‘The Changing Face of luxury in India’ gives an overview of the luxury market today – that has witnessed robust growth of ~15% over the last 3 years and is estimated to have reached ~ USD 7.58 billion in 2012. Luxury products have grown the fastest at ~22% as compared to luxury services at ~15% and luxury assets at a much lower 9.4% - primarily contributed by slow growth in luxury real estate. It is the luxury categories like apparel & accessories, perfumes, fine dining and automotive that has contributed to this growth.
Luxury as a concept is not alien to India. Our culture is unique in that Indians have historically never seen a dichotomy between spirituality and materialism. The dominant Hinduism lays out the rules for the universe, in which preservation always goes hand in hand with wealth and prosperity; Vishnu the preserver is intertwined with Lakshmi, the Goddess of wealth.
Despite this, the Indian luxury market accounts for almost a negligible 1 – 2% proportion of the global luxury market. Industry experts believe that multiple factors are contributing to the slow growth - low priority status assigned to luxuries by the government, lack of adequate range of luxury goods and service levels that are below par. They also believe that our culture dissuades us from flaunting our wealth. Yet they are optimistic about the above factors changing in the coming years and predict that the luxury market will boom in India over the next few years.
The report focuses on identifying and understanding the India’s ‘Closet Consumers’. The last ten years of economic growth have seen a substantial new class of wealthy who have joined the ranks of the traditionally rich – from new generation entrepreneurs to senior corporate executives, from farmers who have sold their land off to developers to the BPO generation which lives at home with the parents and has money to splurge.
Despite their newfound riches, however, findings indicate that there is an inherent mindset that is ‘middle class’ in India, even among those who can no longer be classified as middle class basis their income. The inner conflict between a middle class mindset and the globally rich income level, between conspicuous consumption and a level of luxury which is a reward for hard work shapes what we call the closet consumer.
Closet consumers are cost conscious and seek ‘value’ even when buying luxury products. And their definitions, symbols of luxury are often in variance with conventional definitions and symbols of luxury. Based on their current lifestyles, values and needs from luxury, a segmentation framework divides these consumers into four distinct segments – spanning across those who are Connoisseurs, Experientialists, Aesthetes and Flaunters; with specifics on aspects that drive each of these segments.
Confederation of Indian Industry
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