India's Luxury Boom: A Market Poised for Take-off
- Published | 26 April 2024
The luxury goods industry in India is a burgeoning market driven by the country's growing affluence and evolving consumer preferences. From high-end fashion and jewellery to luxury automobiles and hospitality, India's luxury sector offers a wide array of premium products and experiences. With a burgeoning middle class and increasing urbanization, the demand for luxury goods in India is on the rise, making it an attractive market for domestic and international luxury brands alike.
Trends Driving Growth:
Rising Affluence: India's expanding economy has led to a surge in disposable incomes, propelling the demand for luxury goods across various sectors, including fashion, automobiles, and hospitality.
Changing Consumer Preferences: Evolving lifestyles and global exposure have influenced Indian consumers to seek premium experiences and products, fuelling the demand for luxury brands.
Urbanization: The rapid pace of urbanization, particularly in metropolitan cities like Mumbai, Delhi, and Bangalore, has created a concentrated pool of affluent consumers who exhibit a penchant for luxury goods.
Digital Transformation: The proliferation of e-commerce platforms and digital marketing strategies has facilitated greater access to luxury brands, enabling them to reach a wider audience beyond traditional retail channels.
Introduction
In fact, luxury in India was synonymous in pre-British times and even the post- British era saw its pockets of richness of erstwhile royal families and the newly-developed industrial classes who were the users of European luxury brands. The Indian attitude towards luxury had long been akin to Europeans. Indian princes had a penchant for luxury goods from the west. Brands such as Cartier and Louis Vuitton were patronized by the Patiala royal family among others, and many princely families in Rajasthan had their own private collection of luxury cars. The emergence of new elite in India was all that was required for the mindset to resurface. With the liberalised economy opening up new pockets of affluence in India, luxury retailers would find new customers in India. The last couple of years have seen a profusion of luxury brands into the Indian market: from stand-alone stores in five-star hotels to luxury Malls. These brands which were previously only seen in international fashion magazines and high streets abroad are now gaining popularity in India. With one of the highest levels of disposable incomes, the well-travelled Indian luxury consumer is being wooed by all. In most surveys of the luxury goods market globally, the most exciting market is mainly viewed as China. But, looking at the growth in GDP and HNIs in India, there can be little doubt that the Indian market is going to see considerable demand increases and general growth in the coming years. Organized retailing in India is expected to grow at 19 percent. Thus, in terms of investment in retail sector, India is likely to be one of the hottest destinations for all type of retailing including luxury retailing. The wealth potential of India’s affluent was to the tune of US$ 203 billion as of 2005. With income levels going up, customers prepared to buy such brands are growing in numbers.
Driving forces
Based on statistics from Euromonitor International, the luxury goods industry in India fell by 33% to $5 billion in 2020. This is expected to reach $6 billion in 2021 and continue to rise over the next few years. Nevertheless, the market size won't reach 2019 levels until 2023. Even though the industry has taken a four-year hit, nobody is moaning. Not with the customer's return. Then, there is a rise in destination weddings. For example, all wedding dates at the Leela Palace in Jaipur are booked up for the upcoming several months. To offer the bride comprehensive services, DLF Emporia is introducing a wedding concierge service. "People are taking pleasure in the event's intimacy. It might already be a millennial fad. The limitations on foreign travel are another element driving up prices in India. Almost thirty per cent of the luxury products that Indians buy are bought overseas. Currently, some of that is purchased in India. "It's what I would term trapped buying. Customers don't have any other options. The market for cosmetic care has also resumed expansion. The super-premium cosmetics and personal care industry in India was estimated by Euromonitor International to be worth $313 million in 2019. It is currently about $240 million, having dropped to $210 million in 2020. Companies like L'Occitane and Kiehl's have embraced video consultations as a way to stay in touch with their customers. In contrast to a global increase of 45%, the number of millionaires in India is expected to increase by 69% between 2022 and 2027, according to an analysis by Credit Suisse and UBS. India is undoubtedly the newest luxury travel destination. Therefore, Indians appear to be picking up on the "have money, will splurge" concept when it comes to luxury cars, personal luxury products like watches and jewellery, or experience luxury. Premium companies have observed. Reputable brands have already entered the market as a result of this change in spending. Balenciaga declared in August that it would make its debut in the Indian luxury market by 2023. As part of a collaboration with Reliance Brands Limited, Valentino has launched a flagship store in Mumbai and a boutique in New Delhi. E-commerce has also played a role in the rise of luxury in the nation. an Indian online retailer with over 80 premium brands claims that the increased demand from affluent Indian consumers can be attributed to the ease of internet buying.
Conclusion:
The luxury goods industry in India is poised for continued growth, driven by rising affluence, changing consumer dynamics, and increasing urbanization. While challenges such as regulatory barriers and infrastructural constraints persist, the vast potential of the Indian market presents lucrative opportunities for luxury brands willing to navigate complexities and innovate to meet evolving consumer demands. As India's economy continues to ascend on the global stage, the luxury goods industry is poised to play a pivotal role in shaping the country's consumer landscape for years to come. We anticipate a rise in both the upper class and the aspirational middle class as the Indian economy expands to reach US$5 trillion in the coming years. More brands will undoubtedly be motivated to enter and invest in the industry by the depth of consumers that is increasing.
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