As the demand for luxury goods and services increases, international luxury brands are gearing up to cater to the Indian consumer in ways that the current retail sector may not be able to.
Luxury is the new-found love of the Indian retail sector. Aspirational consumers with ever-growing disposable incomes are the target, and the sector is growing at a rapid pace thanks to international luxury brands setting up their stores across the country. Over the last decade, the Indian luxury market has been in the spotlight for global luxury brands with a growing presence. The Indian luxury market, valued at about US$ 18.5 billion at the end of 2016, has the potential to cross the US$ 100 billion mark over the next 7-8 years (source: CII, Kantar IMRB).
Since India was ranked as the seventh most-valued ‘nation brand’ in 2015, according to a report by Brand Finance, the country’s economy has grown to become even stronger. All the economic indicators are favourable, and the retail sector has used this to good advantage by driving growth. Luxury brands need to strategically design their plans to tap the growing demand across the retail sector. There is typically a need for luxury brands to focus on expansion in the type of products being offered, and increasingly adopt innovative marketing plans in response to rapidly evolving consumer behavioural trends.
Luxury is no longer a ‘status symbol’ in India, but has now become a viable lifestyle for a vast majority. And global brands need to evolve quickly and learn to adapt within the local environment—it is critical for them in order to get accustomed to the market and understand the cultural identity of Indian consumers. The shift from conspicuous consumption to more value-driven purchases is extremely evident in today’s aspirational buyers of high-end brands. Experience-based luxury is the new driver of growth for many of these brands for the new discerning Indian consumer.
India as a retail market is not uniform, especially when it comes to preference for luxury in terms of need fulfilment. Few existing players have thus been able to fulfil the needs of the Indian luxury consumer. Since this segment of market remains untouched, huge potential lies in the same. To be successful in India as a retailer, it is necessary to gauge both the financial potential as well as the mindset of the Indian luxury consumer. For example, the traditional Indian custom of personal adornment has led to strong demand for luxury accessories, jewellery and timepieces, and designer clothing and footwear, thus establish international retail brands as a huge competitor to the domestic Indian brands. When it comes to ‘affordable luxury’, Indian retailers find it comparatively more difficult to generate revenue from Indian brands, a concern that the Indian brands are taking seriously and addressing accordingly. The market for luxury goods and services has grown rapidly in all the top metro cities, making the consumer spoilt for choice and signifying a major upheaval for the country’s retail sector.
Luxury has different meanings for different people. To some consumers, luxury goods provide a means to a better lifestyle, while others adapt luxury goods to their existing lifestyle. This perception varies with the maturity of the market and the exposure to which the consumers have been subjected. The growing influx of international luxury brands will be a game-changer the likes of which the retail sector has not seen in a very long time.