The last couple of years have seen a rapid influx of International luxury brands into the Indian market. What started with one or two brands in
five-star hotel locales quickly resulted in a rapid and complete takeover of the consumer’s mindspace. Canali, Zegna, Paul Smith, Ferragamo, Kenzo, Jimmy Choo, Bottega Veneta, Armani, Versace...think of a luxury label and it was here.
However, in the midst of this flurry of activity, the global meltdown happened. Consumer spending plummeted the world over and luxury was in crisis globally. But the story in India was somewhat different. There was no real dent in the luxury consumer’s spending here. The recession was in the mind of this consumer, psychological, not real. And it presented an interesting case for study. So, who then is the luxury consumer in India, defying all logic of global gloom syndrome?
Sample this –second-generation scion of an industrial business family, running a successful family business or a first-generation entrepreneur who has made it big through his sheer business acumen; well traveled, in some cases studied abroad, enjoying the rewards of success – fancy car, plush apartment, trophy wife. The vagaries of economic downturn, which affected global giants, do not seem to ruffle his business enterprise.
Case two – rich businessman’s wife, unaccounted cash stashes in her Burberry clutch, out picking her evening wardrobe for a friend’s store opening soiree. She heads to DLF Emporio and a few happy shopping hours later emerges with four bags – Jimmy Choo, Louis Vuitton, Dior, Judith Leiber, and slides gracefully into her waiting Bentley.
The world watched this little show from the sidelines and gaped at this extravagant and unabashed spending while they did not know how to hold the show together in their own backyards. The interest levels thus rose and we had the luxury world converging in March this year in Delhi for the International Herald Tribune Luxury conference. While they extolled on sustainability, the picture unraveling outside was quite the contrast. As the evening parties rolled, more of the same surprised faces.
Admittedly, the luxury world had never seen such opulence in their home turfs where private residences hosted dinners for 800 guests or the most spectacular shows were put up at luxury abodes in the heart of the capital. This is a snapshot of the Indian luxury market that defies all logic and does not have an equal anywhere in the world. The luxury goods market in India is one of the world’s most diverse and exciting markets.
China, which has been hitherto extolled as the future of luxury, is a very different story all together. The Chinese consumer comes from the newer generation working population, who saves every yuan to buy that much-coveted new bag from the LV store across the street. It is the numbers of these aspirational luxury buyers that get that economy clicking. We do have a similar consumer emerging in India – the young working population, which is brand aware and has the propensity to buy.
This aspirational class in India, combined with the older business families, makes it the largest emerging luxury market in the world, estimated
to grow at 25% over the next five years. In this bullish scenario for luxury in India, it would be a good idea for global luxury brands gauging the market to understand their consumer better.
The good life is in. Money and consumerism are emerging as the undisputed measures of success. There is considerable disposable income coupled with optimism about the future.
An expanding upper class, creating large peer groups and reference groups for aspiring consumers.
The consumer is well traveled, brand aware, price conscious and shops for his favorite brands overseas. Most luxury brands in India have understood these consumer dynamics and kept prices at par to whatever degree possible, within 10-20% of the European prices at best. This is a fact, which the consumer is now realising and, therefore, preferring to shop at ease in the brand store closer home. Further, the merchandise is the latest season offering from the brand globally and of good quality.
Media has played a pivotal role in creating aspiration. International titles that have entered the country in the last couple of years have taken consumer desire to new levels. As a result, there has been an emergence of a new ‘social hierarchy’, of those who get featured in these glossies vs. those who aspire to get there. The deep-rooted social hierarchy mindset of those who want to make the leap into the higher strata of society imitating the prestige purchases of those they imagine are above them in the social ladder are fuelling the luxury goods market in India.
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