New Delhi: Global urban consumption is expected to grow by USD 23 trillion over 15 years, a compound annual growth rate of 3.6 per cent, says a report by McKinsey Global Institute.
Just 32 cities globally, including two from India - Delhi and Mumbai - are likely to generate one-quarter of total urban consumption growth between 2015 and 2030, it said.
Demand for goods and services beyond necessities is now soaring in India as millions of people are attaining income thresholds, where consumption of services like communications, transport, restaurants, and catering takes off.
By 2030, consumers in large cities globally will account for 81 percent of global consumption, which is "extraordinarily concentrated".
The report noted the emergence of two significant trends, the heavy spending on health care among aging consumers in developed regions and increasing spending by consumers in emerging economies.
"In India, such spending accounted for 35 percent of average household consumption; by 2025, and McKinsey Global Institute expects this share to have increased to 70 percent," the report said.
According to McKinsey, 79 percent of consumption growth between 2015-2030 in India will come from increased per capita consumption while the urban population growth in the country will be moderate and is expected to register a compound annual growth rate of 2.2 percent.
The demographic profile of Indian cities is diverse and aging will affect specific cities more than others, the report said, adding that all cities in India are aging, particularly those in Kerala.
Moreover, consumption growth will be concentrated in Mumbai, Delhi, Ahmedabad, Hyderabad and Bangalore, it added.
"70 percent of consumption growth in India from 2015- 2030 will come from the working age population (aged 15-59), while consumption by the 60-plus age segment will grow at over 10 percent per annum," the report said.
While drafting the corporate strategy, companies will have to tailor products and services for an increasingly diverse consumer market, it said, adding that the growing importance of services will need to be factored into while thinking of all businesses and cities.
Companies should manage parallel products and channels for increasingly disparate consumer groups, it said.