Despite warning signs that India’s economy might be tightening, Indian consumers have benefited greatly from the country’s resilience during the first half of the five-year meltdown. Over the past decade, new innovations have left consumers around the globe—including more than ever those living in emerging markets such as Brazil, Russia, India, China and South Africa (also known as BRICS)—more connected. Dr. Venkatesh Bala, chief economist for The Cambridge Group, a part of Nielsen, recently discussed the effect these new technologies could have on global consumers and online commerce at The Next Billion: A Forum about the Connected World presented by Quartz.
“A few years ago, I was looking at a curve where I was plotting what countries have in terms of per-capita income and their mobile and internet penetration rates,” said Dr. Bala. “From 2003 to 2006 to 2009, you could see these giant jumps that were taking place in all of the emerging markets, including BRICS.” In fact, the Indian economy boasted a 9 percent boost in GDP during its 2007-2011 fiscal years, according to a recent report on its fast-moving consumer goods market. And with this new-found growth, demand for new technology has risen. Globally, intentions to buy new technology products (29%) in the third quarter of 2013 increased 4 percentage points compared to the second quarter, according to Nielsen’s Q3 2014 Global Consumer Confidence report.
At the same time, the middle class is rapidly expanding and creating opportunities for retail growth. Over the next 20 years, 3 billion people are on track to join the middle class in these growth markets, placing 5 billion of the world’s 8 billion people into this group.
Still, some have been disappointed by what they see as the unfulfilled promise of emerging markets, including India. The country is currently teetering on the edge of a severe economic crunch—GDP growth has slowed to its lowest pace in the past 10 years, touching 5 percent in 2012-13. Nevertheless, Dr. Bala is extremely optimistic for short- and long-term expansion of the economies in BRICS and other emerging markets through e-commerce.
India and other emerging markets’ online shopping demands are growing from the ground up. Consumers are changing their buying and digital habits to enhance their lifestyles and connect with people in ways previously not available to them, instead of a need to shop more. And the developing middle class should further drive economic advances in these countries.