A look at the issues related to the potential of the ” Indian Luxury Market “, estimated to be worth $14 billion a year..!!
A large and growing middle class in India is not only buying luxury goods and services but, inevitably in an Emerging Market the size of India, is also redefining the luxury market..
There’s an image of India—one that has persisted despite being a cliche—that is contoured by contrasts: Maharajas on the one hand, in full regalia and motorcades of Rolls Royce limousines, and poverty and hunger on the other. As India of the 21st century aspires to rank among global manufacturers and service providers, the luxury that once defined the Maharajas is a matter of widening aspiration, too..
The national airline—whose mascot was the Maharaja—no longer carries just the privileged few to the Swiss Alps and other luxury holiday destinations. A large and growing middle class in India is not only buying luxury goods and services but, inevitably in an emerging market the size of India, is also redefining the luxury market. But while India tops the list of tomorrow’s markets, it is yet to make it to the top in the priority markets list of luxury marketers..
What will it take for luxury marketers to tap into India? And what will it take for India to realize its luxury potential to the maximum? Experts and marketers gathered at a two-day Mint Luxury Conference in Mumbai on 31 October and 1 November to discuss some of these issues and challenges. Firstly, the definition of the Indian luxury consumer needs to change—start with banishing that cliched image of the Maharaja. “Luxury cannot be limited to just the very top or 0.01% of the population,” says Abheek Singhi, senior partner and director, Asia-Pacific leader-consumer and retail practice at consulting firm The Boston Consulting Group.
He estimates the Indian luxury market to be worth $14 billion. But for a country with a population of 1.2 billion, there are just 117,000 people who are classed as ultra-rich—people who have family wealth of over Rs.25 crore or earn Rs.3-4 crore a year, says a July report by Kotak Wealth Management. This segment of consumers prefers to do their luxury shopping abroad. In the local context, luxury denotes brands that globally are a notch lower than the finest, appealing to a wider audience of the top 1%, 5% or even 15% who have the aspirations and the money to buy them, said Singhi..
To grow the luxury market, “marketers selling in India need to be innovative and reach out to new consumers”, says Sanjay Kapoor, managing director of Genesis Colors Pvt. Ltd, parent of Genesis Luxury Fashion Pvt. Ltd whose portfolio includes brands such as Bottega Veneta, Burberry and Canali. According to Kapoor, luxury marketers need to continually “upgrade” consumers used to buying premium to luxury goods and services. “It’s a continuous process of educating people about brands to grow the existing business,” says Kapoor. Adding new brands and opening new stores is the business part of the same process..
There are FIVE Luxury Consumer Segments emerging in India, says Singhi : Classpirationals, who want to blend in with the classes; Fashionistas, or Trendsetters; Experiencers who love travelling, wine tasting, etc.; Absolute Luxurers for whom luxury is about exclusivity and customization; and Megacitiers—part of the global elite..
As such, the Indian luxury consumer is spread across the metros, tier-I and tier-II cities. “Close to 40% of the Indian luxury consumers are living outside of metros and shop on their travel overseas or in the metros,” says Singhi..
Firms seeking to expand in India speak of infrastructure challenges. For instance, India got it’s first luxury mall—DLF Emporio—in south Delhi in 2007. Now, there are just two more luxury malls in the country. “The biggest impediment to the development of the luxury market is the lack of infrastructure and an environment,” says Rahul Prasad, managing director (Asia-Pacific and Middle East), Pike Preston Partners Ltd, a boutique advisory firm on mergers and acquisitions in the fashion and luxury segments..
Meanwhile, with the new National Democratic Alliance (NDA) government in India, businesses are hopeful regulatory hurdles will be resolved. “The new government’s approach has energized a number of companies, including multi-brand retailers and international retailers..,” says Pierre Mallevays, founder and managing partner of Savigny Partners LLP, a corporate finance advisory firm focusing on the retail and luxury goods industry..
At the Mint Luxury summit, Nirmala Sitharaman, commerce and industry minister, agreed to look into the requirement of 30% sourcing from domestic companies for single-brand foreign retailers who are allowed to invest 100%..
The challenges remain daunting. According to Armando Branchini, vice-chairman of the Altagamma foundation, a conglomerate of several high-end Italian companies, there are 17 Italian luxury brands in India at the moment, a number that has remained unchanged since 2005..
British luxury brands are focusing their efforts in other markets such as China, says Charlotte Keesing, director at Walpole British Luxury, a consortium of British luxury retailers like Jimmy Choo, Harrods and Burberry. Eight years ago, India and China both were on the long-term radar of luxury product marketers..
Today, China has become one of the biggest growth drivers of such products, and India is yet to take off…“ There are only 18 of 90 British luxury retailers present in India today and less than a dozen are looking at entering the market in the next two years,” said Keesing…