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Bottomline: Back-to-class will boost spends

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With big spending on going back-to-class, retailers and consumer goods brands catering to key segments should gain.

Bottomline: Back-to-class will boost spends
With several states ringing the bell for classes to begin, India’s consumption sector is set to get a substantial boost.
Caveat: This piece is powered by personal experience.
After a year of classes-from-home, India’s student population is slowly making its way back to the classroom. And for anyone who has been to school or college, or whose children are of school-going age, some things are obvious. Books will need to be bought, if not textbooks, notebooks—because the non-digital review of classwork and homework is likely to make a comeback.
There will also be a need for other stationery and for the bags where everything goes. Then there are tiffin boxes, new uniforms or clothes (depending on whether the child is going to school or college), footwear and FMCG purchases for in-school snacking or a return of out-of-home spends at the canteen or the local chaiwalla, and at quick service restaurant (QSRs) and cafes for post-school or college hangouts.
There’s also the daily commute for students that’s an added expense—good for fuel retailers. And for some who are studying away from their home towns, a one-time travel expense, by bus, train or air.
So, an impetus to spending is clearly on the cards. How much could it be? I don’t have the data to offer a precise answer, but there’s the next best thing. Guesstimates, or jugaad, if you would like to call it that.
Classroom Numbers
India’s school-going student population is estimated at about 265 million and the higher education (read colleges and universities) population at a smaller 38.5 million, according to (as per All India Survey on Higher Education 2020). Of the higher education population, about 80 percent are undergrad college-goers, and the annual increment is in the region of about 800,000 as per the HRD Ministry. There are also about 1.5 million teachers, many of whom may go back to work in 54,000 colleges and institutions, and another 9.8 million who could go back to 1.5 million schools (over 400,000 of them private). Those are big numbers. Little wonder that India’s education system is considered one of the largest in the world.
Household Numbers
India had 247 million households, as per the 2011 Census. Seen in the light of the student population of 265 million, there is a high likelihood of a very high number having one student in a family. And if we look at the urban picture, where larger spends are likely, the total household count is about 81 million, with an average family size of 4.7, which is also a fairly significant number. And a large part of the higher education students (at 38.5 million) are likely to be from these households.
What one also needs to keep in mind, vis-à-vis a normal year is that this time, students of two batches will be going to class for the first time. Those who have joined school or college for the first time this year, and those who have been schooled at home for the past year.
Now getting to the guesstimate on spends. Below is rough math on possible spends by a household on key back-to-classroom expenses. These numbers have no source or basis, they are a figment of my imagination, so if you disagree, by all means, do your own math. Also, the unaffected expenditure on tuition, of about Rs 10,000 per urban household in India is not part of the computation. Though here too, any relief offered to students by educational institutions during study-at-home will now likely be rolled back.
If we take 30 percent of the school student population of 265 million and the higher education population of 38.5 million, and a wide range of estimates, we could end up with spends of between Rs 23,000 crore and Rs 65,000 crore. The real number is likely to be somewhere in between.
BACK TO CLASS SPEND
HOUSEHOLD MATH (Rs)Lower MidMidHigh
Clothes / Uniform1000300020000
Shoes300100010000
Books2005002000
City Travel/Month2005005000
One Time Travel1000300015000
F&B2505005000
Total Household Spend2950850057000
Total House Spend w/o OTT1950550042000
Agg Households Spend w/o OTTAmounts in Rs Cr
Higher Education750821175161700
School Students (30%)1550343725333900
Total Households Spend2301064900495600
Boost For Consumption
Naturally, with big spending on going back-to-class, retailers and consumer goods brands catering to key segments should gain. From a Bata to Liberty to Navneet Education to big retail brands and the transport ecosystem—buses, fuel retailers and airlines—could gain. Even bag makers like VIP could get a slice of the spoils. What’s more, college-going folk could boost QSR spends and FMCG purchases—snacking, grooming and what have you—as well as out-of-home beverage spends (Varun Beverages). An off-the-radar beneficiary could also be ITC—with smokes being paired with more chai on campuses.
How much each player will benefit requires deeper analysis, and you should do your own before diving in. But some additional revenues are almost a given from the back-to-classroom effect.