emerging rural & small town india
DESCRIPTION
Presentation to CEO forum by Mr. Pradeep Kashyap-Founder & CEO, MARTTRANSCRIPT
Emerging Rural & Small Town India
1
Pradeep KashyapFounder & CEO, MART
Presentation to CEO forum September, 2013
1 Million +
< 1 Million
< 10,000
48 large cities
7,834 towns
640,000Village
50%
25%
25%
GDP share
12 %
18%
70 %
Population
Where Does India Live
Source : Census of India 2011,, India Urbanization Econometric Model -McKinsey Global Institute ,MART Knowledge centre 2
Growing Rural Demand
Source: NSSOPercentage increase in monthly per capita expenditure
Per capita rural GDP grew at 6.2% CAGR against 4.7% in urban since 2000
3
Rural Growth Drivers
•Government Initiatives
oNREGA
oBharat Nirman
oImproved Infrastructure (all 500+ population villages
connected by road)
•Transformation in Agriculture
•Rural becoming a non farm economy
•Emergence of services sector
•Emergence of small towns
4
Agri Transformation in Last Decade
•50 mn tonnes increase in food grains production
from 196 to 245 mn tonnes
•Eight good monsoons
•More than two fold increase in support price of food grains
5
Emergence of Service Sector
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
Mar-00 Mar-03 Mar-06 Mar-09 Mar-12
Service (40%)
Industry (30%)
Agriculture (30%)
Source: Government of India
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
6
Retail trade39%
Manufacturing26%
Community, social and personal service
Education
Hotels and resturants
Transport and storage
Health and social work
other12%
Non-agriculture Establishments in Rural India
Source: NSSO 7
2%
4%
4%
5%
8%
Manufacturing shifting to Rural
•Out of 36 million non-agri enterprises in India,
20 million in rural (55%)
•75% of new factories in last decade in rural
•70% of all new manufacturing jobs created in rural
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Rural Employment in millions
Source: NSSO and CRISIL Estimates
Agriculture, hunting & forestry &
fishing
Industry Manufacturing Construction Services
1990-00 218.3 32.6 21.2 9.4 35.5
2004-05 249.4 47 27.8 16.8 46.7
2009-10 229.0 58.6 24.2 31.7 49.5
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Small Towns
Cities & Towns
No. Pop Strata (in Million)
% Share of HH
Income/HH in INR
% Share of Total Disposable Income
Tier I 8 > 4 29 1,86,000 39
Tier II 40 1 - 4 15 1,36,000 14
Tier III 53 0.5 - 1 9 1,29,000 9
Tier IV 7781 < 0.5 47 1,14,000 39
Total 7882 100 100
…NOT SO SMALL
10
Now
Rudrapur
Then..
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Rudrapur
Radisson Blu
SIDCUL(Rudrapur outer/Pantnagar, on NH 87)
….Now
Budget Hotel- Hotel Ginger, a Tata enterprise in Sidcul
OMAXE & METROPOLIS CITY (Back side of Radisson)
12
Migration to metros slowing down
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Delhi Mumbai Kolkata Chennai Bangalore Hyderabad
1981-1991
1991-2001
2001-2011
Source: Census Bureau of India
Growth in Urban population,2001 to 2011
13
Rural Economy
One Trillion14
Rural Economy
or
15
150
500
250
900 million
2020
50
350
400
> 5
1-5
< 1
800 million
2010Per capita Income – USD/Day
Pyramid Morphing to Diamond
16
Share of Household Spending
rural catching up fast45
5
119
75
55
5
106 7
5
Food Health Transport & leisure travel
Education Clothing Durables
Urban Rural
Source: Max NCAER Survey, 2007 17
Changing
Consumer Behavior
18
Shift from
Loose to Packaged
loose
Packaged
19
Multi Brands within family
& by Individual
20
Shift from
Affordability to Economy
21
Regional Players gaining ground
22
Aspiration matching Urban
23
Buy Value for Money
24
English Medium Private School
25
Private Tuitions
26
Ready Stitched No Tailoring
27
Challenges of Reach, Acquire & Retain
Go to Market
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• Problemo Dispersed geography, o Poor infrastructure - Leading to high logistics
costs
Reach
• Solutiono Identify high potential states ,towns
and villageso Urban clusters (NCR + other metros)o Large towns as hubs for villageso Innovative ‘last mile’ reacho Feet on street
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Tale of 3 Rural India’s
Developed
Goa, Gujarat, Haryana , Maharashtra, Punjab, Delhi
Developing
Arunachal Pradesh, Himachal Pradesh, West Bengal, Tamil Nadu, Karnataka
Under Developed
Bihar, Madhya Pradesh, Uttar Pradesh, Odisha, Rajasthan, Chhattisgarh, Jharkhand, NE States
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TV Ownership
%
4 wheeler ownership
%
GDP Share %
Population%
PopulationMm
Developed50 4 30 20 170Goa, Gujarat, Haryana , Maharashtra,
Punjab, Delhi
Developing25 1.5 34 30 240Arunachal Pradesh, Himachal Pradesh,
West Bengal, Tamil Nadu, Karnataka
Under Developed
12 0.9 36 50 400Bihar, Madhya Pradesh, Uttar Pradesh, Odisha, Rajasthan, Chhattisgarh, Jharkhand, NE States
Tale of 3 Rural India’s-Potential
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Cities & Towns 2011
Source: NSSO
PopulationCities/Towns
(2011)
4 mn and Above 9
1-4 mn 44
0.5-1 mn 53
0.1-0.5 mn 507
50-100 k 612
20-50 k 1726
10-20 k 1436
5-10 k 1057
< 5 k 2491
Total 7935
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Population No of villages % of total villages
Less than 200 96,855 15.7
200-500 1,36,454 21.4
501-1000 1,56,737 24.6
1001-2000 1,40,751 22.0
2001-5000 87,206 13.7
5001-10000 20,363 3.2
Total no of villages 6,38,365 100.0
Hardly any shops in these 230,000
villages
17% of villages account for 50% of rural population & 60% rural wealth
Distribution of Villages
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• Solutiono Segment market on social, cultural, economic factors
o Engage with wide set of stakeholders
o ‘Word of mouth’ critical in acquiring consumers, so identify appropriate influencers
Acquisition
• Problemo Same value proposition as for urban
o Treating rural consumers as a homogeneous mass
o Skills of sales force to operate in complex, closely knit communities, collective decision making
o Seasonality, credit
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• Problemo Building trust
o After sales service
Customer Retention
• Solutiono Building trust
Focus on satisfying customer needs and not on sales
Offer products suitable for local conditions and preferences
o Device low cost model of after sales support Customer feedback on products & sales process
Market intelligence on competitors
Strengthen bonds with consumers/community
o Invest in community development Create jobs
Build social infrastructure
Provide business opportunities 35
