The apex trade association of India, Assocham, has recently stated that the Indian luxury market is expected to cross $18.3 billion mark with a CAGR of about 25 percent. The growth is fueled by the increasing brand awareness and purchasing power of the upper class in tier II and III cities of the country.
As per DS Rawat, Secretary General, Assocham, “The factors that have fuelled the luxury industry's growth are raising disposable incomes, brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India.”
Preferences of dining at five star hotels, buying high end luxury products such as electronics, jewellery, personal care etc. has been adopted by a larger percentage of people in 2015 and the trend is expected to grow by 30-35% over the coming 3 years.
With this exponential rise of the luxury market, even private equity investments in the segment will increase and aid the growing luxury market.
The chamber paper segregated the luxury sector into products: apparel and accessories, pens, home decor, watches, wines and spirits and jewellery, for services the sectors are spas, concierge service, travel & tourism, fine dining and hotels and assets include: yachts, fine art, automobiles.
The study says that increasing internet penetration across smaller cities and towns along with high disposable income shall lead to approx 100 million transactions on the Internet by 2020 and this will result in multifold increase in luxury consumption.
The size of the High Income group (HIG) consumers continues to grow and they spend over 40% of their monthly income on some of the world's largest luxury brands whereas the middle income group (MIG) consumers spend 8-10% of income on luxury products, reveals the Assocham survey.
Globally too, consumer spending is on the rise, expected to reach $ 40 trillion by 2020 with an unprecedented growth of $ 12 trillion in a decade, added the report.
The survey was conducted in various cities including Delhi, Mumbai, Chennai, Ahmedabad, Kolkata, Pune, Chandigarh and Hyderabad. Delhi stood first in spending the most on luxury brands followed by Mumbai, Ahmedabad, Pune and Bangalore.
Luxury jewelry, electronics, SUV cars and fine dining have grown beyond expectations, while apparel, accessories, wines and spirits have continued their strong growth in 2016, according to the Assocham assessment.
Branded wine consumption is also likely to grow 30% in the metro cities.
Rawat further said that the slowdown in the economy has not affected the spending patterns of high income group (HIG), with many of them stating that maintaining their lifestyle is an extremely important facet of their social life.
According to survey majority of women tend to make purchasing decisions around cosmetics, perfumes, spa treatments, clothes, footwear, bags and jewelry. Men on the other hand mostly decide on purchases related to alcohol, watches and automobiles.