Fuelled by access to the internet and international trends, aspiring Indians are spending more than ever on luxury experiences. Brands would do well to take note of opportunity, says Luxury Connect’s Abhay Gupta.
Micro-vacations, high-end cosmetics, perfumes, personal care products, clothes, automobiles, weddings, retail, art and collectibles, streetwear, sneakers, you name it, a luxury version of that category now exists in India, each catering to the increasing number of aspiring Indians who are spending more than ever.
Fuelled by access to the internet and international trends, aspiring Indians want experiences that make their lives better. The fact that Indians are splurging more on luxury is a clear sign of their maturing taste and demand for the finer things in life. Beyond the need to ‘keep up with the Joneses’, the rising splurge trend seems to be driven by the desire for newer and more bespoke experiences that only a few can afford.
Bolstered by rising disposable incomes, the middle class, and the upper middle class – who are cash rich and time poor – are now the darlings of the luxury industry, with several brands launching affordable luxury products aimed at specifically at first time luxury consumers.
Luxury automobile brands like Lamborghini produce products like keychains and t-shirts so that people can afford their entry-level accessories. Similarly, Ferrari is popular for their caps and jackets. The regular offerings of traded down luxury products like eyewear, fragrances, beauty care, ties and scarves, and small leather goods, are a large volume contributor that find favour with the primarily middle-class audience and a scale up has been successfully noticed to other categories by most brands.
According to a recent report by McKinsey Fashionscope, more than 300 international brands are planning to open stores in India by 2020, a clear indication towards the strong belief in the potential of the Indian luxury market.
The size of the global luxury market is estimated to be around $2 trillion, and the luxury market in India is estimated to grow to $30 billion by early 2019, according to Indian trade association ASSOCHAM. This amounts to approximately 1.5 percent of the total market size.
Amitabh Kant, chief executive of governmental think tank NITI Aayog, stated at the Mint Luxury conference in 2016 that the luxury market in India has the potential to grow from $18.5 billion in 2016 to $50 billion by 2020 and to $180 billion by 2025. So far, Kant’s analysis has proven to be on track for the Indian luxury industry.
With the luxury industry showing signs of slowing down in other developing markets like Brazil, Russia and China, India’s steady growth, political stability, better ‘ease of doing business’ ratings, economic reforms aimed at improving GDP, and strong leadership in the global sense has given confidence to global businesses and brands alike to expand their footprint.
The luxury market is exploding in India driven by various factors. Simultaneously, the market is changing immensely pushing brands to create better strategies to attract potential customers.
It’s no longer about bling and show, rather it’s more about novel experiences that are exclusive, new and ones that connect emotionally at a personal level. When brands are able to offer such experiences, money is never a barrier. LVMH is the most forward-thinking company on this subject as they completed an acquisition of luxury hotel operator Belmond – taking the view that experiential luxury will become a highly significant category in time.
Increasing opulence and availability of premium real estate in tier II and tier III cities is leading to a sharp rise in the expansion of luxury brands in India. Growth in luxury spending in India is 30 times more in tier 2 cities as compared to tier 1 cities, according to the American Express Luxury Spend Analysis 2018 report, representing an opportunity for luxury brands to capitalise on. Several luxury automobile, fashion, and retail brands have opened stores in such cities driving in-store footfall in their premium stores for the first time luxury consumer.
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