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BCG: India Will be the Third Biggest Consumer Market by 2025

India’s consumer is changing—spending more and spending it differently—and by 2020, online fashion purchases will quadruple, reaching $12 billion to $14 billion.

That means as many as 135 million online fashion shoppers in India will be consuming product three years from now.

“India is in the midst of a digital revolution and fashion is at the frontier of this change,” The Boston Consulting Group (BCG) said in a new report, Fashion Forward 2020, done in conjunction with Facebook. The amount of consumers with Internet access has more than doubled in the last three years, and that number will grow another 2.5 times between now and 2020.

With Internet access further-reaching, e-commerce adoption growing and existing shoppers increasing their share of wallet, India will be a market force to reckon with in no time at all.

“Consumer behaviors and spending patterns are shifting as incomes rise and Indian society evolves,” BCG wrote in a separate piece on the changing Indian consumer. “These shifts have big implications for how companies position themselves now.”

By 2025, consumption expenditures in India are expected to reach $4 trillion, and India’s 12 percent growth in this area is more than double the projected 5 percent global rate—that growth will make India the third largest consumer market, according to BCG.

Consumers in India are making more money and the share of elite or affluent households will double to 16 percent between 2016 and 2025, while the portion of strugglers will shrink from 31 percent to 18 percent in that time. Consumers are also flocking more and more to urban centers, and existing in nuclear households (a couple or one parent with or without children) as opposed to joint, often multigenerational households.

“This ongoing shift is significant to marketers because nuclear families spend 20 percent to 30 percent more per capita than joint families,” BCG noted.

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But just because they are spending more, doesn’t mean they’ll be spending the same as the consumers before them.

“There is a shift toward higher-quality, higher-price subsegments within categories, as Indian consumers trade up with greater frequency and enthusiasm,” BCG said. “Our survey suggests that 30 percent of consumers in India are willing to spend more on products that they perceive are ‘better’—a much higher percentage than is found in more developed markets such as the U.S., Germany, and the U.K.”

What companies should do to capture this growth

For one, targeting a new type of consumer will mean ditching conventional ways and concepts and trying to reach that shopper with a new approach that will work for them. Opportunities aren’t only in the big cities anymore, for one, as rural consumers have greater access to the Internet and are tapping into e-commerce for fashion.

There are four main things BCG advises companies targeting the Indian market do.

Find the opportunities at every price point

India may have been a large mass market with low unit prices on products, but now there are large-scale markets touching all price tiers for most consumer categories.

“Companies need to choose between straddling the full spectrum and focusing on select segments,” according to BCG.

Identify the breakout opportunities

India as a whole is experiencing growth, but emerging cities, micromarkets within cities—and any category that would particularly benefit from rising incomes—are experiencing “breakout” growth.

“Companies looking to capitalize on India’s growth story need to identify the high-growth segments and pockets for their brands and products,” BCG said.

Develop an omnichannel strategy that is appropriate for the category

The impact of digital in India will be broad and deep and its execution will dictate how consumers decide what they’ll buy and how they’ll buy it. Either way, it will have to be seamless, and the overall online experience should extend beyond simply the concept of e-commerce.

“In apparel, a category that involves lots of online purchases, the challenge is to ease the buying process and present purchase options and offers when and where the consumer wants to buy,” according to BCG.

Plan for changing social norms

Women’s roles are expanding, family structures are shifting, people are exhibiting pride in local products and they’re embracing greater individualism, and companies trying to cater will need to keep up.

“Companies need to stay ahead of the curve, developing their own innovative offering for consumers and staying agile enough to change effectively,” according to BCG, which added, “they should react to the changing nature of the relationship between the consumer and the company. More information, greater transparency, and the amplified voice of the individual through social media mean that consumers are gaining the upper hand when it comes to buying decisions.”