Take the US and Europe for example. Those born in the early part of the 20th century typically lived through trying times. There was World War 1, the crash of 1929, the Great Depression of the 1930s, and finally World War 2 all the way till 1945.
In many ways, this was a lost generation which went through tumult and political unrest and its primary aim appears to be basic survival. As a consumer group, this group really could not contribute much. The next two generations in the US were the most significant from a consumption and savings point of view.
Let us look at the Baby Boomers and the Millennials in greater detail.
Baby Boomers and the Millennials
In the United States and Western Europe, Baby Boomers were the typical post-war generation. While there are no clear definitions, Baby Boomers typically refer to those born between 1946 and 1964. This was the period of post-war revival and post-war investments across most parts of the US and Europe. Income levels shot up, economic growth posted new highs, and this resulted in a massive consumption boom. This was an optimistic generation born after the travails of war. The Baby Boomers enjoyed relatively privileged childhoods and could pursue their dreams, which explains why some of the finest US entrepreneurs and even artistes of the modern generation were born during this period. The generation following that o the Baby Boomers is generally referred to as the Millennial generation. Millennials represent a more comfortable childhood but more importantly, access to advanced computing, communication, and data. This generation had purchasing power as well as the availability of gadgets. In a way, these two key generations “Baby Boomers and Millennials” have essentially driven the consumption boom in the US and Europe.
The India experience: DINKS and WSUs
In India, for a very long time, the consumer market was centralized. It was also called the “Karta” syndrome. The Karta was the head of a “Hindu Undivided Family,” but apart from being the senior most member, the Karta also centralized consumption and financial decisions. This system gradually changed as increasing urbanization since the late 1960s led to gradual migration of people from villages and towns to metropolitan cities in search of a living. As cost structures were much higher in urban cities, the concept of homemakers began to recede and both men and women began to join the workforce. This created the Double Income syndrome in India for the first time. Families found their purchasing power substantially rising due to the additional source of income. Within the Double Income Group, there were Double Income, No Kids (DINKs), where the purchasing power was still higher and they were able to spend more freely on products such as colour televisions, white goods, and clothes. The latest addition to the generation list is that of Wealthy, Single and Urban (WSUs). What does this mean?
WSU and the rise of the new Indian consumer
The WSU in a way is the tech-savvy generation that was born post the mid-1970s and up to early-1990s. What are some of the highlights of this set of customers?
- They are typically between the ages of 26 and 42 and are already having reasonably high income levels. Typically, the WSU category has a monthly income in excess of Rs50,000 with rapid income growth and a high propensity to consume.
- WSUs are single by choice, at least for now and prefer the freedom that being single brings to them. It gives them more space socially and economically, which is the reason for their comfortable economic position.
- The WSUs typically have a longer term commitment to savings and investment and are less willing to get bogged down by long-term mortgages. They prefer a rented accommodation, which gives them space and flexibility.
- The WSUs are brand-savvy and inclined to spend not only on needs but also on lifestyle and for making a social statement. This makes them a ready market for the typically upscale mobile products such as perfumes, branded apparel, and branded footwear.
- The WSUs are not keen on taking added liabilities; hence, their entire income revolves around saving and spending.
- The WSUs prefer long-term investments, which can generate wealth over the long run with calibrated risk and minimal intervention. In fact, this group is likely to drive the growth in passive and quasi-passive investing in India in a big way.
- This group is tech-savvy and comfortable with the use of hardware, software, communication platforms as well as familiar with emerging trends such as artificial intelligence, big data, and machine learning. Hence, investment solutions need to be designed and delivered accordingly.
- Finally, the WSU group is a control freak group. Accounting for nearly 10% of the Indian population of 1.25 billion, it is a big market for the Do-It-Yourself (DIY) approach to financial planning and investing.
- WSUs are not just a large market definition, they are also likely to challenge the existing design and delivery of financial solutions, which may be the big and interesting part of the financial market growth story!