When ever there is a mention of the term luxury all of us start imagining things that will always remain beyond the common man’s possession. But, over the years luxury has become a necessity and is no longer identified with terms like lavishness and unreachable wishes. What was considered to be luxury yesterday is a necessity today. Take the example of cell phones and cars. Today luxury and need are the two facets of a single coin. Quality experience, value for money, customer satisfaction and creativity are four elements of luxury retail. It is important to take care of these four aspects to make today’s luxury tomorrow’s need.
The term ‘Luxury’ is frequently used by the retailers to signify high-end expensive products. As per the figures available, the Indian luxury goods market is currently growing at a compounded annual growth rate of 25 per cent. Luxury brands across the globe have identified India as a future retail destination. These brands are planning big expansions in the sub-continent and the Indian consumer too, is ready to spend on these high-end luxury brands. Experts believe that the luxury retail market in India is all set to evolve in a major way.
Being one of fastest growing economy in the Asia-Pacific region, India is expected to be the next hub of luxury goods consumption. India has a huge population of young shoppers who aspire for an international lifestyle. Moreover, Indians have been travelling globally and have had enough exposure to international brands. Indians today have also realised that luxury brands are known for their quality and durability. India's economy is growing at the rate of 7.5 per cent each year; which means initially Indians were expected to buy small luxury products but gradually they have started buying more expensive products and services.
International luxury brands in India
Top luxury brands from the US and Europe are already making their presence felt in India. The few among these are Spanish brand Zara Basics and US men’s casual and sportswear brand IZOD. Other brands, including French label Nina Ricci, Carolina Herrera (US), French shoemaker Christian Louboutin and Italy’s Max Mara, among others, which are eyeing India.
There are mainly two portions available for foreign brands to enter India, and that is either through joint ventures, or via the franchise route. Recently Zara the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega proposed a JV with Tata Group subsidiary Trent Ltd. According to the proposal, Inditex SA will have a 51per cent stake in the JV, while the remaining 49 per cent would be held by Trent. On similar lines Carlson Hotels Worldwide announces plans to expand its luxury brand Regent Hotels and Resorts into India with the opening of The Regent in Gurgaon in late 2013. Harley-Davidson Inc. (HOG) expects India's expanding economy and rising disposable incomes to help it sell high-end motorcycles in a market dominated by cheaper commuter motorcycles and scooters. Also, luxury-car manufacturers like, Daimler AG's Mercedes-Benz, BMW AG and Audi AG have introduced several models in India to cash in on the growing need for luxury products in the world's second-fastest growing economy.
However, rising income levels in India, where about two-thirds of the nearly 1.2 billion population is under the age of 35 are prompting companies such as Yamaha Motor Co., Ducati Motor Holding SpA, Suzuki Motor Corp., Honda Motor Co. and Kawasaki Heavy Industries to introduce their high-end motorcycles in the country.
Challenges to overcome
Talking about the hindrances faced by the growing Indian luxury market, it is believed that international luxury brands need to take care of many aspects.
Though Indian has become brand conscious and are ready to invest in luxury goods yet the scope of international luxury retail is limited, as there is still a percentage of people who do not see luxury retail as a necessity.
Lack of retail space
Except for five star hotels Indian retail space has still failed to match international standards. For an international brand to find a large retail store space is still a dream, as apart from high rentals, shortage of retail space still exists.
Lack of High Fashion Street
There is no street that is coming up as a high fashion street. Like New Yorks’s Fifth Avenue and London’s fashion streets, India has a long way to go before it can compete in both space and name, to call its retailing spaces as fashion streets.
When consumer is ready to spent huge amount of money in buying a luxury product he would not like to compromise on the quality and services provided by the brand. Being a foreign brand satisfying the consumer becomes little difficult.
Despite the challenges international luxury brands face in launching a retail store in India, experts do believe that India offers a great market for luxury retail. It only gets better from here.