38 32.52 32.64
Essentials spending, USDbn 1,111.80 1,160.59 1,227.71 1,307.92 1,406.10 1,532.36 1,649.63
Non-Essentials spending, USDbn 517.84 543.87 579.76 621.90 673.26 738.38 799.51
Essentials spending, INR % y-o-y 11.16 7.30 9.65 9.45 10.37 10.39 10.41
Non-Essentials spending, INR % y-o-y 12.33 7.95 10.50 10.21 11.14 11.10 11.05
Clothing and footwear will be the fastest growing category in the non-essential spending segment, with growth averaging 10.6%
annually over the medium term to 2024. Spending in this category will be driven by the large and growing young adult segment
(20-39 years old) that tends to have more aspirational lifestyles and will be more inclined to pursue the latest fashion trends. On the
back of this demand, we have seen numerous fast-fashion retailers enter the market including H&M, Inditex and Uniqlo, which
will continue to expand their footprint in the market.
Personal, insurance and other spending is the third-largest spending category and will be our fastest-growing category for non-
essentials over the medium term, expanding by an average of 11.4% per year. This segment includes products such as personal
care, personal effects (for example, watches and jewellery), financial services and types of insurance. Rapid growth in this category is
a sign of aspirational and non-essential spending, as households buy products such as watches and make-up that they previously
did not own. An important driver in this sub-sector will be financial services, because of the fact that Indian households are currently
underleveraged compared with their regional and global peers. We expect that consumer debt will pick up substantially over the
coming years as the government's Pradhan Mantri Jan Dhan Yojana scheme for comprehensive financial inclusion, which aims to
open a bank account for every household, bears fruit. According to the World Bank, more Indian consumers are gaining access to
financial accounts with 79.8% of adults above 15 years old having an account in 2017, up from 35.2% in 2011. The uptake of
consumer credit will further underpin the consumer story, and we forecast the personal, insurance and other category to rise from
15.6% of household spending in 2020 to 16.1% in 2024. For insurance, a growing middle class, increasing awareness of the need for
protection, and a favourable regulatory landscape will also continue to contribute to the strong growth of the general insurance
market.
After personal, insurance and others spending, education will be the next fastest growing categories at 10.7% on average per year
over the medium term. However, education will only account for roughly 4.1% of total household retail spending over to 2024,
mainly due to the unaffordable private options. The strong growth thus comes from upper-income households that are more able
to pay for their children's private education, which is increasingly seen as a necessity to perform well in the competitive labour
market.
Total Household Spending Breakdown % total

Total Household Spending Breakdown % total (2020-2020)
f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions
Spending on communications is set to remain as one of the smallest household spending categories and to grow the slowest at
9.6% a year through to 2024. The 'Digital India' programme (launched in 2015) aims to provide universal phone connectivity across
the country, and the government plans to ensure that every citizen has a smartphone by 2022. We expect strong uptake of new
services, given the lack of mobile connectivity and cheap basic phones in the rural parts of India. With 3G/4G penetration at around
25%, there are opportunities for premiumisation over our forecast period as infrastructure is expanded and data costs come down.
Further, the growing young-adult population will help drive growth beyond our forecast period. Access to 3G and 4G will improve on
the back of consolidation in the telecommunications space, which will result in a three-cornered fight
between Airtel-Telenor-Tata-Aircel alliance, IDEA-Vodafone and Jio-RCom.
Another slow growing category is alcoholic drinks and tobacco spending, which will grow by an average of 9.5% annually over the
medium term, although it will account for just 2.3% of spending through to 2024. The slow growth comes on the back of mounting
headwinds to India's alcoholic drink sector from government regulation. In April 2017 the government imposed a ban on the sale of
liquor within half a kilometre of state and national highways. Bars and restaurants have found ways to skirt this ban by constructing
mazes to increase the 'motorable distance' between bars and the highways, while in the city of Gurgaon, roads have been
barricaded to achieve the same effect. Furthermore, more states are considering becoming 'dry-states' (where the sale of alcohol is
illegal except through on-trade sale), with Madhya Pradesh the latest to become a dry-state in April 2017. Other states, including
Rajasthan, Kerala, Tamil Nadu, West Bengal, Delhi and Jharkhand, allow liquor sales only through government-owned corporations.
Food, Drink And Tobacco
Food, drink and tobacco is the largest area of expenditure in Indian household spending, although spending is expected to fall
slightly as a share of total spending from 29.7% in 2020 to 29.4% in 2024. Within the segment, the largest share is food at
INR38.6trn in 2020, rising to INR54.8trn in 2024, which will also be the fastest-growing spending segment. This is largely because
growth will come from affluence-instigated purchasing of more expensive items.
The roll-out of a Goods and Services Tax (GST), implemented in July 2017, will have minor implications for the food and drink sector,
as most products are expected to be subjected to the lowest rates. This will help lower-income households afford staples and
essentials and keep inflation in check. Alcohol will be exempt from the GST because of legal reasons, which could prove to be a
short-term advantage as prices will be unchanged while other products increase. That it is illegal in five states puts a ceiling on our
alcohol forecasts, and we expect spending to grow at 8.6% per year over the medium term. This will be outperformed by spending
on tobacco, which will see growth of around 10.6% annually over the same time period. Tobacco spending will also be greater than
alcoholic drinks, at INR2.6trn compared with INR1.0n for alcohol spending in 2024. Under the GST regime, cigarettes have been put
in the highest tax slab of 28%. However, it is likely that a cut in taxes for producers will mean that the impact will be neutral.
FOOD, DRINKS (NON-ALCOHOLIC, ALCOHOLIC) AND TOBACCO SPENDING (INDIA 2018-2024)

Food and non-alcoholic drinks spending,

33,319.30 35,744.31 39,186.71 42,882.34 47,321.40 52,230.59 57,659.86
INRbn
Food spending, INRbn 32,829.87 35,223.76 38,622.01 42,270.22 46,652.32 51,498.53 56,858.14
Non-alcoholic drinks spending, INRbn 489.44 520.55 564.71 612.13 669.08 732.07 801.72
Alcoholic drinks and tobacco spending,

2,619.75 2,799.41 3,053.66 3,326.46 3,653.77 4,015.53 4,415.42
INRbn
Alcoholic drinks spending, INRbn 642.43 678.42 729.37 784.02 849.60 922.08 1,002.20
Tobacco spending, INRbn 1,509.18 1,618.24 1,772.59 1,938.19 2,136.89 2,356.49 2,599.24

11.13 7.28 9.63 9.43 10.35 10.37 10.39
INR % y-o-y
Food spending, INR % y-o-y 11.15 7.29 9.65 9.45 10.37 10.39 10.41
Non-alcoholic drinks spending, INR % y-o-y 9.58 6.36 8.48 8.40 9.30 9.41 9.52
Alcoholic drinks and tobacco spending, INR

10.39 6.86 9.08 8.93 9.84 9.90 9.96
% y-o-y
Alcoholic drinks spending, INR % y-o-y 8.33 5.60 7.51 7.49 8.36 8.53 8.69
Tobacco spending, INR % y-o-y 11.01 7.23 9.54 9.34 10.25 10.28 10.30

486.32 507.57 536.80 571.76 614.56 669.62 720.75
USDbn
Alcoholic drinks and tobacco spending,

38.24 39.75 41.83 44.35 47.45 51.48 55.19
USDbn

121,641.48 128,917.47 139,657.62 151,050.50 164,783.49 179,841.91 196,359.44
INR per household

9,564.13 10,096.50 10,882.95 11,717.27 12,723.23 13,826.41 15,036.60
per household
Food and non-alcoholic drinks spending, 24,632.75 26,159.14 28,396.08 30,775.13 33,641.64 36,791.02 40,252.43
INR per capita

1,936.76 2,048.72 2,212.79 2,387.28 2,597.53 2,828.53 3,082.41
per capita
Clothing And Footwear
Despite being significantly behind the big spending categories - such as food and drink, personal care and housing and utilities - the
clothing and footwear category still accounts for a significant proportion of total consumer spending. Our forecasts show that
household spending on clothing and footwear will increase from INR8.9trn in 2020 to IRN13.4trn in 2024. The sheer size of the
20-39 years old age bracket and the fact that it is expanding, along with a number of households moving up into the middle-class
income bracket of USD10,000-plus, mean that spending on fashion items will increase.
Clothing and footwear will account for a significant 6.8% of total household retail spending in 2024 because of both demand and
supply factors. Growth in spending in this category will be significant over the forecast period, averaging almost 10.6% a year for the
rest of the forecast period - one of the fastest-growing segments in our household spending breakdown. The large number of
fashion retailers in the country, increasingly including major international chains such as Zara and H&M, means that opportunities
for spending in this area will increase significantly. The growth of online fashion retail also provides much space for growth for both
start-ups and established fashion houses.
We believe that the clothing and footwear sector represents one of the best opportunities for foreign firms looking to enter the
Indian market. The large number of young adults, combined with rising incomes, is already causing consumer tastes to shift.
Western-oriented fashion options conveyed through internet media are already generating demand in this age group. India is also
likely to ease local sourcing norms for foreign direct investment in single-brand retail, which will further encourage international
brands to expand into the country.
We believe that opportunities will be available particularly for retailers who are positioned to tap into growing e-commerce sales
channels. This will be especially beneficial to second- and third-tier cities that do not have access to bricks-and-mortar retail seen in
first-tier cities. In fact Amazon has already made inroads into these cities, with their partnerships with mom and pop shops all over
India to serve as delivery pick up points for their online purchases in 2019.
CLOTHING AND FOOTWEAR SPENDING (INDIA 2018-2024)

Clothing and footwear spending, INRbn 7,543.58 8,126.61 8,956.66 9,848.23 10,920.31 12,106.58 13,419.17
Clothing spending, INRbn 6,007.14 6,469.12 7,126.82 7,833.28 8,682.76 9,622.73 10,662.78
Footwear including repair spending, INRbn 1,536.43 1,657.49 1,829.83 2,014.94 2,237.54 2,483.84 2,756.37
Clothing and footwear spending, INR % y-o-y 11.93 7.73 10.21 9.95 10.89 10.86 10.84
Clothing spending, INR % y-o-y 11.86 7.69 10.17 9.91 10.84 10.83 10.81
Footwear including repair spending, INR % y-o-y 12.19 7.88 10.40 10.12 11.05 11.01 10.97
Clothing and footwear spending, USDbn 110.10 115.40 122.69 131.31 141.82 155.21 167.74
Clothing spending, INR per household 21,930.76 23,331.90 25,399.30 27,592.26 30,235.29 33,133.26 36,311.88
Footwear including repair spending, INR per

5,609.17 5,977.98 6,521.32 7,097.51 7,791.60 8,552.43 9,386.76
household
Clothing spending, INR per capita 4,441.04 4,734.37 5,164.35 5,621.66 6,172.73 6,778.21 7,443.70
Footwear including repair spending, INR per capita 1,135.87 1,213.02 1,325.96 1,446.05 1,590.71 1,749.61 1,924.23
Household Goods
We forecast household goods to account for a modest INR3.0trn in overall household spending in 2020, rising to INR4.5trn by 2024,
growing by an average of 10.4% per annum, over the medium term. Growth has been limited traditionally by the large proportion of
the population (nearly two-thirds) who live in rural areas and generate little demand for non-essentials. As the economy improves
and incomes rise, the potential in this category is strong. The young and urban consumer base in particular will begin to move
towards greater spending in this category as disposable incomes improve. More affordable, domestically produced items in this
sector will bring a wider range of household goods within the reach of a greater number of people. The entry of Swedish furniture
retailer IKEA in Hyderabad and a second store planned in the state of Maharashtra is set to be a boost to household spending.
The fastest-growing sub-segment in household goods spending (furniture and furnishings; household textiles; household
appliances; glass, tableware and utensils spending; home and garden tools; audio-visual, camera and computer spending; and toys,
sports, gardens and pet spending) will be furniture and furnishings, which will grow by an average 10.7% annually over our medium-
term forecast period to 2024. This comes on the back of rising levels of urbanisation and people buying new homes that need
furnishing. Crucial to this will be the expansion of consumer credit, as interest rates head lower and demand for financial services
picks up. Buying 'big ticket' items such as refrigerators and washing machines is nearly impossible without the use of credit in
developing markets, so we expect this to play an important role in fuelling this spending. Furniture and home spending will account
for a still-low 3.1% of total spending between 2020 to 2023.
Although household appliances spending will grow at the slowest rate in the household good spending sectors, we note that this
category will receive a significant boost from the government's latest tax cuts. Taxes on refrigerators, washing machines, televisions
and vacuum cleaners were slashed from 28% to 18%, effective from July 27 2018. This will provide a boost to the already robust
growth in household appliance spending, which is forecast to average 8.9% annually over the medium term.
HOUSEHOLD GOODS SPENDING (INDIA 2018-2024)

Household goods spending, INRbn 2,562.87 2,756.88 3,032.48 3,328.39 3,683.91 4,077.14 4,512.08
Furniture and furnishings spending, INRbn 1,574.82 1,698.57 1,874.51 2,063.45 2,290.53 2,541.73 2,819.62
Household textiles spending, INRbn 234.95 253.06 278.80 306.45 339.67 376.43 417.08
Household appliances spending, INRbn 109.87 117.62 128.63 140.46 154.67 170.40 187.79
Glass, tableware and utensils spending, INRbn 70.31 74.98 81.61 88.74 97.31 106.78 117.26
Home & garden tools/equipment spending, INRbn 35.52 37.89 41.26 44.88 49.23 54.03 59.36
AV, camera and computer spending, INRbn 211.15 225.63 246.13 268.12 294.51 323.68 355.92
Toys, sports, gardens and pets spending, INRbn 326.25 349.14 381.53 416.29 458.00 504.09 555.05
Household goods spending, INR % y-o-y 11.63 7.57 10.00 9.76 10.68 10.67 10.67
Furniture and furnishings spending, INR % y-o-y 12.14 7.86 10.36 10.08 11.00 10.97 10.93
Household textiles spending, INR % y-o-y 11.88 7.71 10.17 9.92 10.84 10.82 10.80
Household appliances spending, INR % y-o-y 10.76 7.05 9.36 9.19 10.12 10.17 10.21
Glass, tableware and utensils spending, INR % y-o-y 10.06 6.64 8.85 8.73 9.65 9.74 9.82
Home & garden tools/equipment spending, INR % y-o-y 10.12 6.67 8.89 8.77 9.69 9.77 9.85
AV, camera and computer spending, INR % y-o-y 10.39 6.86 9.08 8.94 9.84 9.90 9.96
Toys, sports, gardens and pets spending, INR % y-o-y 10.65 7.02 9.28 9.11 10.02 10.06 10.11
Household goods spending, USDbn 37.41 39.15 41.54 44.38 47.84 52.27 56.40
Household goods spending, INR per household 9,356.49 9,943.13 10,807.46 11,724.04 12,828.18 14,038.53 15,365.79
Household goods spending, INR per capita 1,894.72 2,017.60 2,197.44 2,388.66 2,618.96 2,871.92 3,149.89
e/f = Fitch Solutions estimate/forecast. Source: National Sources, Fitch Solutions
Personal Care And Effects
We expect expenditure on personal care and effects to rise from INR2.3trn in 2020 to INR3.3trn by 2024, at a growth rate of 9.0%
average annually over the medium term. The strong growth expected over our forecast period will generate opportunities for
retailers catering to non-essential retail products. This growth is being supported by improvements in income across the country,
including among the rural population. As a result, we expect growing demand and spending capacity in Tier 2 and Tier 3 cities, many
of which currently have limited competition.
Personal care products spending will slightly outperform personal effects, growing by an average of 9.0% over the medium term,
while personal care will rise by an average of 8.9% in the same period. The outperformance of personal effects spending comes on
the back of consumers being able to allocate a larger share of spending to non-essentials as income rise. Increasingly, we will see
Indians spend disposable income on watches, jewellery and other effects as wages rise and non-essential spending goes up.
Personal care spending will see slightly slower growth over our forecast period and we attribute much of this to the implementation
of the GST, which will see tax rates lowered on everyday basic goods, such as soap, toothpaste and hair oil, from 24% to 18%. FMCG
companies were able to pass on the savings from this lowered tax to consumers, which led to consumers purchasing more
premium products. However, as the effects of the GST wear off, spending in this segment will return to normalcy after the uptick in
spending.
PERSONAL CARE AND EFFECTS SPENDING (INDIA 2018-2024)

Personal care and effects spending, INRbn 2,054.52 2,174.69 2,340.65 2,533.43 2,767.60 3,061.89 3,340.02
Personal care products spending, INRbn 1,365.20 1,445.38 1,556.12 1,684.75 1,840.99 2,037.35 2,222.93
Personal effects products spending, INRbn 689.32 729.31 784.54 848.69 926.61 1,024.54 1,117.09
Personal care and effects spending, INR % y-o-y 8.15 5.85 7.63 8.24 9.24 10.63 9.08
Personal care products spending, INR % y-o-y 8.18 5.87 7.66 8.27 9.27 10.67 9.11
Personal effects products spending, INR % y-o-y 8.07 5.80 7.57 8.18 9.18 10.57 9.03
Personal care and effects spending, USDbn 29.99 30.88 32.06 33.78 35.94 39.26 41.75
Personal care and effects spending, INR per household 7,500.61 7,843.37 8,341.86 8,923.86 9,637.41 10,542.80 11,374.38
Personal care and effects spending, INR per capita 1,518.90 1,591.53 1,696.12 1,818.15 1,967.54 2,156.79 2,331.68
e/f = Fitch Solutions estimate/forecast. Source: National Sources, Fitch Solutions
Tourism Spending
India is not typically viewed as a destination for retail shopping, as tourists tend to visit the country for its beaches, temples and
cuisine rather than luxury shopping malls or trendy neighbourhoods. As many parts of the country still suffer from extreme poverty,
it lacks the attractiveness of other retail hotspots in the region like Thailand. While shopping malls may attract some foreigners, it is
far down the list as a luxury or even mid-range travel destination. Bangladesh, the US and the UK contribute a large number of
arrivals; however, many of these are younger generations on a budget and are not looking to visit international stores. Spending will
therefore largely be limited to local stores and not chain stores. India's tourism market is expected to see solid growth in 2020, with
arrivals forecast to increase by 4.4% y-o-y, and average 3.8% over the medium term. Total tourist arrivals will reach 13.3mn in 2024,
up from 11.5mn in 2020.
Household Characteristics
Key View: Disposable incomes are growing strongly in India, driven by the country's strong economic growth and government
stimulus. We estimate that the households in the middle-income bracket (household disposable income of USD10,000-plus) will
more than double in size, indicative of opportunities for mass-market consumer-facing companies. However, India's upper-income
consumer base (household disposable income of USD75,000-plus) will remain small in size, limiting opportunities in luxury retail.
Latest Updates
• India has one of the largest household numbers in the world, forecast to increase from 281mn in 2020 to 290.4mn by 2023.
• Household incomes are forecast to rise strongly between 2020 and 2023, with disposable household income set to rise from
USD5,944 to USD7,352 respectively, becoming the key force behind the expansion of the retail market.
• The number of households in the USD10,000-plus net income bracket will more than double, from 32.5mn to 70.9mn. The
number of upper-income households (disposable incomes of USD75,000-plus a year) will more than double, although in
absolute terms the number of wealthy consumers will still be small, at approximately 231,000 households in 2023.
• The minimum wage in India differs by city with Delhi having a higher minimum wage than Mumbai at USD244.6 versus
USD135.9 respectively according to the World Bank.
Purchasing Power And Demographic Trends

Household Income Breakdown (2020-2024)
f = Fitch Solutions forecast. Source: National sources, Fitch Solutions
Structural Trends
Due to steady population growth, the number of households in India is forecast to increase from 280.6mn in 2020 to 293.6mn by
2024, offering the largest number of households in the world. Incomes are also set to rise, although more quickly at the bottom
than at the top. By 2024, some 194.7mn households will have a net income of more than USD5,000 a year, up from 132.3mn in
2020.
Income growth will be slower for the upper income groups. This points to a relative lack of middle-income earners, and indicates
that, while demand for essential goods will rise (driven by growth in incomes at the bottom of the scale), the rise in demand for non-
essential products will not be nearly as rapid. In the longer term, as incomes continue to rise, more and more households should
enter the middle class, and non-essential purchases will become more of a feature of Indian retail.
However, although growth in the upper income segments will be slower, India's vast population means that the absolute numbers
are still significant, and will provide opportunities for retailers wishing to expand, particularly in the cities, where incomes are higher.
By 2024, 58.8mn households will earn a net income of more than USD10,000 (in the middle-income segment and above) and
611,400 will earn more than USD50,000 (in the upper-income bracket).
Over our forecast period, the number of working adults in Indian households will continue to average 3.3, while net income per
capita is set to rise significantly, from USD1,827 in 2020 to USD2,251 by 2023. This indicates a continued rise in wages, and ties into
our view that employment levels will remain high - although growth in employment numbers is expected to slow over our forecast
period. However, the unemployment rate will remain at a constant 7% over our forecast period.
The rapid rise in incomes at the lower end of the scale and the much smaller rise in higher-level incomes are both indicative of the
main employment sectors in the country. Despite the rapid industrialisation of the country, 41.6% of the labour force is employed in
the agricultural sector, which makes up 17.9% of the country's GDP. Living in rural areas, these workers tend to have low incomes
that are primarily spent on essentials. Opportunities for exposure to modern retail are thus limited, not only because of low income,
but also because poor infrastructure makes rural populations harder to access, and agricultural workers tend to be more self-
sufficient.
The next main employment sector in India is the services sector, with just over 34.5% of the population - much of the urban
population - involved in this segment. Many of the jobs in this sector are low paid in international terms and are predominantly in
the IT sector, as companies look to take advantage of the low-cost labour that is also highly skilled and usually fluent in English -
making the IT sector one of the more productive and largest industries in the country.
The number of people employed in the high-income professional services industry is small, with almost all employment
opportunities in this area located in the main cities of Mumbai and Delhi, and a handful of others. Only 4.5% of the population has
been in or has completed tertiary education and this is reflected in the employment patterns, where some IT professionals and
those working in the growing pharmaceuticals industry or the relatively small financial sector are able to earn high incomes. This
ties into the fact that not many households fall into the high-income brackets. However, we expect employment in these higher-
paid sectors to rise over the long term, with the result that retailers involved in non-essential goods have an opportunity to build
brand loyalty and to establish themselves.
In November 2019, the Indian government suggested a nine-hour normal working day in its draft wage code rules, but has stayed
away from fixing a national minimum wage. The draft reiterates most of the old rules except suggesting three geographical
classifications for deciding wages in future.
HOUSEHOLD INCOME DATA (INDIA 2017-2024)

Indicator 2017e 2018e 2019e 2020f 2021f 2022f 2023f 2024f
Households, '000 270,538.1 273,914.0 277,265.0 280,591.3 283,894.1 287,173.2 290,425.0 293,644.4
Households, % y-o-y 1.3 1.2 1.2 1.2 1.2 1.2 1.1 1.1
Average working adults per household 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3
Gross Income, per household, INR 365,050 384,274 455,691 443,501 481,476 525,328 572,464 623,861
Gross Income, per household, USD 5,605 5,608 6,470 6,075 6,419 6,822 7,339 7,798
Gross Income, per capita, INR 111,689 117,562 139,378 135,654 147,255 160,651 175,050 190,751
Gross Income, per capita, USD 1,715 1,715 1,979 1,858 1,963 2,086 2,244 2,384
Disposable Income, per household, INR 354,099 372,746 442,020 430,196 467,032 509,568 555,290 605,146
Disposable Income, per household, USD 5,437 5,440 6,276 5,893 6,227 6,617 7,119 7,564
Disposable Income, per capita, INR 108,339 114,035 135,197 131,585 142,837 155,831 169,798 185,028
Disposable Income, per capita, USD 1,663 1,664 1,919 1,802 1,904 2,023 2,176 2,312
Tax and social contributions, % of gross

3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
income
Tax and social contributions, per capita,

3,350.69 3,526.87 4,181.36 4,069.65 4,417.66 4,819.54 5,251.51 5,722.53
INR
Tax and social contributions, per capita,

51.5 51.5 59.4 55.7 58.9 62.6 67.3 71.5
USD
Households '000 Disposable Income

114,248.1 115,664.5 146,551.4 134,871.3 148,001.0 162,465.5 179,353.9 193,340.2
USD5,000+

22,408.0 22,773.6 33,984.3 29,122.1 34,173.5 40,542.0 49,329.0 57,833.3
USD10,000+

190.1 195.1 307.2 260.3 314.2 385.5 489.8 599.1
USD50,000+
Households Disposable Income

42.2 42.2 52.9 48.1 52.1 56.6 61.8 65.8
USD5,000+, % total households

8.3 8.3 12.3 10.4 12.0 14.1 17.0 19.7

0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2
Consumer Demographics
Key View: By 2050, retailers will be attracted to invest in India as its consumer pool becomes the largest in emerging Asia and
worldwide. The increasingly urbanised and wealthier population will benefit consumer-facing companies further. As India's
population ages even with high birth rates currently, we expect to see a steady shift in consumer purchasing preferences over the
longer term, as younger population groups decline as a proportion of the total. Still, we expect strong growth prospects for retailers
across all age segments because of the sheer population size.
Demographic Trends
Looking at the demographic trends of a market gives insight into where future opportunities will emerge for consumer-facing
industries. These are generally longer-term trends, taking place over multiple decades rather than our typical five-year forecast
period. This section therefore provides analysis, charts and data up to 2050. The demographic trajectories of India are analysed to
enable a better understanding of the long-term population shifts and their impact from a consumer perspective.
Population Size
India will see its population grow by around 330mn over our long-term forecast period from 2015 to 2050. We forecast the total
population to reach 1.64bn in 2050, up from 1.3bn in 2015. Strong birth rates will push up the population count, making India the
most populous country in the world by 2050. This bodes well for consumer-facing companies in India, which will see their total
market expand over the coming decades, creating more opportunities for growth.
Population Vs Emerging Asia

Total Population, mn
e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions
• Simply put, larger population sizes translate into larger consumer markets for companies to target.
• If a population continues to grow over our 2050 forecast period, it sends a positive signal to investors, as their target market is
expanding.
• If a population shrinks, this poses a potential risk. This is particularly so if the shrinking is precipitated by a 'brain drain' among
young, educated adults - an important slice of the population.
POPULATION (INDIA 2015-2050)

Geography Indicator 2015 2020f 2025f 2030f 2035f 2040f 2045f 2050f
India Population, mn 1,310.15 1,380.00 1,445.01 1,503.64 1,553.72 1,592.69 1,620.62 1,639.18
f = Fitch Solutions forecast. Source: UN, Fitch Solutions
Adult Population Trends
The Indian population is slowly ageing as people live longer. This will lead to the size of the pensionable population, above the age of
65 years old, increasing from 74mn in 2015, to 225mn, by 2050. The middle aged population will also see significant growth, going
from 311mn in 2015, to 550mn by 2050. The young adult population will remain relatively stagnant, only increasing by 22mn, over
our forecast period. This will take the group from 428.9mn in 2015, to 451mn by 2050.
Proportionally, the you adult population will be the largest adult group, representing 32.7% of the total Indian population in 2015.
This is followed by the middle-aged population, at 23.8% and the pensionable population, at 5.6%. As the population ages, this
dynamic will change drastically. By 2050, the middle-aged population will become the largest adult population, at 33.6% of the total
population. The young adult group will fall to 27.5%, while the pensionable population will see its share nearly triple, to 13.8%.
Adult Population Trends

Adult Population Trends (2000-2050)
• We have broken down the adult population into three groups: young adults (20-39 years old), middle-aged (40-64 years old) and
pensionable population (65-plus years old). We have used their percentages of the total population to determine which age
group will account for a larger or smaller share of the total population by 2050. This does not necessarily mean that a group will
decline in total numbers if the percentage falls, just that other groups are growing faster.
• Young Adults (Trendsetters): alcohol, technology (latest devices, e-commerce), fashion, personal care, restaurants, recreation,
furnishing and home (lower end), transport (public, taxis, second-hand cars), experiences (holidays, unique/shareable activities),
education, utilities, sporting goods.
• Middle Aged (Premiumisation): spirits, personal effects, restaurants, recreation and culture, health, transport (premium
brands, larger vehicles, new vehicles), financial products (life/home insurance), furnishing and home (antiques, renovations),
hotels (domestic), education, utilities, garden products.
• Pensionable Population (Retiring, Out Of Workforce): health, financial, traditional food and drink, convenience, culture,
holidays, property, care services.
YOUNG ADULTS, MIDDLE-AGED AND PENSIONABLE POPULATION (INDIA 2015-2050)

Indicator 2015 2020f 2025f 2030f 2035f 2040f 2045f 2050f
Population, 20-39 yrs, total, '000 428,900.3 455,538.3 473,352.6 483,586.0 481,404.0 473,604.2 462,784.2 451,096.2
Population, 20-39 yrs, % total 32.7 33.0 32.8 32.2 31.0 29.7 28.6 27.5
Pensionable popn, % of total 5.6 6.6 7.6 8.6 9.6 10.8 12.1 13.8
Pensionable pop., total, '000 73,560.3 90,720.0 109,235.1 128,877.4 149,236.8 171,482.6 196,172.0 225,427.9
Babies, Children And Teenage Population
We forecast the youth population (those under the age of 20) to shrink by 83.7mn between 2015 and 2050, and to account for
25.2% of the population in 2050, down from 37.9% in 2015. The drastic shift in the demographic makeup of the youth population
will mean that retailers operating in this segment will be negatively affected, although it is worth noting that the youth population
will still be significantly large at 413mn.
The greatest drop in total terms comes from the young children segment (5-9 years), which will fall by 26.5mn between 2015 and
2050, accounting for 6.1% of the population in 2050. The small fall in total terms comes from the teenagers segment (15-19 years),
which will decrease by 13.6mn, accounting for 6.7% of the population in 2050, down from 9.4% in 2015. Babies and toddlers from
the ages of 0-4 years will also shrink in their share of the population - from 9.1% in 2015 to 5.9% in 2050, reaching 97mn in 2050,
down from 118.9mn in 2015. Pre-teenagers (10-14 years) will fall in total terms by 21.6mn, from 126.8mn to 105mn by 2050.
Babies, Children & Teenage Population Trends

Babies, Children & Teenage Population Trends (2000-2050)
• We have broken down the non-adult population into four groups: babies (0-4 years old), children (5-9 years old), pre-teenagers
(10-14 years old) and teenagers (15-19 years old). We have used their percentages of the total population to determine which
age group will account for a larger or smaller share of the total population by 2050. This does not necessarily mean that a group
will decline in total numbers if the percentage falls, just that other groups are growing faster.
• Babies: clothing and footwear, toys, games, personal care.
• Children: clothing and footwear, toys, games, confectionery, soft drinks.
• Pre-Teenagers (Allowances): fashion, recreation, technology (smartphones, apps, video games/consoles), restaurants (fast
food/quick serve, fast casual), confectionery, sporting goods.
• Teenagers (Minimum Wage): restaurants (fast food/quick serve, fast casual), alcohol, tobacco (vaporisers), personal care
(makeup), technology (smartphones, apps, video games/consoles), fashion, recreation, sporting goods.
POPULATION : CHILDREN AND TEENAGERS (INDIA 2015-2050)

Median Age
The median age of the Indian population will increase from 26.8 years in 2015 to 38.1 in 2050, indicating that the population is
ageing. This means that the average person in 2050 will be roughly 11 years older than the average person in 2015, as the
population is living longer. This is a relatively slow rate overall and makes India one of the most youthful populations in emerging
Asia.
Median Age Vs. Emerging Asia

Median Age
e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions
• This indicator works as a complement to our other population age forecasts, providing an average age of the population and
how it is changing over time.
• Developed markets typically have a higher score for this indicator; they are ageing as people live longer and birth rates fall. Older
generations can present an opportunity, if they are marketed to in the right way. Convenience, easy-to-open packaging and
traditional ingredients are appealing to this group.
• Emerging markets tend to be lower in average age, as birth rates remain strong and populations grow. This bodes well for
companies targeting trendsetting, younger generations entering the consumer market with higher levels of income than their
parents. One area of risk is that youth unemployment can be quite high in these markets, capping the spending.
POPULATION, MEDIAN AGE OF POPULATION (INDIA 2015-2050)

Geography Indicator 2015 2020f 2025f 2030f 2035f 2040f 2045f 2050f
India Median age of population 26.8 28.4 30.0 31.7 33.3 35.0 36.6 38.1
Urban/Rural Split
The percentage of the population living in urban areas is expected to grow significantly over our forecast period to 2050, reaching
52.8% of the population in 2050, up from 32.8% in 2015. This will lead to an additional 437mn urbanised people in 2050. Major
urban areas in India include Mumbai, Delhi, Kolkata and Chennai. Conversely, those in the rural areas will decline in total terms and
as a share of the population, from 881mn to 773mn and 67.2% to 47.2% respectively, over the 2015 to 2050 period. While the
urban population is expected to rise, creating a wealthier consumer base for companies to target, almost half of the population will
still live in rural areas, limiting this opportunity, as many consumers still will not have access to modern retail.
Urban & Rural Population Trends

Urban and Rural Population '000 (2000-2050)
f = Fitch Solutions forecast. Source: National Sources, Fitch Solutions
• Markets with higher urbanisation levels are generally more attractive, due to developed logistics, concentrated consumers and
higher spending levels, among other reasons.
• In contrast, consumers in rural regions are harder to reach and typically have lower spending power, making investment riskier,
particularly in emerging markets.
RURAL/URBAN POPULATION (INDIA 2015-2050)

Urban pop., % of total 32.8 34.9 37.4 40.1 43.2 46.4 49.6 52.8
Rural pop., % of total 67.2 65.1 62.6 59.9 56.8 53.6 50.4 47.2
Urban pop., total, '000 429,428.7 481,980.3 540,188.7 603,592.1 670,773.6 738,515.1 803,875.7 866,157.0
Rural pop., total, '000 880,723.7 898,024.1 904,822.9 900,050.2 882,950.2 854,176.4 816,743.5 773,019.0
Population per sq km, persons 440.7 464.1 486.0 505.7 522.6 535.7 545.1 551.3
f = Fitch Solutions forecast. Source: National Sources, Fitch Solutions
Male/Female Split
The population in India consists of more males (681mn) than females (629mn), with a difference of 52mn between the two in 2015.
The male population will continue to be the majority for the forecast until 2050, when the males (843.5mn) will still outnumber the
females (796mn), but by a smaller margin of 47.8mn. The narrowing margin indicates the growing importance of women that
consumer-facing retailers will have to target, especially as more women enter the workforce. According to the World Bank, female
labour participation in India reached 23% in 2019, which is significantly lower than the world average of 47.7%. India's female labour
force participation peaked at 32.2% in 2005 and has since been on a steady downtrend. However, as education becomes more
accessible and affordable, we expect this figure to improve as more women enter the workplace.
• Except for some extreme examples such as China, the male/female split tends to be about equal, with only a slight leaning
towards one gender.
• The rise of the female consumer is becoming an important part of company strategy. They are beginning to tailor products,
advertising and marketing - which were previously male-focused or neutral - to women.
POPULATION RATIO (INDIA 2015-2050)

Population, total, male, '000 681,223.3 717,101.0 750,331.5 779,874.1 804,579.2 823,165.5 835,781.5 843,493.6
Population, total, female, '000 628,929.1 662,903.4 694,680.1 723,768.2 749,144.6 769,526.0 784,837.7 795,682.4
Population ratio, male/female 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1
Market Overview
Retail Trends
Online retail and a changing regulatory environment are transforming India's retail sector. Major e-commerce players, frequently
backed by foreign private equity and venture capital funds, are investing in e-commerce expansion. International brick-and-mortar
retailers are entering the country and expanding beyond major cities, after the government relaxed domestic sourcing
requirements. India will see a substantial influx of foreign players, which will help to diversify and modernise the country's vast yet
fragmented retail market.
Latest Updates
• In February 2020, Louis Vuitton reported a 24.5% year-on-year increase in profit, representing a doubling of income since
2017
• In February 2020, Chinese smartphone brand Vivo opened an experiential flagship store in Thane, Maharashtra as Vivo India
eyes 250 new stores this year.
• In February 2020, the Tiffany opened its first store, located in New Delhi’s upmarket The Chanakya shopping centre.
• In February 2020, the Indian Commerce and Industry Ministry announced plans to limit duty-free alcohol sales to inbound
travellers to one bottle or one litre per person – half the current limit – and to ban all sales of tobacco products. This is expected
to negatively impact duty-free sales in India, which grew at a rate of 23.1% from 2013-2018.
• In January 2020, local food-delivery app Zomato purchased Uber Eats in India. The purchase was made via an all-stock
transaction, which awards Uber 9.99% ownership of Zomato.
• In January 2020, Indian omnichannel eyewear retailer Lenskart raised an investment of USD275mn from the SoftBank Vision
Fund.
• In January 2020, 7-Eleven announced their plans to launch in Mumbai, marking the first major international convenience-store
chain to take on local players.
Clothing And Footwear
India has numerous apparel retailers. In January 2016 Madura Fashion Division and Aditya Birla Nuvo's subsidiaries,
Pantaloons Fashion & Retail and Madura Garments Lifestyle Retail Company, were consolidated under a new company
name, Aditya Birla Fashion and Retail. The group hopes to tap into synergies between these sub-divisions in areas such as real
estate and technology platforms. It is the market leader in apparel as a result of the consolidation, as it brings together the largest
branded womenswear retailer (Pantaloons), the largest branded menswear player in India (Madura Fashion) and Madura
Lifestyle, which has a presence in the luxury segment. Aditya Birla clinched a partnership and exclusive representation rights for
US-based retailer Forever 21 in May 2016, and will help the retailer expand its presence in the country. Forever 21 has 22 stores in
India, and has an established presence in Bangalore, Chennai, Hyderabad, Mumbai, Delhi and Pune. In August 2019, Forever 21 filed
for Chapter 11 bankruptcy.
Foreign retailers active in the market include Inditex, H&M and Mango, which operates in India through franchises. Spain's Inditex
has 25 stores (23 Zara and three Massimo Dutti stores) in the country and launched its Zara online shop in October 2017. H&M
added 12 new stores over 2018, adding to a total of 39 stores in the country. GAP is looking to open 40 new stores in India over the
next five years, as it sees opportunity in Tier 2 cities such as Chandigarh, Ludhiana, Lucknow and Kolkata. It will also cut prices by
10-15% to compete with fast-fashion majors, as the retailer's prices are about 40-50% higher than Zara's and H&M's. Jack & Jones,
a menswear brand, has been in the Indian market since 2008 and is expanding in the country's Tier II and III cities while also selling
via its e-commerce portal. Indian conglomerate Reliance Industries Limited through its Reliance Retail arm is expanding its
low-cost fashion store network Reliance Trend to 2,500 locations by 2023, focusing on lower tier cities. Tata Group's retail arm
Trent is launching a fast-fashion chain. Trent is seeking to launch 40 locations of its flagship Westside chain per year as well as Zudio
stores for price-conscious consumers. Mango is building up its omni-channel by opening its first offline store in Delhi in conjunction
with its e-commerce partner Myntra. Mango is also strengthening its offline presence with its first store Delhi, starting the
company's plans to open 25 stores in India by 2022. In October 2019, Japanese clothing retailer Uniqlo opened its first store in
India. The company has benefited from the government’s relaxation of sourcing restrictions for single-brand retailers, which
currently stand at 30% mandatory local sourcing.
A number of Japanese retailers are eyeing the Indian market, including fashion and lifestyle company Mark Styler (Mercuryduo,
Dazzlin and Emoda), eyewear company Owndays, and the Kai Group, which sells products in cooking, grooming and beauty
care. In 2016 Muji entered in partnership with Reliance Brands. Uniqlo opened its first store in the country in October 2019. The
company has benefited from the government’s relaxation of sourcing restrictions for single-brand retailers, which currently stand at
30% mandatory local sourcing.
International high-end fashion brands are entering and expanding in India through franchise agreements with domestic firms.
Italian brand Ermenegildo Zegna has purchased a minority stake in Raghavendra Rathore, as the Italian suit maker looks to
expand the luxury men’s brand and mature India’s luxury fashion market. Reliance Industries Ltd purchased an additional 8.1% stake
in luxury fashion retail firm Genesis Colors in July 2018. In 2017 Reliance Brands acquired a 46.6% stake in Genesis Luxury
Fashion, which operates brands such as Armani, Canali and Michael Kors.
SELECT CLOTHING AND FOOTWEAR RETAILERS

Company Parent/ Sub-Sector Revenues Employees Stores Notes
Ownership
Aditya Aditya Birla Branded INR85bn 19,000+ 6,000+ ABFRL was created by the merger of Madura
Birla Group fashion, via (FY2017-18) points of Fashion, Pantaloons Fashion and Retail and
Fashion Madura sale; 2,260+ Madura Fashion & Lifestyle.
and Retail Fashion & brand
Ltd Lifestyle and outlets; e-
Pantaloons commerce
Bata India Bata B.V. Footwear INR24.9bn 8,034 1,293 stores Expanding into Tier 2 cities.
Ltd (global)
Spykar Spykar Menswear and na na 205 Spykar Lifestyles is planning to expand its retail
Lifestyles Pvt womenswear, footprint by adding more stores in metro markets
Ltd mainly denim and opening new ones in tier II and III cities to
take the total store count to more than 350 by
2020-2021.
Gap Arvind Menswear, na na 15 Announced the launch of 17 Gap shop-in-shops

Lifestyle womenswear through multi-brand retailers in order to
Brands and children's accelerate the availability of the products around
wear the country.
Inditex Inditex Menswear and na na 25 -

Womenswear
H&M H&M Menswear and SEK1,408mn na 39 -

womenswear (FY2018)
Marks & Joint venture Clothing and na na 63 M&S currently has 24 stores in tier 2 cities and
Spencer between the homeware these constitute one-fifth of the company’s India
Reliance UK's M&S and
India India's

Ownership
Reliance revenue.
Retail
na = not available/applicable. Source: Companies, trade press, Fitch Solutions
Household Goods, Homeware And Home Improvement
As is true for other retail segments, the household goods market is fragmented and has few large players. Only some modern
foreign household-goods retailers have established a considerable presence in India. Home Centre of Dubai's Landmark Group is
one of such success stories, having opened 40 stores across the country. The firm sells furniture, and bed and bath products, in
addition to other household goods for middle-income consumers. It has operated in India even with domestic product sourcing
requirements in place, and will likely be joined by more internationally recognisable brands, as foreign retailers are now exempt from
the rule for the first three years of operations.
Consequently, Sweden's IKEA is bullish about the relaxed regulation. It has unveiled a plan to invest more than USD220mn to open
25 stores by 2025 in the country. The Scandinavian retailer opened its first store in Hyderabad in August 2018 where the company
expects 7mn visits a year. Prior to the opening, IKEA opened 'Hej Home' in Hyderabad to give consumers a retail experience of the
store prior to the launch. Subsequent IKEA stores will be built in the cities Mumbai and Bangalore. Already, IKEA has signed
memoranda of understanding with Karnataka, Telangana, Maharashtra, Uttar Pradesh and Haryana to open retail stores. The store in
Maharashtra is expected to open in 2019 and employ 10,000 people both directly and indirectly. As a part of its second phase
expansion plan, the company is now looking to expand in Tier 2 cities.
Chinese homeware brand Miniso opened its first store in Ambience Mall in New Delhi in August 2017. Spread over 2,000sq ft, the
store sells products across 12 categories such as creative homeware, digital accessories and stationery at the starting price of
INR150. Miniso looks to make INR100bn in revenue over two years. There are now approximately 110 stores across 41 Indian cities.
The goal is to get to 150 stores by the start of 2020. In September 2019, Flipkart and Miniso entered into a partnership, to provide
online distribution rights for Miniso’s products in India starting from end of September 2019. The partnership will allow Miniso to
extend its reach beyond its existing brick-and-mortar stores, into Tier-2 and Tier-3 cities.
Tynimo is a low cost department store in India that sells household goods that range from INR50 to INR3,500. Tynimo sells
products across 16 categories including toys, home décor, bags and wallets, fashion jewellery, hair ornaments, footwear and socks,
seasonal products (sunglass, umbrella, caps etc), travel series, personal care, food and beverages (to be introduced), Indian
handicrafts, digital and watches, innerwear, office stationery and sports and fitness. Tynimo currently has three stores in Bengaluru
at Mantri square mall, Malleshwaram, Commercial street and Jayanagar 4th block with one upcoming store at HSR layout. The
company is also betting big on the tier 2 and tier 3 markets. It is planning to invest only INR30mn over the next few years. By the
end of 2020, Tynimo wants to have at least 50 operational stores across the country, of which 40-50% will be in tier 2 and tier 3
towns. In terms of customers, Tynimo is mainly targeting women.
High-end household goods retail is also seeing increased activity, underlined by the opening of the first BoConcept store in Delhi.
The Danish manufacturer of contemporary luxury products plans to grow its network to eight locations.
SELECT HOUSEHOLD GOODS, HOMEWARE AND HOME IMPROVEMENT RETAILERS

Ownership
Home Landmark Retail Furnishing, homeware, na na 40 na

Centre Ltd clothing
IKEA India IKEA Group Furniture na na 1 Plans to open 25 sites across India before
2025.
Electronics
The growing popularity of online retail is likely to have an adverse effect on conventional electronics retailers. The price advantage
and fast deliveries are luring Indian customers, and some brick-and-mortar players are reconsidering their plans. Croma, a
subsidiary of Tata Group, is shelving plans for an aggressive nationwide expansion and is planning to focus on growing in the
locations where it already operates its 96 stores. Reliance Digital, the largest physical retailer of consumer electronics and
household appliances in India, is proceeding with its business model, which includes widespread store expansion. The firm currently
operates close to 1,900 shops - much more than any other competitor in the market.
Smartphone sales buoy the electronics retail business and encourage retailers to focus on this particular product segment, striking
deals with manufacturers and seeking ways to diversify the offering. However, the recently passed exemption from local sourcing
requirement for some international retailers has formally cleared the path for Apple and other electronics manufacturers to open
their own single-brand stores - a much-coveted prospect for global conglomerates, which have been hit by consumption slowdown
in China. Amazon brought its voice assistant Alexa-controlled Echo speakers to Asia for the first time, launching in India. The voice
assistant is able to converse in American English, British English, German and now English with an Indian accent, as well as
understanding names of places, songs and movie titles that include proper nouns in Hindi, Tamil, Telugu, Kannada, Malayalam and
Punjabi. In February 2020, Amazon has made a long-term business agreement with local retailer Future Retail, extending the local
retailer’s reach beyond its 1,500 physical locations within India by leveraging Amazon’s platform. Amazon will then become Future
Retail’s authorised online sales channel, covering its Big Bazaar and Foodhall grocery and lifestyle chains. The product focus will
cover groceries, general merchandise, fashion, apparel and beauty products.
Xiaomi Corporation is a Chinese electronics company that sells smartphones, mobile apps, laptops, bags, trimmers, earphones, MI
Television, Shoes, fitness bands and other products. The company's retail network includes Mi Homes, Mi Studios and Mi Stores.
Xiaomi has become the leader of single-brand retail network with the largest exclusive brand retail network in India.
In 2019, Xiaomi announced that Mi.com, the company’s online retail platform, became the top single brand online smartphone
channel. There are currently 70 Mi Home stores and approximately 7,500 authorised dealers. The company is expanding its India
product portfolio to include pricier, high-spec smartphones and smart TVs.
SELECT ELECTRONICS RETAILERS

Company Parent/Ownership Sub-Sector Revenues Employees Stores Notes
Croma Infiniti Retail, owned by Tata Group Consumer electronics INR166.4mn na 112 na
Reliance Digital Reliance Industries Ltd Consumer electronics, mobile phones na na 1,862 na
Xiaomi Xiaomi Corporation Consumer electronics CNY175bn na 70 na
Department Stores
As with many developed markets across the globe, Indian department stores are under pressure from online retailers and e-
commerce players. Shoppers Stop, an Indian retailing company promoted by the K Raheja Corp, is responding to this pressure
by having more, big digital screens in its stores to attract young consumers, with an overall focus on improving the in-store
experience for customers. The company has also revamped its mobile app and website. Shoppers Stop exclusively retails beauty
brands such as Estee Lauder, MAC, Clinique and Bobby Brown in India and has 81 stores across 37 cities. E-Commerce major
Amazon has also acquired a 5% stake in the company. Amazon’s experience centres have been created across the network of
Shoppers Stop stores to bring the touch and feel aspect to the assortment.
Big Bazaar (owned by Future Group) is pursuing a similar strategy, designing its new stores to be smarter through the use of
technology, such as upgrades at the checkouts to ensure faster service. Big Bazaar has also introduced live kitchens in its gourmet
food chain, Foodhall. It also launched its e-commerce website in August 2016.
High-street clothing retailers are implementing ambitious expansion strategies. Lifestyle International plans to become a billion-
dollar company by Q217 thanks to the opening of around 40 Lifestyle and Max stores. Future Lifestyle Fashions Limited
owns and markets more than 24 fashion brands through exclusive brand outlets, department stores and multi-brand outlets, as well
as company-operated chains such as Central, Brand Factory and Planet Sports. It collectively operates around 400 stores
spread over 5mn square feet of retail space.
SELECT DEPARTMENT STORE RETAILERS

Ownership
Big Bazaar Future Wide range of sub- na na 285 Stocks more than 500 international and Indian
Group sectors brands in a range of categories. Also plans to
launch own-brand clothing. Has reached online
sales agreements with Amazon and Flipkart.
Lifestyle Part of Clothing, footwear, na na 69 More than 250 international and Indian brands.
International Dubai- toys, furniture and
based homeware, beauty
Landmark and fashion
Group accessories
Shoppers na Clothing, footwear, na na 83 Also operates hypermarkets.

Stop children's wear,
homeware, beauty
and fashion
accessories

E-Commerce And Online Marketplaces
India has a thriving e-commerce segment, which is forecast to be worth USD92.1bn in 2022, according to our forecasts. The e-
commerce sector has been the main change in India's retail market in recent years and it is expected to continue to grow at a
phenomenal rate. Due to limitations on the activity that international retailers are allowed to undertake in the market, e-commerce
has been driven by local firms such as Flipkart and Snapdeal. Many Indian brick-and-mortar retailers are also entering the e-
commerce segment because of the rising mobile penetration in the country. Reliance Industries Ltd. announced that it would be
launching its own e-commerce platform in January 2019 in collaboration with Reliance Retail. Online retailers are also increasingly
targeting this market with m-commerce websites. Retailers involved in this area include Snapdeal, Myntra and Voonik.
The government's regulations on e-commerce have tightened recently. The Indian government has announced the introduction of
new e-commerce guidelines and rules, which will place restrictions on foreign e-commerce companies operating in India, effective
from February 1 2019. The new rules will ban online retailers from selling products from companies or affiliates in which they own
an equity interest. Furthermore, inventory of a vendor will be deemed to be controlled by the e-commerce company if more than
25% of purchases of the vendor are from the marketplace entity. E-commerce companies are also restricted from entering into
exclusive merchandise deals with their partners.
US e-commerce behemoth Amazon is in the most immediate danger as a result of these new rules, considering that most of the
major sellers on the site are companies that it has invested in, including Cloudtail and Appario. Amazon cut its stake in Prione
Business Services, Cloudtail’s parent company, to 24% on February 6, meeting regulations preventing e-commerce companies
from owning 25% of the sellers using their platform. Amazon has thus far invested nearly USD7bn in the Indian market, after it
increased its investment by USD2bn in June 2018.
Attracted by the large and growing e-commerce market in India, in May 2018 Walmart acquired a 77% stake in Flipkart for
USD16bn, leveraging on the most successful Indian start-up company in terms of fund-raising, valuation and employment creation.
Flipkart retains its market position after securing USD2.5bn in funding from Japanese investor Softbank, which is also known for
backing China's Alibaba. This is the second of its major funding, after receiving USD1.4bn in funding from China's Tencent, eBay
and Microsoft. The investment will also see Flipkart taking control of eBay India, which will remain an independent e-commerce
website. In a bid to strengthen its logistics service and support its last-mile delivery, Flipkart's subsidiary Instakart Services is set to
invest INR9.9bn in setting up a logistics hub in West Bengal.
Other players in the e-commerce market include Patym, whose largest investor is China's Alibaba, which invested USD200mn in
March 2017. International e-commerce platform eBay is preparing to head a USD160-170mn investment in e-tailer Paytm Mall. This
move would mark a continuation of eBay's investment in India, having previously taken up stakes in Snapdeal and Flipkart.
Reliance Industries Ltd is also planning to launch a fashion and consumer electronics e-commerce site. In the fashion segment are
Myntra, a mobile-online fashion retail website; Koovs, which sells branded fashion; and abof.com, the online branch of ABFRL. In
the make-up segment, there is Nykaa.com, which also opened its offline store in November 2015 at the Terminal 3 Indira Gandhi
International Airport. In the furniture and home decor sphere, e-commerce firms include India Circus Retail, Pepperfry and
FabFurnish. In the children and baby products landscape, Indian online baby product retailer FirstCry is in funding talks with
Chinese e-commerce platform Alibaba and Japanese multinational conglomerate SoftBank Group.
Food and grocery are compelling categories for e-commerce businesses as people buy their grocery and perishable supplies much
more frequently than they buy office supplies and gadgets. Indian laws permit e-commerce companies to sell food items directly to
consumers. For other categories of items, e-commerce businesses work with third-party sellers. In October 2019,
Flipkart announced that it was entering the food retail business. The company revealed that it would invest USD258mn in the new
venture. Amazon is also expanding its food retail business in the country. The company has already committed to invest about
USD500mn in the course of the next five years to build its own private label food products and engage with third-party sellers. In
recent years, Amazon India has established or started Amazon Now, Prime Now and Amazon Fresh in the nation.
SELECT E-COMMERCE RETAILERS AND ONLINE MARKETPLACES

Company Parent/ Sub- Revenues Employees Stores Notes
Ownership Sector
Flipkart na General na na na Sold a 75% stake of the company to US retailer Walmart in May
2018.
Snapdeal Jasper General na na na Investors include Alibaba, Foxconn and Softbank.

Infotech
Pvt
Jabong Xerion Fashion Sales of na na na

Retail INR10bn in
2014/15
Shopclues na General na na na Investors include Singapore's GIC.
Amazon na General na na 41 In mid-2016, Amazon India began a grocery delivery service,

India fulfilment Amazon Pantry, in Hyderabad. The company plans to expand the
centres service across the country.
Drugstores And Pharmacies
The drugstore market reflects the overall retail sector in India. It is highly fragmented and under threat by the ascension of online
competitors. In 2015 practically all pharmacies - a total of 850,000 stores - closed for a day in protest against foreign capital-backed
online drug stores, which are allegedly distorting the competitive balance. Venture capitalists and private equity firms are rushing to
move into a market disrupted by online retail in order to clinch larger capital gains in a relatively short period of time. However, their
activities could provoke retaliatory legislation from the government, which has traditionally been protective of domestic businesses.
Currently, most of the pharmaceutical retail market is shared by corner shops, owned by individuals, families and small businesses.
The country's largest brick-and-mortar pharmacy chain, Apollo Pharmacy, operates approximately 2,700 stores, or less than 0.3%
of the total number in the country. The explosive nature of the industry is underscored by the story of the second-largest chain
MedPlus, which was founded in 2006 and has built a network of 1,350 drug stores. Another strategy for growth is in private label
brands and the company also plans to distribute its in-house label via other retail outlets. The company plans to reach 2,000 stores
by 2022. Government regulation of online pharmacies is still subject to intense debates fuelled by multiple lobbying groups, but it is
unlikely that the growth of pharmaceutical e-commerce will be curbed in the near future.
SELECT DRUGSTORE AND PHARMACY RETAILERS

Ownership
Apollo Apollo Pharmaceuticals na na 3,000 The largest pharmacy chain in India.

Pharmacy Hospitals
Enterprise
MedPlus MedPlus Pharmaceuticals na 10,000 1,650 Established in 2006, it is the second-largest pharmacy
Health chain in India and has an online branch.
Services
Shopping Centres And Malls
JLL, one of India’s largest professional real estate services firms, noted in their half-yearly update that net absorption in H118 for
retail space saw a rise of over 75% y-o-y, recording a total absorption of 1.9mn sq ft. JLL’s estimation for H218 was fresh supplies of
3.7mn sq ft in the top seven cities of the country. Of the total, Hyderabad was expected to see the highest volume of 1.8mn sq ft.
Delhi, at 715,000sq ft, was forecast to receive the next highest volume of mall space supply, followed by Chennai (511,000sq ft) and
Bangalore (500,000sq ft). Pune was expected to be the only market that would not see any new addition of retail mall space.
Large global investors, such as Canada Pension Plan Investment Board, APG Asset Management NV, Virtuous Retail
South Asia Pte. Ltd (a joint venture with Xander Group Inc.) and Blackstone Group are entering the shopping mall business to
ride the wave of India’s urban consumption story. A push for modernisation will lead to a further expansion of malls that combine
shopping, dining and entertainment. Projected growth in household incomes will also significantly increase the customer base for
mall operators, providing them with stronger and more stable demand. First-movers into a complete, modern shopping centre
format are likely to reap substantial benefits as an increasingly sophisticated consumer base will reward innovating operators.
In January 2018 UAE-based retail chain Lulu Group, promoted by NRI businessman Yusuffali MA, signed three memorunda of
understanding with the Telangana government to develop retail and food processing industry in the state. The Lulu Group
will construct a 1.8mn sq ft mega shopping mall, alongside its food processing plant, and a logistics and export processing unit for
fruit and vegetables. In line with Prime Minister Modi's initiative of Digital India, the leading destination mall of the Mumbai
Metropolitan Region, Viviana Mall, is driving a campaign for customers to use electronic modes of payment. The campaign is
targeted to help customers conduct cashless transactions with ease and to create awareness of the various cashless options
available for digital transactions.
Consumer & Retail Glossary

Fitch Solutions' household spending data is based on the UN Classification of individual consumption by purpose (COICOP), which is
a classification system used to define consumption expenditures incurred by households. This lists various categories and sub-
categories defining the different categories of items on which households spend, and is the preferred model used in household
expenditure surveys carried out by national statistics agencies from which Fitch Solutions’ household spending data is sourced.
Where spending data is not readily allocated into the COICOP format, Fitch Solutions applies a rigorous and logical approach in
allocating data to align with these categories, and if needed, apply aggregation methods or other techniques to achieve category
level data.
Fitch Solutions' spending data defines spending in terms of three different types of consumer units: individuals (given as per capita),
households and total economy.
• Household - is defined as a group of people living in the same residential unit. The number of households and average persons
per household is sourced from national statistics. Where this data is unavailable, Fitch Solutions uses alternative best sources for
the data, and where needed use best practice techniques to make an estimate. Households exclude institutionalised individuals,
such as those in hospitals and military, religious and other institutions. Where national statistics include it, Fitch Solutions uses
the relevant best practice to amend the data in order to keep all countries similar with respects to their definition.
• Per household spending - is defined as spending by each household unit.
• Per capita spending - is defined as spending by each individual person.
Below are definitions to the different indicators covered in our consumer & retail publications. For more details on what is included
in each of the categories, please review: 'UN - detailed structure and explanatory notes', http://unstats.un.org/unsd/cr/registry/
regcst.asp?Cl=5&Lg=1
Food and non-alcoholic drinks spending - refers to the sum of food spending and non-alcoholic food spending. Details of what
is included in these categories are given below.
Food spending - refers to the sum of spending on the following food items:
01.1.1 - Bread and cereals
01.1.2 - Meat
01.1.3 - Fish and seafood
01.1.4 - Milk, cheese and eggs
01.1.5 - Oils and fats
01.1.6 - Fruit
01.1.7 - Vegetables
01.1.8 - Sugar, jam, honey, chocolate and confectionery
01.1.9 - Food products, other.

Note that this refers to spending on food for home consumption and excludes food spending for consumption outside the home.
Non-alcoholic drinks spending - refers to the sum of spending on the following types of drinks:
01.2.1 - Coffee, tea and cocoa
01.2.2 - Mineral waters, soft drinks, fruit and vegetable juices
Note that this refers to spending on drinks for home consumption, and excludes spending for consumption outside the home.
Alcoholic drinks and tobacco spending - refers to the sum of spending on the following items/services:
Alcoholic drinks spending - refers to the sum of spending on the following items:
02.1.1 - Spirits
02.1.2 - Wine
02.1.3 - Beer
Tobacco spending - refers to spending on the following tobacco products: cigarettes; cigarette tobacco and cigarette papers;
cigars, pipe tobacco, chewing tobacco or snuff. Excludes other smokers' articles.
Clothing and footwear spending - refers to the sum of spending on the following items/services:
Clothing spending - refers to the sum of spending on the following clothing items:
03.1.1 - Clothing materials
03.1.2 - Garments
03.1.3 - Other articles of clothing and clothing accessories
03.1.4 - Cleaning, repair and hire of clothing
Footwear, including repair, spending - refers to the sum of spending on the following items:
03.2.1 - Shoes and other footwear
03.2.2 - Repair and hire of footwear
Housing and utilities spending - refers to the sum of spending on the following items:
04.1 - Actual rentals for housing
04.2 - Imputed rentals for housing
04.3 - Maintenance and repair of the dwelling
04.4 - Water supply and miscellaneous services relating to the dwelling

04.5 - Electricity, gas and other fuels
Furnishing and home spending - refers to the sum of spending on the following items/services:
Furniture and furnishings spending - refers to spending on the following items:
05.1.1 - Furniture and furnishings
05.1.2 - Carpets and other floor coverings
05.1.3 - Repair of furniture, furnishings and floor coverings
Household textiles - refers to the sum of spending on the following items:
05.2.0 - Household textiles which includes items such as fabrics, bedding, linen, kitchen and bathroom linen, cloths and towels.
Household appliances - refers to the sum of spending on the following items:
05.3.1 - Major household appliances, whether electric or not
05.3.2 - Small electric household appliances
05.3.3 - Repair of household appliances
Glass, tableware and utensils - refers to the sum of spending on the following items:
05.4.0 - Glassware, tableware and household utensils which includes items such as cutlery, flatware, silverware, kitchen utensils,
pans, non-electric household containers, waste bins etc.
Home and garden tools/equipment spending - refers to the sum of spending on the following items:
05.5.1 - Major tools and equipment
05.5.2 - Small tools and miscellaneous accessories
Goods and services for routine household maintenance - refers to the sum of spending on the following items:
05.6.1 - Non-durable household goods
05.6.2 - Domestic services and household services
Health spending - refers to the sum of spending on the following items/services:
06.1 - Medical products, appliances and equipment
06.2 - Outpatient services
06.3 - Hospital services
Transport spending - refers to the sum of spending on the following items/services:

07.1 - Purchase of vehicles
07.2 - Operation of personal transport equipment
07.3 - Transport services
Communications spending - refers to the sum of spending on the following items/services:
08.1 - Postal services
08.2 - Telephone and telefax equipment
08.3 - Telephone and telefax services
Recreation and culture spending - refers to the sum of spending on the following items/services:
09.1 - AV, camera and computer - refers to the sum of spending on the following items: AV equipment spending, including
television, radio and CD players; cameras and video cameras, including sound recording equipment; computers spending, including
all types of personal computers, software and peripherals; recorded media, including recordable CDs, cassette and recording films;
AV, camera and computer repairs
09. 2 - Other major durables for recreation and culture
09.3 - Toys, sports, gardens and pets - refers to the sum of spending on the following items: games, toys and hobbies spending,
including items such as card, board, electronic games and hobbies, eg stamp collecting and video games; sport and camping
equipment, including items such as sports equipment, and game specific footwear; gardens, plants and flowers, including artificial
flowers, pots and pot holders; pet food/products and vet fees, including all pet related accessories.
09.4 - Recreational and cultural services
09.5 - Newspapers, books and stationery
09.6 -
Education spending - refers to the sum of spending on the following items/services:
10.1 - Pre-primary and primary education
10.2 - Secondary education
10.3 - Post-secondary non-tertiary education
10.4 - Tertiary education
10.5 - Education not definable by level
For more details on what is included in each of the above categories, please review 'UN - detailed structure and explanatory notes'.
Restaurants and hotels spending - refers to the sum of spending on the following items/services:
11.1 - Catering services
11.2 - Accommodation services
Personal, insurance and other spending - refers to the sum of spending on the following items
Personal care and effects spending - refers to the sum of spending on the following items:
12.1 - Personal care products spending - includes spending on hairdressing/personal grooming, small electric appliances for
personal care, toiletries and other similar products.
12.2- Personal effects products spending - refers to the sum of spending on the following items:
12.3.1 - Jewellery, clocks and watches
12.3.2 - Other personal effects
12.3 - Insurance - includes all types of personal, home, health and transport insurance.
12.4 - Other spending - which includes social protection, financial services and other similar services etc.
Household goods (Fitch Solutions only category/Fitch Solutions calculation) - the sum of spending on furniture and
furnishings, household textiles and appliances, glass, tableware and utensils, home and garden tools and equipment, AV, cameras
and computers, toys, sports, gardens and pets.
Income Definitions
Gross income - refers to income received before tax and deductions.
Net income - refers to income received less any income taxes and social contributions.
Tax and social contributions, % of gross income - refers to tax plus social contribution rate as percentage of total gross
income.
Consumer & Retail Methodology

Industry Forecast Methodology
Fitch Solutions' industry forecasts are generated using the best-practice techniques of time-series modelling and causal/
econometric modelling. The precise form of model we use varies from industry to industry, in each case determined, as per
standard practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry is the use of vector autoregressions, which allow us to forecast a variable using more than
the variable's own history as explanatory information. For example, when forecasting oil prices, we can include information about oil
consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most
desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile
form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases,
we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
Fitch Solutions mainly uses OLS estimators, and in order to avoid relying on subjective views and to encourage the use of objective
views, we use a 'general-to-specific' method. We mainly use a linear model, but simple non-linear models, such as the log-linear
model, are used when necessary. During periods of 'industry shock', for example poor weather conditions impeding agricultural
output, dummy variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. Fitch Solutions selects the best model according to
various different criteria and tests, including but not exclusive to:
• R2 tests explanatory power; adjusted R2 takes degree of freedom into account;

• Testing the directional movement and magnitude of coefficients;
• Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
• All results are assessed to alleviate issues related to auto-correlation and multi-collinearity.
Fitch Solutions uses the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all of our industry forecasting. Experience, expertise and knowledge of
industry data and trends ensure analysts spot structural breaks, anomalous data, turning points and seasonal features where a
purely mechanical forecasting process would not.
Sector-Specific Methodology
In the Retail forecasts human intervention might include, but is not exclusive to, business environment changes; changes in
consumer trends; the introduction of new technology; changing fashion trends; the expansion of retail capacity/stores; and
regulatory changes.
Intervention can also be necessary with respect to the following factors: changing regional trends; demographic factors;
infrastructure investment; macroeconomic indicators; and regulatory changes. Our analysts take into consideration both macro and
industry factors when intervening, bringing together our country risk and industry knowledge to give a complete forecast of the
industry.
During periods of 'industry shock', for example a deep recession, dummy variables are used to determine the level of impact.
The retail industry data can be divided into the following main categories: demographics, household structure, consumer price
index (CPI) breakdown and total household spending.
• Demographics covers the different types of consumers by age group, sex and urban/rural population. This is important in
highlighting the different consumer groups and the size of each group.
• Household structure includes indicators such as household size by number of people in the household, net/gross income per
household/capita and number of households earning above USD5,000, USD10,000 and USD50,000. This gives an overview of
the households within a country.
• CPI breakdown comprises indicators on the price index and annual change in price of all goods/services and the main
categories of spending.
• Total household spending across the main categories of consumer spending.
The categories for household spending forecasts are:
• Food and non-alcoholic drinks;

• Alcoholic drinks and tobacco;
• Clothing and footwear;
• Housing and utilities;
• Furnishing and household goods;
• Health;
• Transport;
• Communications;
• Recreation and culture;
• Education;
• Restaurants and hotels;
• Personal care, insurance and other.
These main categories can then be divided into the following sub-categories:
Food and non-alcoholic drinks:
• Food
• Non-alcoholic drinks
Alcoholic drinks and tobacco:
• Alcoholic drinks spending

• Tobacco
Clothing and footwear:
• Clothing
• Footwear, including repair
Furnishing and home, and recreation and culture:
• Household goods spending

• Furniture and furnishings
• Household textiles
• Household appliances
• Glass, tableware and utensils
• Home and garden tools/equipment
• AV, camera and computer
• Toys, sports, gardens and pets
The following categories are forecast:
• Demographics. Fitch Solutions forecasts this data using UN and World Bank projected population levels as a benchmark, while
objectively and subjectively intervening where necessary.
• Household structure. This data is forecast objectively based on Fitch Solutions' core country-specific macroeconomic data.
This includes Fitch Solutions' views on population, household demographics and GDP.
• Total household spending. Using a selection of leading retail indicators and macroeconomic data from our Country Risk
service, Fitch Solutions estimates each indicator of spending individually. This can be intervened subjectively to take into account
qualitative information believed to be necessary. Once every individual spending indicator has been forecast, Fitch
Solutions then uses this information, along with any other sector and macro views, to form headline total spending indicators.
Sources
For the Consumer & Retail sector, Fitch Solutions sources data primarily from national-level sources. This includes data from national
statistics organisations, government ministries, and industry associations. Fitch Solutions uses national sourced data in conjunction
with data available from Eurostat, the World Bank and the UN where needed. In some instances where full-time series data is not
available, we use a combination of the above, coupled with industry expertise, to model industry data.
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 2513-9592
ISSN:
Copy Deadline: February 2020

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2020
20 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2020 Fitch
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India India: C Consumer & R Onsumer & Retail R Etail Report Eport

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India India: C Consumer & R Onsumer & Retail R Etail Report Eport

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Q2 2020

Consumer & Retail Glossary.....................................................................................................................................................36

Consumer & Retail Methodology............................................................................................................................................40

Strong Growth In Consumption Amid Upturn In Economic Growth

Inflation Being Driven By Food Price Increase

Source: Bloomberg, Fitch Solutions

Personal Income Tax Breaks May Increase Consumption Spending As Well

PERSONAL INCOME TAX CUTS MAY STIMULATE CONSUMER SPENDING

250,001- 500,000 20% 10%

500,001-750,000 20% 15%

750,001- 1,250,000 30% 20%

1,250,001-15,000,000 30% 25%

>15,000,000 30% 30%

Source: Budget Documents, Fitch Solutions

Business Expectations Of Retail Sales Drop Further

Business Optimism Regarding Consumer Sales Slides In The Short Term

Source: Wind, Fitch Solutions

Total Household Spending

Total Household Spending, Real Growth, % y-o-y

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

TOTAL HOUSEHOLD SPENDING (INDIA 2018-2024)

Total household spending, INRbn, 2010 prices, % y-o-

Essential And Non-Essential Spending

Essential And Non-Essential Spending

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

ESSENTIAL AND NON-ESSENTIAL SPENDING (INDIA 2018-2024)

Total Household Spending Breakdown % total

f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions

Food, Drink And Tobacco

FOOD, DRINKS (NON-ALCOHOLIC, ALCOHOLIC) AND TOBACCO SPENDING (INDIA 2018-2024)

Food and non-alcoholic drinks spending,

Alcoholic drinks and tobacco spending,

Food and non-alcoholic drinks spending,

Alcoholic drinks and tobacco spending, INR

Food and non-alcoholic drinks spending,

Alcoholic drinks and tobacco spending,

Food and non-alcoholic drinks spending,

Alcoholic drinks and tobacco spending, INR

Indicator 2018e 2019e 2020f 2021f 2022f 2023f 2024f

INR per capita

Alcoholic drinks and tobacco spending, INR

Clothing And Footwear

CLOTHING AND FOOTWEAR SPENDING (INDIA 2018-2024)

Footwear including repair spending, INR per

Indicator 2018e 2019e 2020f 2021f 2022f 2023f 2024f

HOUSEHOLD GOODS SPENDING (INDIA 2018-2024)

Indicator 2018e 2019e 2020f 2021f 2022f 2023f 2024f

Personal Care And Effects

PERSONAL CARE AND EFFECTS SPENDING (INDIA 2018-2024)

Purchasing Power And Demographic Trends

f = Fitch Solutions forecast. Source: National sources, Fitch Solutions

HOUSEHOLD INCOME DATA (INDIA 2017-2024)

Tax and social contributions, % of gross

Tax and social contributions, per capita,

Tax and social contributions, per capita,

Households '000 Disposable Income

Households '000 Disposable Income

Households '000 Disposable Income

Households Disposable Income

Households Disposable Income

Households Disposable Income

Population Vs Emerging Asia

e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions