Does the rise of Indian luxury reflect that of China?
Key points to remember:
The Center for Economic and Business Research (CEBR) predicts that India will overtake the UK to become the fifth largest economy by 2025 and the third largest economy in the world by 2030.
The size of the luxury market in India is expected to exceed $ 200 billion by 2030.
With one of the region’s largest millionaire populations and a strong middle class, India offers exceptional opportunities for luxury brands.
For obvious reasons, marketers often compare the Indian luxury market to the Chinese market. Like China, India has both a rapidly growing elite class and an ambitious one – and their insatiable appetite for luxury reminds China of global brands.
In 2019, India had 4,593 very wealthy people, ranking fourth after the United States, China and Germany, according to a Swiss credit World Wealth Report. India had approximately 912,000 millionaires, which represents 2% of the 51.9 million millionaires in the world. Of even greater importance, The Center for Economic and Commercial Studies (CEBR) predicts that India will overtake the UK to become the fifth largest economy by 2025 and the third largest economy in the world by 2030.
With one of the region’s largest millionaire populations and a strong middle class, India now offers exceptional opportunities for luxury brands, and these positive developments have impacted luxury consumption.
The size of the luxury market in India is expected to exceed $ 200 billion by 2030, according to India Retail. And as India becomes a hotbed of global luxury, international brands are increasingly optimistic to expand their footprint in the country and strengthen their brand awareness. But in one of the world’s largest and most populous countries, brands simply need to pay attention to consumer behavior.
Consumer trends and behaviors differ across regions, cities and social groups, so using a ‘one size fits all’ approach will not work. While Delhi and Mumbai continue to have the highest number of millionaire households, high taxes and the COVID-19 pandemic could change this trend. Moreover, even in these cities, consumer behavior is not linear, and the young, spendthrift millennial cohort does not have the same consumption habits as the older generations.
In this context, India seems to have luxury consumption behaviors similar to those of China and Japan in the past. And if consumer behavior is a sign of things to come, luxury brands should be wondering if the era of status signage and logo display will soon end in India.
Abhay Gupta, Founder and CEO of Luxury Connect, said mint that Indian shoppers will become more “quality conscious” when shopping for clothes after the pandemic. Gupta compares the change in consumer behavior to that seen in China, and she points out that “logo clothes and ostentatious things” will be replaced by a “wiser, classic and refined trend.”
According to Gupta, the decline in disposable income will also cause consumers to think more about “what they want to buy.” Buying versatile bullion coins instead of trendy clothes is a smart move, especially during an economic downturn.
Former Mercedes-Benz India Managing Director and CEO Roland Folger brings up an interesting point, saying HNWIs with personal fortunes of over $ 10 million can “have luxury car fleets” but prefer to drive a car. Toyota Corolla seven years because of tax fears. He also insists on the cultural aspect which brings India closer to China than the materialist West.
“There is something about India that makes people uncomfortable flaunting their wealth,” Folger said. Business today. “There is less materialistic and more spiritual view in India that makes it different from a country like the United States. But it also has a more socialist political background which makes the rich very cautious about how they show their wealth on the outside. “
The rise of subtle and understated luxury does not manifest itself in the same way in all consumer groups. And luxury consumer trends in India will continue to be influenced by the 440 million millennials whose shopping habits are still in their infancy.
The move towards larger brands is already underway, while the premiumization of the market is likely to push understated luxury to the fore. This change will also improve competitiveness and put national players at the forefront. Global brands might need to pick up the pace if they are to thrive in a country that is a world renowned authority in textile production methods and embroidery styles. Affluent consumers are already turning to Indian designers for wedding and party wear, and Kama Ayurveda and Forest Essentials are slowly conquering the premium skin care segment.
In fact, the shift from logo brands to unbranded products is already underway in Indian elite circles. These buyers are highly educated and highly connected citizens of the world, so they understand the true meaning of quality and craftsmanship. Conquering this segment means making innovative investments in personalization and personalization efforts rather than flaunting prominent logos as before.
Looking at India, luxury brands might copy some valuable points from their Chinese playbook, as the market has shown the same signs of maturity as China years ago.