Luxury retail brands are making a beeline into the Indian market, foreseeing the commercial viabilities. But this is only a beginning. What is the current and future market for luxury brands, and what should the retailers do to leverage the opportunity?
Luxury retail is a segment that has grabbed immense attention in the recent past. Against the backdrop of the Indian thrift, the attention this segment is creating, is magnetizing both domestic, and international luxury brands to consider their options seriously.
There is no particular definition of what products come under the category 'luxury'. Based on the amount of money spent on buying the product, it can be defined as 'a luxury product'. Products that are meant to show off a person's prosperity, lavishness, that serve as a medium of self expression can also be defined as luxury. Luxury market is a broad term encompassing perfumes, jewelry, watches, clothes, footwear, and many more.
Which customers manipulate the luxury market?
Indian luxury market is currently on the growth trajectory, seeing a continuous exuberance. Changes in the income level of the people, increasing families with dual income, nuclear families, and transformations in preferences, and life style of the consumers are fuelling the growth of the market. Strong polarizations of the buyers for specific products also influence the market. Children of the aging baby boomers termed as millennials dominate the luxury market. They belong to a demographic group enticed with pomp, glamour, and cutting edge technology. Fashion designers focus on the mind set, and preferences of these people. Trends spring up keeping in mind, the style, and color preferences of the millenials.
Indian Luxury Market:
India is currently emerging as one of the attractive luxury markets; worldwide. It has growing literate population, brilliant careers and spending power. There are 70,000 millionaires in India, making the top end of the luxury consumer populace. With a current per-capita income of $460, a rapid growth is still on the cards contributing to an added internal wealth creation. Industry analysts predict that by 2020, 47% of the Indian population will be in the age group 15-59. During 2004, the same population was 35%.
Indian retail market is witnessing a tremendous growth, with luxury retailing going through a dramatic transformation. A research report by Northbridge Capital reveals that Indian retail market is seeing a growth of 30%. Luxury retailing is currently estimated to be $3.5 billion. Analysts predict it to grow at a CAGR of 25%, and leapfrog to $30 billion by 2015. The country is having rosy hopes to maintain the same trend for the next 10 years. India is the desired destination for luxury retail brands from all across the globe, with many big brands planning for an expansion for their already established business in the country.
Attributes of the Indian aristocrat:
Individual, personalized high-touch and highly customized marketing satisfies the need of the customers and lure them to buy the products. Companies are vying to design and deliver goods and services that satisfy the creamy layer of the society.
Top five purchases of the Indian consumer:
- Digital Accessories
- Time wear
Average spending of an Indian consumer per annum: $8,900. Though customers of luxury are located all across the nation, Mumbai, Bangalore, and Delhi are the top three cities in terms of rupee millionaires.
Luxury market is dominated by three main factors; brand, price, and reputation. SRI Consulting Business Intelligence classifies luxury shoppers into 3 main categories:
- Luxury is Functional: These consumers buy luxury items based
on their functionality and quality. They make logical decisions, and not
emotional or impulsive decisions. They will be willing to spend money to buy
things that are durable, and having long lasting value. They will be in the age
group of 35 and more.
- Luxury is Reward: They are in the younger age group of 25-35, and buy
luxury items as a status symbol. They prefer buying luxury items that gives
them importance while it does not have much lavish or hedonistic in look. An
'acceptable exclusivity' in marketing strategies attracts them to make buying
- Luxury is indulgence: The youngest of the three categories', they come under the age group 17-25. They buy luxury items to lavish themselves in self-indulgence. They prefer to pay more for items that express their individuality, and make attract other's attention.
Luxury, which was once available only to the aristocratic world, is now, not just a product. Its a lifestyle. It is of primary importance for the retailers to outline the consumer preference to meet their demands in a better way.
- "Luxury fashion branding: trends, tactics, techniques", By: Uché Okonkwo