Luxury Brands Gaining Ground In India

Those who have watched director Zoya Akhtar’s hugely successful film Zindagi Na Milegi Dobara would surely remember Bagwati as an exclusive character. Bagwati is an Ostrich Hermes Kelly limited edition bag, which is a gift from one friend to another, whose fiancée is this classy woman who adores luxury brands.But that’s not all! TOD’s D-Bag must have had quite a few fans in real life. The approval from Bollywood came in the form of an integrated script, which had one of the lead actresses carrying the navy version of it. And boy, did it send lots of Indian women into a tizzy!

Indians have warmed up to global luxury brands for some time now. But the trend over the recent years is so obvious that you cannot ignore the growth of this segment as a separate business space. While Hermes, Louis Vuitton and Gucci are the top three brands in India in the luxury segment, there is a growing appetite for newer luxury brands as well.

Brands such as Fendi, Burberry, Bottega Veneta, Paul Smith, Jimmy Choo and Roberto Cavalli make the lifestyle statement of the upper middle-class and those in the top echelon. And this clear shift in consumerism has been possible as young Indians are now embracing global luxury brands. In fact, young Indians who are well-travelled and open to new brands to enhance their self-worth are fuelling this growth. While women mainly look for bags, shades, clothes, shoes, wrist watches and lingerie, men are mostly shopping for brands like TAG Heuer, David Jones, Versace, Armani, Boss Orange, Fred Perry, Ralph Lauren and more. Then there are unisex luxury items such as cars and electronics, which are equally favoured by men and women. In most cases, both men and women show equal interest in luxury brands!

Walking on Jimmy Choos and Cavallis is the ‘New India’ that is showing all signs of turning the market in favour of global brands. Although India’s share of the global luxury market is a paltry 1-2%, luxury retails – both national and international – are in a hurry to set up shops in the country. And the main reason that the industry experts attribute to this positive growth is the fact that Indians are more ‘brand aware’ now, owing to their foreign jaunts. Well-travelled consumers and a stable economy, coupled with a young population with growing disposable incomes, spell ‘good news’ for luxury brands across the world.

The current and upcoming shopping malls across the country must be another key driver behind the luxury market growth in India. They have provided a truly conducive atmosphere for shopping, bringing in a lot more footfalls and ensuring a lot more exposure to luxury brands. Earlier, when the luxury brands operated in star hotels, the customer base was restricted owing to several factors. But today, Indian shopping malls have gained character and a retailer can clearly pick and choose which mall would be ideal to set up shop, depending on the mall topography other co-existence factors. More luxury brands in one mall are bound to attract an exclusive crowd with a taste for luxury items.

A study by ASSOCHAM and YES Bank has laid out some facts that sound extremely encouraging for the Indian luxury market, which has attracted scores of global players. In spite of the economic slowdown, the Indian luxury market is pitted to grow at 25% till 2015 and is expected to touch $15 billion. Last year, India was an $8.5 billion market for global luxury brands. The bullish outlook is anticipated to continue unscathed in the luxury sector spanning products such as apparels, home décor, pens, watches, jewellery, wines & spirits, spas and even yachts – a heady mix of both lifestyle and individuality-defining products.

Cars and electronics are among the most attractive segments across the Indian market. The Benzs, BMWs, Rolls Royces, Audis, Jaguars are not rare sights in metros.

The key growth driver is the upper middle-class who has banked on the new education system for the high net worth jobs of the future and subsequently, has cashed in on the current growth. A relevant analysis will reveal that their aspiration to climb the ‘consumer ladder’ is owing to the fact that they are, in fact, driving India’s growth.

They are a small segment but then, luxury brands are not exactly looking at taking the country by storm. Although India comes next only to China when it comes to its appetite for luxury brands, the kind of growth it has triggered is quite interesting. About 150,000 high net worth individuals, with a net worth of $600 billion-$3.1 million and with earnings more than Rs 10 lakh per household, have been fuelling this unprecedented growth across the top 10 cities in India.

What can trigger further growth for India and be mutually beneficial is the reduction of import duties (currently 20-150%) and introduction of easy FDI policies. This can easily spell further boom for the country’s economy.

Image: ThinkStock
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