There’s quite a buzz over the world about India’s retail luxury market, nevertheless about its deficient 1-2% contribution to the global retail luxury trade. All the important names as Hermes, Fendi, Louboutin, Louis Vuitton, Burberry, Gucci, Jimmy Choo, Chanel have opened their outlets in India.
Experts are of the opinion that future of India’s Luxury Sector is quite promising.
About 10% of the Indian GDP and 18% employment of the working population are dependent on the retail sector. An estimate says that this industry will grow to $1 trillion by 2020. At present, the size of Indian retail luxury market is $18.5 billion. In the number of Indian Ultra High Net Worth, the luxury market has encircled an impressive huge growth of 340%.
The reason behind the growth
Mumbai and Delhi are the leading cities in the figures of Ultra Tech Net Worth according to an overview of ground reality till date. Indian middle class has always been a noteworthy driver of the growth of Indian Luxury Retail Sector. An impressive rise has been noticed in the number of shopping malls followed by luxury showrooms, along with premium and super-premium stores.
In the top 10 cities of India, the huge growth of Indian luxury consumer has been fueled with 150,000 High Net Worth, individuals with a Net Worth of $600-$3.1 million, along with earnings more than $1.5 million per household. There’s a promising possibility that total luxury goods retail value in India can have a growth of 25% by 2018.
The Indian luxury trade generally caters to two types of customers – the traditionally rich or old money, and the nouveau rich or new money. Delhi NCR followed by Mumbai, Bengaluru and Chennai are the top leading markets for luxury products in India. Non-metros like Ahmadabad, Pune, Chandigarh, Hyderabad, and Ludhiana are now also participating in this luxury marketing race. About 16% of the total luxury sales in India consist of these non-metros.
Digitalization of Luxury:
Among the 140 million Indians using the Internet, mostly are youngsters who take interest to try luxury brands. By 2020, around 250 million Indians will be in online-trading, so the online-shopping will increase rapidly. At present, the number is about 90 million. As per industry estimates, by 2020, approximately 100 million web-transactions will be done by the people in the Tier-2 and Tier-3 cities, speeding up with high usage of internet. The growth of high net worth individuals in the Tier-2 and Tier-3 cities will fuel the growth further. Around 20-25% of the total luxury retail spending will be for that. Globally the online-sale of luxury products is going to hit $20 billion.
Types of consumers
The traditional buyers are interested to own a world-class luxury brand than to have experience of luxury buying, whereas the new money groups want to experience luxury brands. With the aid of digital wave, this category will help to aid the luxury retail trading to a new level in the coming years.
A lot of obstacles and challenges as counterfeits, lack of infrastructure, pricing, shortage of space, etc. have to be overcome by the luxury retail sector. But in spite of these problems, the future of Indian luxury market seems promising enough to make a mark among the Indian culture and population.
The retailers are often challenged by the diversified and fragmented customer base. In order to attain success, the brands should be tailor-made to make their goods suitable for the whims and fancies of Indian buyers. Brands like Louis Vuitton and Versace are renovating their product range in order to suit the Indian market.
Experts are of the opinion that any luxury brand wants to be successful in the Indian market, they have to understand the fact that the luxury trade in India is a marathon and not a sprint. It’s necessary to have a long-term plan and keep patience. Nowadays India enjoys the advantage of the youngest consuming population in the world. This country also has an increasing level of disposable incomes joined to high brand awareness level.
With the increasing consumer market, luxury retail brands are quite optimistic about the future of retail luxury in India in the coming years.