As India rises up on the global ladder, Indians are finding their true positions in the global arena, luxury goods demand is enabling meritocracy-based status increases, and the market gets more and more complicated. The Indian luxury landscape is experiencing strong evolutionary undercurrents that are redefining the consumer profile and also how luxury players need to operate in this domain.
India's luxury market is developing in many ways. Luxury is no longer restricted to the rich and famous alone, but to new age consumers who do not typically fit into the boardroom definition of luxury consumers. This segment of clients is staking claims on luxury products, brands and services, but on their own terms.
There is now a larger consumer-base, which has the money to splurge, but also wants real value proposition. Going forward, this will be the biggest challenge faced by luxury brands.
The luxury goods market in India is one of the world’s most diverse, exciting, and challenging markets for brands seeking a presence there. Brands and retailers that want to capture a share of this fast-paced business need to learn to adapt, or risk missing one of the next great untapped opportunities for the luxury business. As more and more brands are entering India with renewed strategies, Indians traveling to London, New York or Dubai and coming back with suitcases full of products is gradually becoming a thing of the past.
A demographic scan of the population, spread across five to six generations of post-independence Indians, show that the behaviours, trends, and approach toward wealth and consumption have radically changed. Typically, the economic evolution could be spread across:
The income and wealth generation journey of the various demographics can be summarized as the following:
The Indian luxury consumer could be subdivided into the following traditional classes. That being said, the true impact of Gen Y and Z are a matter of further study since typically, the purse strings are still controlled by Gen X and above. The behaviour of their off-spring, while important influencers, are not yet key purchase drivers.
The Old Money consumer – The Traditional Maharaja or The Khandaani Raaes
Born with a silver spoon, the old money group has inherited wealth. Luxury is hence, a way of life for them. The elitist, original, sophisticated, upper-class spill over from the erstwhile nawabs and kings, who despite the Privy Purse restrictions, have continued their traditional conspicuous consumption all through the post-independence decades, and have not been dependent during the new wave of luxury goods into India. These luxury consumers want exclusivity and customization, key drivers being individuality, personalization and a special effect just for them. This small percentage of Indians perhaps contributes a maximum value to the luxury sales.
The New Money Consumer - The New Maharaja
Created during the post-industrialization phase of the sixties, the new industrialists, the new rich, or the new factory owner is a by now staunch consumer of luxury goods. They earned the wealth themselves and seek value. While the older generation prefers spending on safe assets like jewellery, their successive generation tries to pull them out of the closet to devote more spend on trendy items.
The HENRY – The Educated, Corporate Professional
The management graduate with MNC income; the DINK (double-income, no kids); the HENRY (high-income, not rich yet); and the YUUMY (young urban, upwardly mobile) shop luxury like there is no tomorrow. They need to dress well, drink well, eat out frequently, socialize, entertain, and relax-- essentially living well and living for today. They place importance on luxury automobiles, mobile phones, and seasonal wardrobe changes and are considered the next big spenders on all things luxury.
The Returning NRI (Non-Resident Indian)
During the 1960s and 70s, many educated Indians moved to the United States for a better quality of life. The reverse brain drain due to global meltdown brought back a whole lot of technocrats and their ABCD (American-born, confused desi) off-spring. They seek the westernized lifestyle which they left behind. Some still use artificial accents to show their superiority to locals, and at times end up being made fun of. This group is well-educated, well-exposed and tech-savvy. As more and more globetrotting NRIs make their way back to resettle in India, the luxury industry has hugely benefitted. Used to a certain standard of living and services that they have experienced abroad, they seek the same in India. Particular gains have been seen in luxury real estate, home decor, hospitality, fashion, and restaurants.
The Bargain Hunter
This class is visible during EOSS (end of season sales). They come out in large numbers and can be seen walking around showrooms wondering why goods are so expensive even during sale periods. They buy small, but will graduate to higher level purchases as their career progression supports them.
The above extract is from the book "The Incredible Indian Luxury Bazaar." For further analysis on the Indian Luxury space, its consumers, challenges, solutions and more, pre-book your copy at a special early-bird price.