Luxury consumption in India is definitely on the rise and people are increasingly willing to spend money on these goods.
Louis Vuitton (LV) launched its first store in India in 2003 but there were already a number of consumers in India who shopped at LV even before they launched their first store. Louis Vuitton is known to have served Indian royals and their families as well as the leading industrialists and businessmen of the country who had been educated or lived abroad. Louis Vuitton was the first luxury store to enter India as the brand had already been well received by Indians abroad in the past.
According to report by consultancy firm KPMG and the Associated Chambers of Commerce and Industry of India for the India Luxury Summit 2014, the luxury market has grown at a rate of 30% in 2013 and is currently worth over $8.5 billion and is estimated to reach $14 billion in 2016. Presently luxury wear in India is not limited to just the royals. The well-travelled, professionals in their 20s and 30s like industrialists, doctors, lawyers and entrepreneurs are also spending their money on new and seasonal luxury bags, limited edition watches and gorgeous cocktail dresses.
Research by Boston Consulting Group (BCG), an international consulting and strategy firm found that in India there are five typical segments purchasing luxury items and these are – the people who believe indulging in luxury goods is an experience; the people who believe that luxury indicates trusted brands with exceptional quality; the people who see luxury goods as being exclusive and customised; the people who believe that luxury goods can set fashion trends; and finally the people who believe that the purchase of luxury goods helps be a part of the international trends and styles.
As compared to China, India’s luxury purchasers are relatively older although India does have a large new class of spenders who are younger, highly aware and those who want the best. For example, when luxury brands like Louis Vuitton first entered India, they thought that their buyers would primarily be third and fourth generation Indians living in prime locations like Lutyens Delhi but it is not only these consumers who are spending on luxury.
Sanjay Kapoor, the managing director of Genesis Luxury, a firm that distributes and markets global luxury labels within India believes that the main clientele of luxury brands is now the younger generation of professionals and entrepreneurs who care about how they present themselves. They either purchase these brands abroad or in India. Charu Sachdev, director of Kitsch a multi-brand store for these upmarket brands further adds that originally they were marketing these brands to just a limited audience who they believed were already knowledgeable about these brands.
The question that needs to be answered now is whether the Indian consumer still likes to purchase these goods while travelling abroad to destinations in Asia, Europe and America or to London or whether the presence of these luxury brands in India makes the bulk of these purchases take place in India itself.
Kalyani Chawla, vice president of marketing and communications at Christian Dior India believes that over the years less Indians travel to places like Hong Kong, Dubai, Singapore and Paris. She further mentions that although the retail price will be higher in India than for example Paris, a traveller who visits Paris frequently will possibly purchase a luxury item on their next visit but consumers who frequently purchase these items would rather spend the slight increase in the retail price to get the product they want immediately instead of waiting to go on vacation.
Senior partner and director at Boston Consulting Group, Abheek Singhi however disagrees and says that research shows that majority of the Indians including professionals and entrepreneurs prefer travelling abroad to buy these luxury items as they believe the latest collections are not available in India even though luxury brands who sell their products in India claim that this is not true.
The men’s luxury market has grown faster as compared to the others. This can be attributed to the fact that men are more decisive and certain with what they want to buy and this can thus be a huge opportunity for luxury brands according to Kalyani Chawla, as they tend to have the purchasing power whether they shop for themselves or for the special women in their lives. Men primarily spend on luggage, shoes, accessories and clothes.
Sanjay Kapoor agrees with this and believes the growth within the menswear segment is tremendous as Indian men are becoming increasingly interested and conscious about fashion. He believes that older men want to look younger while younger men want to look older and so they take an interest in their appearance.
Abheek Singhi believes that while a large amount of luxury spending is by men either directly or for gifting, men do seem extremely attractive because luxury spending can also include automobiles, cars, technology or services.
Charu Sachdev further adds that while men make luxury purchases according to their needs, women shop when they see something they like and want. Indian men usually do not experiment with styles and trends and stick to classics. She also makes an interesting point that men only make repeat visits to the store after a much longer time than women.
Apart from clothing, women also buy shoes, accessories and bags often. Kalyani Chawla points out that especially in Delhi, formal dress codes is the norm for majority of the occasions. She says that women often buy dresses from Dior for cocktail parties before weddings and adds that the wedding market in India is worth $25 billion and luxury brands contribute to most of this figure.
Rishab Suresh who manages Swiss watch brand – Vacheron Constantin says that luxury brands make initiatives to educate consumers about the brand and marketing it to collectors and believes that limited edition products evoke interest. Moreover, Suresh says that selling luxury is not an easy task as even though desire to consume luxury goods exists, consumers in India can still be price conscious and want to receive their money worth.