Being at the cutting edge of fashion comes at a price whether in London Paris or Mumbai. The global luxury goods market in 2006 was worth £75 billion with annual sales growth in double figures. India has been identified as an important source of this growth and is likely to grow at an annual rate of 28% in the next three years. The accelerating pace of economic and social change is transforming the Indian luxury landscape. The so called luxurification of society is a phenomenon that can be attributed to the following.
The booming economy is the reason for increase in demand of Luxury Goods in India. Consumers earning more than Rs 1,000,000 a year will be 24 million by 2025, which will be greater than that China’s comparable segment. It is, however, the emergence of mass affluence combined with aspirational mindsets and lifestyles that are helping to stimulate consumer demand. The rapid growth of the Indian middle class means that a larger number of consumers are able to afford luxury goods than ever before.
The media cultural phenomenon is, however, not restricted to the pages of glossy magazines. Luxury is now in the mainstream. Mainstream media is taking a greater interest in luxury brands, fashion trends and consumer lifestyles. Weekend supplements in national newspaper devote pages to fashion features and product reviews. Increased product knowledge and brand awareness are translating into greater consumer confidence an important catalyst for luxury consumption in a fast emerging market Luxury brands are now following the Indian consumer, expanding their sales operations not only in Delhi and Mumbai, but to smaller cities. Luxury boutiques which were traditionally confined to the secure but often inaccessible surroundings of exclusive hotels have been thrown open to the masses thanks to the shopping mall boom.
Although high import duties on luxury goods continue to prevail, India’s policy of liberalization and deregulation has improved its image as an attractive destination for foreign investment. The luxury market has traditionally been segmented according to two very separate and distinct customer groups namely the affluent and the non-affluent. The transition towards a consumer society has changed the profile of the luxury consumers.
There are seven guidelines set out to guide high-end brands to capture India’s growing fascination with luxury consumption.
1. Respect: Connect with luxury consumers as a selective target. Luxury bands need to respect this point of difference in all interactions between the brand and the consumer.
2. Segment: Acknowledge luxury consumer subsets. Luxury brands need to identify, differentiate and prioritize the most profitable subsets for targeted strategies.
3. Insight: Identify what is important to the defined target. Motivations could be based in personal and non-personal factors.
4. Connect: Brand interactions really matter. For example, respondents cited that friends and family are an important influence on luxury consumption.
5. Experience: Establish emotional connectivity. Deep and meaningful relationships need to be developed in order to win the soul of the luxury consumer.
6. Embrace and celebrate Indian brand or brand made to suit Indian conditions. India has a very powerful and unique identity, and this needs to be leveraged within a luxury brand context.
7. Consistency: Adopt a truly holistic approach, to ensure that all brand interactions, whether advertising or customer service, are consistent with the brand positioning. Contemporary Indian society is challenging traditional consumption patterns. The Indian consumer is ready to embrace luxury consumption.
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 don’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 that’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.
The international luxury industry must be ready to unlock the market potential.