United States, Europe or China has been ruling the luxury market for several years now. Another interesting country is India. The 1.252 billion inhabitants country represents an amazing opportunity for brands who know how to play it right. In 2016, the luxury market in India will represent a $18.3 billion sales, which is a +25% growth. This is big Luxury news!
We might wonder why India is having such a strong growth of its luxury market. There are several explanations. The first interesting point is the fact that several international brands are increasing constantly their reputation and awareness in the country. Indian luxury goods remains fragmented. International players such as LVMH Watch & Jewellery India Pvt Ltd, Gucci India Pvt ltd, Burberry India Pvt Ltd and Swatch Group India Pvt Ltd continue to lead this fragmented landscape. The presence of domestic Indian players is mainly within categories such as traditional jewellery and dresses in the luxury space. The market has also witnessed an increase in number of international brands entering India to tap into the potential offered by this niche and high growth area.
Naturally, if luxury sales are going up, it means there are more and more people buying luxury. It is obvious. Currently there are 137’100 millionaires households in India (source: Kotak wealth management). If we base the calculations on the current evolution, this number will reach 345’000 in the next incoming years owning a little less than US$ 700 million. This constant growth shows the country incredible dynamism and wealth.
The interest for luxury goods is also increasing. The very wealthy Indian households will spend up to 44% of their revenue in luxury goods and services. International luxury brands command only a tiny share of the Indian market, where they face strong competition from local fashion designers and jewelry makers. Indians prefer traditional dress and jewelry but shoes, bags and watches from global brands are a hit. Indians are also developing a taste for high-end skin care, expensive luggage and fine wine.
Of course as many wealthy people around the world, Indians travel a lot, especially to Europe. Due to high importation taxes, many luxury goods are very expensive in India and historically speaking, the country always got the old stocks. Indian buyers do not want this anymore. They buy premium so they expect first choice.
India has been voted as the seventh most valued nation brand. With an increase in 32 percent in its brand value to $2.1 billion, India has moved up one position in the most-valued nation brands list. Not only that, this surge is the highest among all the Top 20 countries on the list. The nation brand valuation is based on five-year forecasts of sales of all brands in each nation and follows a complex process. The gross domestic product (GDP) is used as a proxy for total revenues. Among the BRICS nations, India is the only country to have witnessed an increase in its brand value with Brazil, Russia, China and South Africa seeing a dip in their respective brand valuations. In addition, India is the second most valued among these emerging economies after China, followed by Brazil, Russia and South Africa.
India is a highly digitally inclined nation. Digital influence and online purchase is projected to rise exponentially. It is estimated that by 2020, approximately 350 million consumers are likely to digitally influence as compared to 150 million now. This will account for $240 billion to $250 billion, which is between 20 percent and 25 percent of the total retail spending. It is also estimated that by 2020, 200 to 250 million Indians will shop online, as compared just 90 million currently.
Significant brands across various verticals that performed well in 2015 included Gucci, Christian Dior, Louis Vuitton, Canali India, LVMH India, Judith Leiber, The SPA Group, Starwood Asia Pacific Hotels & Resorts and Reliance Brands. Increasing brand awareness and the growing purchasing power of the upper class in tier II and III cities is fueling further growth. Service areas such as fine dining, electronics, luxury travel, luxury personal care and jewelry saw increasing revenues and are expected to grow by 30 percent to 35 percent over the next three years. Spending on luxury cars continues to grow at 18 percent to 20 percent over the next three years. As the purchasing power of women grows in India, the luxury beauty products market is witnessing a fast-paced growth. Interestingly, three Indian companies have entered the Top 50 luxury brands of the world.
Ranked at 31, 42 and 44, respectively, these are Titan Company Ltd., Gitanjali Gems Ltd. and PC Jeweller Ltd. PC Jeweller Ltd. is also one of the world’s 20 fastest-growing luxury goods companies. There is a growing need for individuality and exclusivity as consumers get richer.
Luxury goods in India is still in its nascent stages and has many opportunities for growth. The recent slowdown in Chinese luxury goods has also shifted the focus of luxury players to India. The government has also been taking steps to make the process of entering Indian luxury goods easier and these steps are expected to help bring in more luxury brands to the country over the forecast period. The young demographics of the Indian population, strong economic growth and rising income levels over the forecast period are expected to help drive luxury goods. LuxuryActivist, as a Luxury Blog will follow up this evolution with incoming articles. Stay tuned.
Info sourced at Forbes, Forbes Asia, Fortune, IndiaTimes, Euromonitor and wikipedia. All content is copyrighted with no reproduction rights available.