Sunday, September 06, 2009

Affluenza in city

Affluenza in city

Bangalore ranks second on the list of the most affluent cities in India. Sindhu Murthy spoke to brand experts on what this means for us and why the city has earned itself a newfound revered spot in the hearts of investors and marketers

Sindhu Murthy

Bangalore just got richer. The IT capital of the country now takes the number 2 spot amongst the most affluent cities in India, even ahead of Greater Mumbai, Hyderabad and Chennai. If you thought traditionally wealthy places like Mumbai and Chennai were ahead of Bangalore in lifestyle, it's time to realign this insight. Surprisingly, the New Age affluent is decoded on the basis of their media consumption and consumption of lifestyle and consumer durables, according to the Nielsen UMAR survey that has examined 18,250 affluent individuals across 35 Indian metros. Trends have been assessed across three distinct segments of the affluent — Upper Middle, Upper-Upper Middle and the Rich.
The talking point of this survey is that Bangalore has been ranked second after Delhi, even beating Greater Mumbai, whose market is wider and investment, much larger. Arvind Singhal, chairman of retail consultancy company Technopak Advisors, said: "Bangalore could well be the second most affluent city by lifestyle, but in terms of absolute consumer spending, its position is probably No. 5 or No. 6 (after Delhi, including NCR, Greater Mumbai, Kolkata, Chennai, and perhaps Hyderabad too)." As far as lifestyle is concerned, the city has undergone a visible change over the last 10 years, what with the population mix, by way of profession. IT professionals account for an everincreasing proportion of chief wage earners, who are ever willing to experiment with their newfound wealth. "Many of these are dual-income households. The lifestyle of these relatively high-income households is such that the categories of consumption used in this survey will find more acceptance. A similar criterion used in, say Ludhiana, will not throw up similar results as far as affluence is concerned, but again, the market potential of Ludhiana puts it in the top 10 most affluent markets in the country," he added.
If one examines this IT city intimately, its lifestyle quotient has its genesis in the changing demographic, business profile and global intensity of the city. Harish Bijoor, brand consultant, concurs: "Unlike Delhi or Mumbai that are traditionally rich cities, Bangalore is a neo-rich city that revels in richness, premiumness and high consumptiveness. Consumers, essentially from IT, ITES, BPO, eager to embrace neo-richness, tend to spend more. The consumptiveness in Bangalore is so high that it ought to be compared to Chicago or Shanghai, not Indian cities alone."

Intellectual affluence
Keeping pace with the increasingly materialistic world, the survey propounds that physical possessions alone determine the affluence of an individual. Intellectual affluence and social affluence — the other facets of affluence—have taken a backseat here, according to Bijoor. He says: "Confining to physical possessions to gauge affluence is being partial. Bangalore is very rich in intellectual affluence as well. NR Narayana Murthy and Girish Karnad, the pride of the city, comprise the intellectually affluent lot. They may be physically affluent too but their intellectual affluence had a major role to play."
Now consider the factors that have been taken into account to assess affluence in this survey. The rich are proud owners of a car, a computer, an LCD, and vacation abroad; the Upper-Upper Middle comprise those who luxuriate in all of those mentioned here but cannot savour the extravagance of a holiday abroad while the Upper Middle segment possess a car and computer but do not have the resources to possess an LCD or a plan to holiday abroad. So, one who owns a Mercedes Benz, has been to Europe, owns an LCD TV, and has the latest version of a desktop at home, is on par with one who owns a Maruti Alto, has been to Nepal, owns an LCD TV and a computer. Surveying agency Neilsen says: "As far as this survey is concerned, yes. The idea is to separate the affluent consumers from the not-so-affluent consumers."
Stake in the pie
The results spell great news for Brand Bangalore. But on delving deeper, several factors lend credibility to the assessment. William S Pinckney, MD & CEO, Amway India, observes: "The advent of private institutes in the mid-80s saw droves of educated youth flock to this young city. It was but natural that the Indian software industry took roots here and brought along affluence and expansion of every kind. Interestingly, the pie of the 'emerging middle class' has witnessed a steady growth over the years and their quest for an enhanced lifestyle has led to an influx of some of the best global brands setting up shop in Bangalore. And there is also the cosmopolitan culture of the city, which has brought in people from the world over, to make Bangalore home."
The excitement, even after all these years, is still palpable. Balaji, executive vice-president, Contract ad agency, says: "There is so much potential here — be it IT, fashion or even being home to alcohol beverage companies. The city is always the first where companies test waters for their products. The ranking is only a reaffirmation of its position."
We're brand conscious
Keeping the cosmopolitan characteristic and the feverish fetish for fashion in Bangalore, this placement exemplifies the rapid opening up of the Indian market, where affluent consumers, who are eager to adopt the latest fashion trends, are growing in number. Nielsen Global Luxury Brands Study of 2007 had validated that India had the third highest percentage globally, with Greece leading the countries with 46%, followed by Hong Kong with 38%, as far as designer fetish was concerned. "People are travelling overseas more frequently and 57% Indians surveyed buy designer brands as a status symbol," said Vatsala Pant, associate director, client solutions, The Nielsen Company.
Bangalore walking away with the bigger pie also provides a new perspective: Is the consumerist pattern more aggressive in Bangalore? Vikram Satyanath, vice-president, Lowe says: "Considering the small populus, the penetration in the city is high and trends are more apparent. The elite pockets comprising the well-educated or the most affluent are easily accessible in a smaller city like this one." Although an increase in consumption of durables has not been so conspicuous, the service and education sectors have aided the ranking, he said.
All said and done, Bangalore's newfound image is also pockmarked with potholed streets, maddening traffic and neglected infrastructure. "With this all new status, the city better start living up to its image and renovate its public infrastructure," says Balaji.


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