A decade ago, Indian consumers used to be penny-pinching and fantastically frugal. They would research a brand to death before making a big purchase like a television set, comparing prices in 10 shops, holding a family summit to discuss the findings, and in the end deciding not to buy because the old TV could "do" for another year.
No consumer in the world is as demanding as the Indian consumer. Multinationals who entered the market after liberalization in 1992 to tempt the great Indian Middle Class with objects of desire were filled with despair at the reluctance to spend.
They soon realized that consuming was alien to the Indian middle class. Its ethic was saving money. This frugality, a product of Gandhian asceticism and a sheer shortage of disposable cash, was its most salient characteristic.
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Durability was the most sought-after quality in any product, because once this class invested its hard-earned savings in an expensive item, the prized object was expected to perform faithfully for decades. Nothing was allowed a dignified death from old age. TVs, cars and fridges were always endlessly repaired, replaced only when beyond resuscitation.
All that has changed.
Indians are spending as though they have awoken from a deep slumber and want to make up for lost time. Part of the reason for the new national hobby is that shopping has become more fun.
For a whole pre-1992 generation, Indians could buy any car as long as it was an Ambassador (based on the British Morris Oxford of the 1940s), any color Ambassador as long as it was white, any TV as long as it was Philips and any toothpaste as long as it was Colgate.
Now consumers have choice.
But more important is the sea-change in attitude. After decades of self-denial, Indians want the good life -- comfortable homes, nice cars, smart clothes and meals in good restaurants. If they have money, they want to spend it and if they don't, they borrow. Cheap and easy credit has been a blessing for the retail business.
A retail revolution is happening in India. Indians used to shop at small, family-owned stores in the neighborhood. These outlets were shabby, untidy and disorganized. Now they travel to gleaming malls that also offer family recreation -- restaurants, video-game parlors, coffee bars, cinemas, etc.
A new study by property consultants Knight Frank shows that India ranks fifth among 30 emerging retail markets in emerging economies with about 25 million square feet of organized retail space -- that's about 55 shopping malls -- coming up by 2005. By the end of 2006, New Delhi alone will have 23 new malls.
One of the main reasons for the revolution is the growth in disposable income. Consumer spending has grown at an average of 12 percent over the past decade. The National Council for Applied Economic Research in New Delhi says that by 2006 to 2007, 5 million households could have an annual income in excess of 215,000 rupees (US$4,743) and are classified as the very rich. The "consuming class," or those with an annual income of Rs45,000 to Rs215,000 would constitute 75 million households. Another 82 million are classified as "climbers" or those with incomes of Rs22,000 to Rs45,000.
Taking the kids to Mcdonald's after some shopping is a routine affair in the west. A decade ago, there were hardly any restaurants or fast food places in any of the big Indian cities where families could have a quick meal.
"There were no foreign brands, no department stores. For real shopping we had to go abroad," said New Delhi schoolteacher Geeta Kapoor.
When Crossroads, a shopping mall in Mumbai on India's west coast, opened four years ago, local people were stunned at the bright lights, the atrium and gleaming chrome. So many "ordinary" people with no money in their pockets wandered in off the roads just to stare at the merchandise and try out escalators for the first time in their lives that the management had to restrict entry only to those carrying mobile phones or credit cards.
A measure of just how radically India has changed is that Crossroads no longer needs to screen its customers to keep out hoi polloi.
Consumer behavior has changed in other ways too. At Shoppers' Stop, a popular New Delhi department store that opened a few years ago, B.S. Nagesh, managing director, says Indians are not just price-sensitive but very discerning: "They won't take anything unless it's top quality and good value for money. You can wave foreign labels at them or famous brands, but if it's second-rate stuff, they won't have it."
Certainly, asceticism is out and instant gratification is in, whether it is booking DaimlerChrysler's new Maybach, shopping for Hugo Boss suits, savoring Hennessy's XO cognac or flaunting Louis Vuitton handbags.
The rich in India have never been embarrassed about flaunting their wealth. It was the middle class that was different, culturally averse to ostentation and imbued with the belief that poverty was somehow morally superior to riches and that self-denial was a virtue.
Its children no longer share those values.
No wonder you don't see many of those clapped-out old Ambassadors on the roads anymore.
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