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Indian Rural Consumers: Why it Makes Sense to Target the World’s Largest Rural Market

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India is home to the world’s largest rural population, with 878 million rural dwellers accounting for 65% of the country’s population in 2020. Despite urbanisation, over half (53.6%) of India’s population - some 835 million people - will still be living in rural areas in 2040. For consumer-focused businesses, targeting Indian rural consumers means unlocking over half of India’s total consumer expenditure and unleashing long-term opportunities in the world’s largest rural market.

Rural/Urban Consumer Expenditure in India 2020-2040

Source: Euromonitor International from national statistics

Note: Data for 2021-2040 are forecast

Who are India’s rural consumers?

Even though 15.3% of the rural population still lived in poverty as of 2020, rural Indians are not poor consumers. The spending level of an average rural household in India in 2020 was more or less comparable to that of a decile 5 household.

The Average Rural Household in India in 2020

Source: Euromonitor International from national statistics

Thanks to technology and infrastructure development in rural India, the country’s rural consumers are increasingly active online as well as becoming increasingly aware of environmental and social issues. In 2021, a huge 85% of rural Indian respondents to Euromonitor International’s Voice of the Consumer: Lifestyle Survey reported that they have interacted with brands and/or retailers on social media. 68% of rural respondents to the same survey stated that they try to have a positive impact on the environment through everyday actions.

Driving a rise in aspirational spending aligned to urban lifestyles

Now, more confident, better educated, and better connected - more than three-quarters of rural inhabitants in India own a smartphone in 2021 - these consumers, who are also enjoying rising purchasing power, are more knowledgeable about brands and product ranges and increasingly inclined to spend on more sophisticated, quality products and services as they aspire to better, healthier and happier lifestyles. They want to bring urban lifestyles to their rural locations. Hence, the availability of consumer goods in rural India is essential so that companies can tap into this interest and meet shifting demands.

Emotionally driven, environmental, and social issues are also important considerations in purchasing decisions, as is remaining aware of value for money. While these consumers are undoubtedly aiming to improve their lifestyles, they have not lost sight of the importance of making good investment decisions and choices that have a positive impact on both people and the planet. Similar to low-income consumers at the base of the pyramid in developing markets, India’s rural population is very community-centric. Businesses can reach these consumers and generate loyalty through community advocates and strong environmental and social values. Additionally, leveraging technology and digital connectivity is also important as it gives rural consumers greater access to products and services previously not accessible to them from both affordability and availability perspectives.

According to Euromonitor’s Voice of the Consumer: Lifestyles Survey in 2021, more than 40% of rural consumers in India plan to spend more on education, new technology, and health and wellness in the year ahead. Businesses that engage with these consumers and find ways to make these products and services available and affordable to this underserved segment of the market in India will be successful.

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