The numbers might seem unbelievable, but the luxury market currently stands at a staggering $14.4 million. With increasing buying power, not necessarily just among the nouveau rich, the luxury market appears to be merrily singing along at an annualized growth rate of 30%.
To put in perspective, the country has about 1.6 million households earning over Rs 45 lakh or more per year, spending about Rs 4 lakh per year on luxury or very premium goods and services. While growth in such households is slated to rise to about 14%, there is an emerging â€œwanted luxuryâ€ class waiting to jump on to this premium bandwagon.
There are a set of consumers in India who understand luxury and value the heritage behind it. However, there are another 8-9 million consumers who can afford luxury, but are not yet oriented to its finer points and so donâ€™t understand its value. They are not active consumers, but they do veer towards luxury.
Attracted to the finer things of life, these consumers are more individualized than ever, expecting every product, service and experience to address their unique needs. Gone are the traditional demographic segments — there are some new, mind boggling statistics, especially since incomes continue to explode at the top rungs.
With its 280 million urban populations, India plays host to 28 million of the rich and upwardly mobile thatâ€™s 10% of the urban population. While 1 million are luxury consumers, 6-7 million are very affluent, while another 9-10 million are mid-affluent. Yet another 11-12 million categories the mass affluent, according to a Technopak study.
The new rich:
Who are these new affluent? Are they the traditional rich, born into money, or are they a whole new segment? India is creating a new generation of entrepreneurs, achievers and dreamers. They are not just born rich. There are a few new entrants like CEOs in their thirties, dot com chieftains, BPO mavericks, and entrepreneurs in myriad new businesses like technology and manufacturing.
The survey team met over 4,000 affluent consumers spread 12 Indian cities to map the emerging super rich category. The study found that the chief earners in such households are 35 years old or more and one-third of them have men and women with professional qualifications. Almost 70% of such households are engaged in business. Significantly, 20% comprise executives. The traditional rich comprise less than 1%.
New riches from the new rich:
This, then, is no simple story of first-time wealth creators. The Rs 45-lakh plus households are growing, with another 216,000 new households being added every year. Another report, Global Consumer Confidence Report, 2006, also finds the Indian consumer upbeat, with over 85% saying their personal finances will improve in 2007. For marketers, new riches will come from servicing the new rich. Selling luxury to the masses has now gained prominence.
The signs are clear. Supported by a strong economy, buoyant personal income trends and growing consumer eagerness to spend, the lifestyle products and services sector has been witnessing exemplary growth. On the one hand, Indians are getting richer younger and on the other, they are no longer shy of spending on themselves. This trend has been noticed by many international lifestyle companies, several dozen of which have set up operations in India and many more are on their way.