India’s consumer landscape is undergoing a dramatic transformation. In recent years, the focus of Indian consumers has shifted away from basic products and necessities towards discretionary items and experiences that enhance their lifestyles. According to the latest data from the Household Consumption Expenditure Survey, Indian households are spending less on traditional food staples like rice and wheat and more on products like processed foods, electronics, and household durables such as televisions and refrigerators. This change is part of a broader trend of premiumisation that has been sweeping across various categories for several years now.
The Rise of the Experience Economy
Perhaps the most profound shift is the growing importance of experiences over material possessions. Millennials and Gen Z are leading this change, prioritizing adventure and personal experiences over owning luxury goods. For example, a recent college graduate is more likely to spend on a backpacking trip to Machu Picchu or a beach vacation than invest in expensive clothing or footwear.
The pandemic accelerated this trend. After months of confinement at home, many consumers were eager to indulge in experiences once restrictions were lifted. While this behaviour was partly a response to the lockdowns, it also represents a deeper change in consumer preferences. Despite the ongoing pressures of inflation, personal well-being and experiences have become top priorities for many. People want to live in the moment and savour life’s pleasures—whether through travel, entertainment, or self-care.
Changes in Retail Dynamics
As consumer preferences shift, the retail landscape is adapting. One notable trend is the shift towards larger stores and smaller formats. The proportion of stores smaller than 2,000 square feet dropped from 61% to 52% in just one year (2023-24), while the share of stores sized between 2,000 and 5,000 square feet increased to 21% from 19%, and larger stores (5,000 to 10,000 square feet and above) also gained ground. This shift is driven by a desire to create more experiential spaces, as brands increasingly recognize that shopping is no longer just about merchandising but about creating experiences for consumers.
The Influence of Social Media on Experiential Spending
Social media platforms like Instagram, YouTube, and TikTok have played a crucial role in amplifying the desire for experiences. People are now more likely to share their adventures, from attending music festivals to exploring new cuisines, on these platforms. This has fueled a desire to participate in experiences that can be shared and celebrated online. Consequently, the demand for experiences has expanded beyond traditional entertainment, including everything from local food tours to virtual reality gaming zones.
India is still in the early stages of fully capitalizing on the experience economy, but the opportunities are vast. The rise of experiential tourism, food festivals, stand-up comedy shows, music concerts, and other immersive events indicates the enormous potential in this sector.
India’s Emerging Experience Economy
The concept of the experience economy, where businesses sell engaging and memorable experiences rather than just products, is gaining significant traction. According to the Event Marketing Institute, 74% of consumers have a more favorable opinion of a brand after participating in an event or experience. The experiential marketing sector in India is poised to be worth ₹10,000 crore by 2025, doubling its current value.
Indian consumers are increasingly spending on events, travel, and experiences that appeal to their senses and emotions, marking a significant departure from the passive consumption of goods. It highlights the contrast between experiences like Coldplay’s sold-out concerts, which cater to young, affluent consumers, and the Mahakumbh, a major religious gathering that attracts millions of pilgrims. These two events, while vastly different, reflect the diverse priorities of the Indian market, encompassing both luxury entertainment and deep-rooted spiritual tourism.
Luxury Experiences and Spiritual Tourism: Two Sides of the Same Coin
The rise of both luxury experiences and spiritual tourism represents a fascinating dynamic in the Indian consumer market. Luxury events such as Coldplay’s concerts are attracting affluent Gen Zs and millennials, who are willing to spend on premium entertainment and travel experiences. At the same time, the Mahakumbh, one of the largest religious gatherings in the world, draws millions of devotees and VIPs, underscoring the importance of spiritual tourism in India.
Both segments offer tremendous growth potential for entrepreneurs. Digital platforms like Zomato’s District app are well-positioned to cater to the rising demand for exclusive dining and entertainment experiences. Meanwhile, travel apps like Ixigo are capitalizing on the growing interest in religious and spiritual tourism, offering tailored services to manage logistics for major events like the Mahakumbh.
A Golden Opportunity for Entrepreneurs
This dual shift towards luxury and spiritual experiences represents a unique opportunity for startups and entrepreneurs. The next generation of consumer apps powered by artificial intelligence (AI) could unlock significant potential within these emerging markets. Whether catering to high-end concertgoers or facilitating the spiritual journeys of millions, the Indian market is ripe for innovation.
As India’s economy continues to grow and evolve, entrepreneurs have a golden opportunity to tap into both ends of the consumer spectrum. The coexistence of luxury entertainment and spiritual tourism presents a rare convergence of interests that could shape the future of India’s experience economy.
The shift from product-based consumption to experience-driven spending is redefining India’s consumer landscape. As millennials and Gen Z prioritize experiences over material possessions, the demand for travel, events, and immersive experiences is growing rapidly. With the rise of social media and changing retail dynamics, businesses must adapt to cater to this new generation of consumers. The experience economy is here to stay, and India’s entrepreneurs have an unprecedented opportunity to create innovative solutions that meet the diverse needs of this evolving market.