Over the past few years, India has witnessed the continuous arrival of international designer brands. ”India is the next China”, and the demand of luxury is growing consistently. However, the Indian market is very complex to understand.
Understanding customers is the bottom-line to be successful. Different segmentation frameworks of the luxury consumers in India coexist, but the most appropriate is the one established by Radha Chadha and Paul Husband in their book The Cult of the Luxury brand: Inside Asia’s love affair with luxury by Nicholas Brealey International (2006).
“OLD MONEY” or INDUSTRIAL DYNASTIES
This segment has always been present in India. The most famous industrial dynasties are TATA, BIRLA, GODREJ, BAJAJ, THAPAR and MAHINDRA. These groups are at the head of powerful conglomerates in diverse industries such as steel, automobile and telecommunications. They are highly educated and their business activities enable them to travel around the world, and are aware of quality and brands.
“NEW MONEY” or the Diverse faces of Entrepreneurship
This segment gathers businessmen who have started to build their empire from scratch. It is the ‘I’ve made it’ generation. The “New Money” group are more modern and they go for shopping sprees abroad. They have a more ostentatious consumption behaviour, because of which they look out for cutting-edge products. Like “Old Money”, they constitute the premium target of luxury brands. The only difference with the Industrial Dynasties is that luxe is very new for these new entrepreneurs. This segment is very heterogeneous: from Punjabi farmers to high- tech entrepreneurs from Bangalore or Maharashtra’s rural businessmen etc.
They are predominantly from modest families but they had the opportunity to go to the best Indian institutes: IIT (INDIAN INSTITUTE OF TECHNOLOGY) or IIM (INDIAN INSTITUTE OF MANAGEMENT). They are currently between 35 to 55 years old, have a high-responsibility position and have a good income. The peculiarity of this group is that they can afford luxury products but they do not have the mindset or the urge to do so. They prefer to invest in family-related activities: education of their children, real estate, trips abroad, cars, etc.
“BPO generation” or liberalization’s children
This segment gathers the 19-29 year-old Indians who work in the flourishing BPO industries (Business Source Outsourcing). Most of them live in their parents’ home and with no living expenses (which are taken care of by their parents). Hence, they are spendthrifts and they buy goods for themselves: leisure, clothing, mobile phones, accessories, etc. This generation, a fan of Bollywood and international TV usually follow Western trends. They have one single need: to get dressed and live like their counterparts in Europe or the USA. There are currently 200 million Indians in the 20-30 age group and this is going to continue (the 15-19 age group stands for 110 million people in India). Thus, the “BPO” generation will become the “Gold Collars” in a few years and contrary to the latter, they will live with the luxury concept brought about by their childhood.
LOCATION OF INDIAN LUXURY CONSUMERS
They are mainly situated in the North and the West but they are spread throughout the country and their number has increased substantially not only in big metropolises but also in second or third-tier cities with the growing number of self-individuals.
However, because of the lack of suitable luxury retail space and hefty regulations, luxury brands are predominantly focused in big metroes such as Delhi, Mumbai and Bengaluru but things may change in the future.
DELHI VS MUMBAI
Delhi and Mumbai are the two biggest luxury hubs in India but the profile of the customers is rather different.
Delhi is the main spot for « Old Money ». Delhi has a substantial advantage over Mumbai because it attracts people from satellite cities such as Chandigarth, Ludhiana and Kanpur in which the « New Money » or « New New Money » have enough wealth to spend thanks to revenues mainly from trading, real estate and agriculture. Logofication is the key factor because they view luxury brands as status symbols.
Mumbai, on the opposite, does not have the advantage of a large consumer base coming to town to splurge. Recent consumer purchasing trends have demonstrated that Bombay is fragmented into three parts : the North (near the airport) and the Central part where most of the « New Money » lives, and the South (Nariman Point, Malabar Hill and Colaba) which accounts for the « Old Money », with a more subtle mindset .Being the center of Bollywood, movies and filmstars have a major influence on street style.
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