India’s one billion euro luxury market can double in the next 3 years
With the occasion of an event organized by Altagamma, an association of Italian luxury brands, on the potential of expansion into India, the country’s luxury market value, to day, was estimated to be worth 1 billion, while actual demand is between 120% and 150% higher. From the 500 international luxury brands, only 30% are present in India, in comparison with 70% in China. Jewellery and watches are the largest luxury industry segment with 47% of the total market followed by apparel and accesories with 14% of the total luxury market. Over 60% of all luxury goods and services are purchased by male consumers.
Despite the tremendous potential for growth, India remains one of the most challenging luxury markets to penetrate, especially due to the high tariffs and increased taxation, obligation to set up joint ventures as well as a high level of corruption. CPP‘s studies on India have also highlighted that luxury companies should pay particular attention to the very strong local luxury products, especially jewellery and clothing, which have centuries of tradition, both creatively and quality of craftsmanship.
India has an impressive cultural heritage which is also reflected in people’s lifestyle, with traditional clothing, beauty products and jewellery. Reputed international fashion houses have long taken inspiration from the traditional Indian dresses as well as unique manufacturing techniques, using the best quality materials such as silk. And there is also the one of a kind style which seems to have an endless diversification, in patterns and the richest colours palette. Indian men and women are not only proudly wearing traditional clothing but also have a innate respect for the manufacturers and designers. The same applies to jewellery, where India’s gold and diamonds play a very important part.
India is not a typical emerging market where top international luxury brands would have an instant guaranteed success just because of the brand reputation and need for differentiation and show off. For instance, the local ”bling” factor is more associated to design, colour and size (jewellery). Displaying an apparel or accesories product of a well known international brand at a major social event such as a wedding could even be seen as tacky and cheap. The best recent example is the lavish wedding of the Prince of Jodhpur which had thousands of guests most of them Indians but also top international VIP’s such as famous business men and celebrities. Wearing an Indian gown and outfit was not only an obvious choice for all Indians attending the event but also an opportunity to display vintage dresses and accessories, some hundreds of years old.
Hermes has been among the very few international luxury brands which have managed to build and maintain a different ”relationship” with India. Hermes has long taken inspiration from Indian designs, with its creative team spending time regularly in India and this has beautifully translated into timeless Hermes Indian inspired garments such as scarves and dresses as well as in Hermes’s advertising campaigns which have regularly featured Indian inspirations, tastefully drawing attention to the invaluable heritage of india.
As for the fact that over 60% of the luxury market is driven by make consumers, this can be explained by their need to wear a suit, the ”international business uniform” when attending business meetings while in India as well as abroad, hence the opportunity for major international men’s luxury brands such as Zegna, Brioni, Corneliani and Brioni, already present in India and enjoying good results. Indian tailoring is also world famous, therefore, only a handful of luxury brands are likely to succeed in India, provided they offer comparable service to local tailors. The second sector with the highest potential for growth is watches.