According to a new study, 'The Next Urban Frontier: Twenty Cities to Watch', co-authored by National Council of Applied Economic Research's (NCAER) Rajesh Shukla and Future Capital Research's Roopa Purushothaman, India is likely to see rapid urbanisation, with around 45 per cent of Indians living in urban areas by 2050, up from 30 per cent in 2007-08.

The top twenty booming Indian cities are likely to see their household income increase by 10 per cent annually over the next eight years. These cities already account for 60 per cent of the surplus income generated currently, and also accounted for around US$ 100 billion of consumption expenditure in 2007-08.

The number of middle class households (households with annual income between US$ 6,000 and US$ 30,000) in these 20 cities will account for 55 per cent of the population by 2016, up from 39 per cent in 2007-08. The number of high-income households with annual income above US$ 30,000 will grow three fold, to 13 per cent by 2016. Significantly, the share of low-income households (below US$ 3,000 per annum) could reduce by half, down to 7 per cent by 2016, against 16 per cent in 2007-08.

Approximately 315 hypermarkets are expected to come into existence in Tier I and Tier II cities across India by the end of 2011, riding on the boom in organised retail sector, says a joint study by consultancy firm KPMG and industry body, ASSOCHAM. The study states that 212 Indian towns are capable of sustaining the development of such hypermarkets in 2008.

With a penchant for constant changes and new products, the urban Indian consumer is discerning and has complex needs. A large segment of Indian consumers today comprise of well educated, young couples with double incomes who are keen on premium, branded products. With socio-economic changes greatly impacting urban India, the result is the creation of many new markets and a further expansion of the existing ones.

Retail

According to the India Retail Report 2009, compiled by research group, Images F&R Research, the Indian retail industry is likely to touch US$ 390.68 billion by 2010. By 2010, organised retail is expected to account for 13 per cent of the total retail market compared to the 5.9 per cent at present, and touch US$ 49.64 billion from the current level of US$ 16.90 billion. Presently, the Indian retail market is worth US$ 287.08 billion and it is growing at a rate of 10.8 per cent per annum.

Another report by McKinsey & Company stated that by 2015, India is expected to become a US$ 450 billion retail market. Organised retail is expected to grow from the current 5 per cent of the overall market to 14-18 per cent of total retail in 2015.