As of fiscal year 2022, the consumer tech sector’s total addressable market was estimated to be at $100 billion, with mobility, and entertainment and media leading the pack, followed by fashion, the report said.
Within mobility, 59% contribution came from the automobile marketplace sub-segment, while 37% came from ride-hailing apps, and the remaining 4% from the online car rental market.
According to Anoop N Menon, principal-investments, Chiratae Ventures, the fashion segment will overtake the entertainment sector as apparel, and beauty & personal care (BPC) sub-segments are witnessing faster growth from tier 2 and tier 3 cities. This is due to the lack of options in the offline market in tier 2 and tier 3 cities, he said.
India’s rising population has also played a crucial role in the growth of the consumer tech market. Approximately 500 million Indians are aiming to integrate entertainment and gaming services in their day-to-day lives, and 220 million Indians are spending on on-demand services, the report said.
This growth is also credited to the digital public infrastructure facilitating higher consumption along with the omnichannel presence of brands.
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“Omnichannel presence, which has a good mix of online and offline would be necessary to succeed after a particular size and scale. So we’re very much clear that some of these brands will play out for the longer term and are able to build profitably a growth story in the future as long as they are able to balance growth versus their margins in a capital efficient manner, especially in today’s world,” Menon told ET.The consumer tech sector has seen a lot of funding from investors as well from the public with direct-to-consumer (D2C) brands like Mamaearth going for an initial public offering (IPO). On October 27, ET reported that Mamaearth will focus on offline sales to fuel its next phase of growth while other brands under the parent company Honasa will retain their focus on online sales.
“I think there is an understanding that some of these consumption patterns and behaviors, especially around premiumisation, would lead to launch of new brands and you will find investors backing some of these founders who come and build on back of some deep insights for a particular segment,” said Menon.
On August 11, ET reported that Nykaa expects the premium category in the BPC segment to grow faster than the mass category. It sees the premium segment accounting for 55% of consumer spending in the beauty sector by 2027.
While talking about discretionary spending, Menon said higher disposable incomes, higher GDP per capita as well as the ability to spend on some of the discretionary items would increase far significantly.
The report also said that Indian startups were now looking at global expansion after seeing higher revenue growth, fuelled by a growing digital native user base. Earlier this month, ET reported that Lenskart is planning to open 300-400 stores in Southeast Asia over the next two years. The company currently has 70 stores in Singapore, and plans to expand into Thailand and the Philippines.
Similarly, ET reported about Mamaearth planning to double down on its push to expand into international markets like Bangladesh, Malaysia, Vietnam and Thailand.
