Rising Spending trends
Over the years, having been born and brought up in one of the biggest cities in India in both GDP and population terms, I have noticed a huge shift in terms of consumer patterns and the spending patterns in the city. I am talking about the city of Mumbai and how it has evolved in terms of the spends of population and a huge shift in the wallet of various consumers within the city.
Around 30 years back, a major chunk of the wallet of a family was spent on creating assets - may it be gold or real estate. I see that though the income levels have increased the percentage of wallet for these have actually reduced. More and more part of the Mumbai household income is spent on experiences, food and travel. Also, there is a major shift from basic means of living to convenience and luxury ways of living. More and more percentage of
a above average income consumers seek to travel by cabs rather than public transport. More and more spend on fine dining than basic fast food restaurants and this percentage is increasing rapidly. This can be attributed to a lot of things. Primary amongst them are as follows:
a. Mobile phone penetration - The extremely high penetration of smart phones in the city has resulted in easy access of all the sources of information. Besides, the targeted means of advertising has ensured that more and more percentage of consumers start buying these stuff as they have a huge amount of convenience and quick gratification value. Buying an expensive watch is much more easy and can be more impulsive than it used to before. Booking an airline ticket/ hotel is much more easy and hassle free leading to quick impulsive purchase for instant gratification.
b. Social Media - The extreme penetration of social media has created a huge amount of awareness for various services and also has indirectly led to increased push for buying these services. People tend to visit expensive restaurants, buy expensive cars and watches etc simply to be able to show it off to their friends. Most times, it is very common to see people travelling to various places to ensure that they can upload their pictures doing "cool stuff" rather than for the real joy of travelling.
c. Convenience - Over the period, the urban society has shifted its decision making from economy to convenience. It has been observed that people tend to book a cab over travelling by a local bus/ train. Also, people tend to avoid walking these days due to the availability of door to door service. All of these services tend to cost more than the economical options.
d. Stress Levels - The increasing stress levels from corporate jobs to failed relationships has caused people to find ways to splurge on themselves. It is a very common phenomenon for people to find expensive alternatives to travel, food etc just to ensure that they do not have to stress about it. Also, the ever increasing stress levels have caused extreme spending to make people feel "good" about themselves.
e. Peer pressure - There is an increasing pressure from peers to spend. More and more people are buying expensive mobile phones, cars etc and going to expensive parties and restaurants simply to stay in touch with other people or be a part of a social group. This has led to a lot of unwarranted spending which leads to lesser savings
f. Lack of alternative saving options - Various investment avenues have become very big ticket leading to people believing they are almost unreachable. For example, buying a home or investing in gold is very expensive and hence people postpone that buying decision leading to greater bank balances and disposable income leading to higher spending.
Over the last 2 decades, the percentage of savings as a percentage of income has drastically reduced from approximately 40% to around 15%. As it is said, "Create Assets" rather than creating negative cash flows. It is high time that the urban population starts realising this so as to ensure we do not waste the assets and the resources endowed to us both by our luck and our hard work.
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