According to a recent survey conducted by ASSOCHAM, India’s luxury market is all set to surpass $18.3 billion by 2016. Currently at $14.7 billion, the market is growing at a compounded annual growth rate (CAGR) of approximately 25%.
Increased purchasing power fuelling this growth
A mark improvement in purchasing power of non-metro cities, brand consciousness and high internet penetration has led to this growth.
Secretary General of ASSOCHAM, DS Rawat said, “The factors that have fuelled the luxury industry’s growth are rising disposable incomes, brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India.”
Luxury categories that performed well in 2015
- Five star hotels and fine-dining
- Electronic gadgets
- Luxury personal care
- SUV cars
- Wines and spirits
The report stated that these categories will continue to grow at the rate of 30-35% (except SUV at 18-20%) in the next 3 years.
Luxury brands that performed well in 2015
- Christian Dior
- Louis Vuitton
- Canali India
- LVMH India
- Judith Leiber
- The SPA Group
- Starwood Asia Pacific Hotels & Resorts
- Reliance Brands
Top 5 cities that splurged the most on luxury products (in order)
Other findings of the report
- Demand for luxury brands continue to grow in metropolitan cities
- High Income Group (HIG) buyers spend about 40% of their monthly income on luxury brands
- Middle Income Group (MIG) buyers spend 8-10% on luxury brands
- Purchasing power of women has improved, which has given boost to luxury beauty market
- Women a key target audience for luxury players
- Slump in economy hasn’t slowed down HIG’s spending pattern
- 85% of prospective buyers search for luxury brands online
- 69% of ASSOCHAM study participants said they prefer eminent luxury brands
- 65% agreed they don’t mind paying a premium price for luxury brands
While the Indian luxury market is growing at an impressive rate, important thing is to keep a check on the counterfeit market, both in offline & online retail platforms.
Besides the threat of knockoffs, deep discounts fixation was also one of the reasons why luxury brands stayed away from online retail for a long time. But things are changing for good. Amazon launched luxury beauty category three months back and leading jeweller Kalyan Jewellers too started selling online. Let’s see what percentage of India’s luxury market gets captured by etailers.