Indian gated communities to account for $500 bn in online shopping by 2026

Representational photo. Pic/IANS

As online shopping explodes in India with an increase in smartphone and Internet users, the total online consumption by the gated communities in India will increase by 2.5 times to reach a whopping $500 billion by 2026, a new report showed on Monday.

In the next five years, India is expected to see 24 million gated community households in major cities (from 16 million at the moment), along with witnessing the growth in spend per household from the current $13,000-$14,000 to $19,000-$20,000, bring the overall spend to $460-480 billion (2.3-2.5x of the current spend).

In that period, India will be second to the US that will have 125 million gated community households with $25,000 as spend per household on average.

According to data provided by Bengaluru-based market research firm RedSeer, 90-95 per cent of the 16 million gated community households in India's major cities are now shopping online (in contrast to 40-45 per cent of non-gated households who shop online).

"By 2026, the total consumption in Indian gated communities will increase by 2.5x reaching $500 billion," the report showed.

The gated community is more than the sum of its parts (walled living, controlled entrance and exit, pool, fitness centre, supermarket, clubhouse, amphitheatre, etc.).

"It's an ecosystem unto itself. So quick is its proliferation across Indian cities and so distinctive its residents' lifestyles that the gated society is now an indispensable player in India's consumption story," the RedSeer report mentioned.

With 45 per cent of spend and 32 per cent of population in top-50 cities of India, gated communities are a significant part of India's consumption story

Although gated community households are mushrooming, they still number in the minority even in major cities.

"The cost of purchasing and maintaining such a household, however, is higher than elsewhere. Which is why residents have higher discretionary spending relative to non-gated households," the report added.

In the next five years, the spending power of each household will mirror that of identical households in the UK and Germany.

"Residents of gated townships in India will be second only to their American counterparts when it comes to discretionary spending," the report forecast.

Spurred by the Covid-19 pandemic, gate management platforms went out of their way to accommodate community needs.

The mushrooming of gated communities and their spending power will spur more innovations -- and competition -- in this sector, making this an exciting space to watch, the report said.