The approaching of age second of luxurious in India

In May this year, Louis Vuitton caused quite a stir when it signed actress Deepika Padukone as its first-ever Indian “House Ambassador”. The fact that the luxury fashion brand chose to feature Padukone alongside actors Emma Stone and Zhou Dongyu in their Spring/Summer campaign of their Dauphine handbag was no idle whim. While luxury brands in India catered to a small, elite consumer cohort for decades, they are only now sensing major growth in the country.

A variety of factors including newly affluent consumers, a desire to consume better and greater choice at the high end now available here in India are driving the luxury sector. And that led to a lot of movement in the room.

Just last month, Aditya Birla Fashion and Retail Limited (ABFRL) entered into a strategic partnership with Galeries Lafayette, announcing plans to open luxury department stores and a dedicated e-commerce platform in India. The flagship stores in Mumbai and Delhi will unite more than 200 luxury and designer brands under one roof, it said.

Nicer things in life

Announcing the plans, Ashish Dikshit, MD, ABFRL, called this the “coming of age moment” for India’s luxury sector. “India is now home to a generation of young and affluent consumers with a global footprint who are willing to spend on the finer things in life. This becomes visible in the boom and the dynamics of the luxury market. The partnership with Galeries Lafayette is a clear confirmation of India’s importance as a global luxury market and a future growth engine for luxury brands,” he emphasized.

“We’re seeing an unprecedented lift and confidence in the Indian consumer,” agrees Shweta Jain, Chief Business Development Officer, Luxury, Reserve & Craft – India & South Asia at Diageo. The spirits major has been on a premiumization trajectory and the strategy appears to be paying off, as the luxury labels in its portfolio have seen annual growth of a whopping 30 percent. “The high end is certainly growing faster than the low end,” says Jain, describing how many consumers still look to Johnnie Walker Blue Label despite the price hikes. “More and more consumers are including our top-end portfolio in their celebrations,” she said.

This has prompted Diageo to engage in innovative marketing. “When we come to the festive district with weddings, you’ll start to see Gold Label themed bars at those events,” she says.

Diageo is also expanding its top-end portfolio – there’s a Johnnie Walker Blonde, a pale, sweeter whiskey made specifically for mixed drinks. It recently launched the disruptive Godawan Single Malt, which captures the spirit of the Rajasthan desert and lives up to Indian pride. Made in India luxury is another driver for the segment.

And the timing couldn’t be more appropriate. As Harminder Sahni, MD, Wazir Advisors says: “In the post-Covid world, China, which has been a major luxury market, has slowed and markets in Europe have been hit hard. Hence, luxury brands are looking to India with a sharper focus as a key market as the new age prosperity drives the growth of this sector. There are expectations that India is on the verge of reaching an inflection point in the luxury sector.”

According to Euromonitor, India’s luxury goods market is expected to grow 42 percent to $8.5 billion in 2022, up from $6 billion in 2021. 4 times,” says Sahni.

Take luxury watch retailer Ethos Ltd, for example, which has now accelerated its growth plans to add 40 new stores over the next 24 months from its originally planned 13 stores. Speaking to investors last month, Yashovardhan Saboo, Chairman and CEO of Ethos Ltd, described how the luxury watch market in India is gaining traction as HNIs’ discretionary incomes rise and the consumer base grows. “Watch buyers now know that luxury watches in India are reasonably priced compared to other global retail destinations. Despite higher import duties and GST, prices in India are similar or even better than other global malls,” he stressed.

In fact, the company is looking beyond luxury watches with agreements to distribute Messika Jewelery and luxury luggage brand Rimowa in India.

Expansion of the portfolio

Others are also expanding their portfolio. Gitanjali Saxena, Business Head, Tata CLiQ Luxury, which has seen exceptional growth this year: “This holiday season we have expanded our current portfolio with the launch of new brands and collections in categories such as fashion, accessories, Indian luxury and designer wear. We also recently introduced a home fitness category.”

According to Saxena, Tata CLiQ Luxury has had a successful holiday season with a rise in average order value for categories such as Indian designer clothing, home furnishings, handbags, beauty kits and gifts, and says the platform has carefully curated offers based on the growth in consumer appreciation for the beautiful things in life.

“Besides Metro and Tier I cities, our strategy also focused on attracting customers in Tier 2 and Tier 3 markets where we have seen increasing demand. The non-metropolitan markets contribute almost 40 percent of the platform’s revenue.”

Saxena says e-commerce has helped the luxury sector thrive by increasing its reach and accessibility. “Brands have been able to reach HNIs and luxury aspirants in Tier 2-4 cities in addition to major cities through their online presence, driving growth and attracting new customers,” she says.

Growing interest from companies

As global luxury brands seek to gain a stronger foothold in the country, many Indian designer-led luxury fashion brands are planning their next phase of expansion, backed by corporate funding.

“Until now, Indian designer brands have largely self-funded their business, but there has been a wave of start-ups where they have now received external funding from large conglomerates. I think in the next phase we will see the rise of younger, designer-led brands and investments in some of the new-age luxury brands that are expected to grow much faster,” summarizes Sahni.


Released December 11, 2022

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