Opinion: India Is An Incredible Opportunity For Luxury Brands. Here’s What They Should Know.
Last week, Balenciaga announced that it had signed a deal with India's biggest retailer Reliance, to open its first-ever mono-brand story, a country that is expected to become one of the fastest growing luxury markets within the next five years. The news follows an announcement a few weeks earlier from Italian fashion house Valentino that it would also open its first-ever standalone boutique first in New Delhi at the end of this summer, which would be followed by a flagship store in Mumbai later in the year.
The two deals represent a wider move from luxury brands looking to tap into different markets for growth, particularly as uncertainty over the global pandemic, surging inflation, severe slowdowns, supply chain disruptions, the energy crisis, and the Ukraine war have forced the International Monetary Fund (IMF) to cut global GDP growth down to 3.2 percent, 50 percent lower than last year’s estimate.
While the outlook of the global economic landscape remains uncertain, India’s GDP is expected to grow by 7.4 percent by the IMF for 2022-23. The Indian government projects that its economy will reach $5 trillion by 2026-27 and is likely to become $20 trillion by 2040. In such a scenario, it’s little surprise that the world is looking at India as a growth engine of opportunity.
On top of that, India’s luxury market has been steadily growing at an impressive pace. Euromonitor forecasts the luxury goods market to be worth $8.5 billion, up by an impressive $2.5 billion from 2021. According to Statista, it is expected to continue growing annually by ~8 CAGR, to help the overall luxury market surpass $200 billion by 2030.
Luxury brands have already reaped the benefits from moving their attention towards other markets as seen with the United States, and now India, which for years has remained elusive due to complexities like high import duties, has become a focus, particularly as brands like Gucci, Bottega Veneta, and Burberry have all made their entry.
Now, a new wave of brands like Valentino and Balenciaga are making their debut, but despite this incredible opportunity, India is a complex market that is not easy to impregnate or conquer. In reality, it requires a deep-rooted knowledge of local culture, people, geography, and purchase motivators to navigate and sustain oneself successfully.
Understanding The Indian Market There are many different nuances that luxury brands should take note of when it comes to the Indian market. For instance, the Indian male shopper tends to spend big on international luxury fashion brands, more so than female shoppers. However, accessories like bags and footwear are large drivers for women’s luxury brands since these are easy to pair with Indian luxury outfits and are a place where womenswear brands need to focus.
Another point to note is that Indians like to be pampered, so luxury brands need to offer unique experiences, storytelling, and melodrama to keep them hooked. A large chunk of the customer is maturing and seeks value and experiences over just brand name and logo.
Specificity counts. Brands that have launched India-specific collections and or communications have fared better. This is an easy route to connect to Indians not only in India, but a larger diaspora spread all across the world, particularly as a larger part of the Indian luxury market invests in brands that help define their sense of style rather than just social stratification.
Celebrity endorsements and influencer campaigns are key drivers of brand affinity. Self-indulgence comes out even bigger than a display of logo.
Unlike the West, Indians are comfortable with crowds. They prefer to step out and shop in-store as compared to online shopping.
The e-commerce surge is real. Don’t ignore it. Limited physical availability is driving small town consumers towards virtual and digital shopping.
Most consumers are unaware of NFTs. Overall awareness of NFT is marginal and ownership is negligible. NFT launches by a few Indian designers and celebrities did not take off as anticipated mainly due lack of any strategy and direction.
Resale and rent a luxury is beginning to see an increasing acceptance in first-time luxury consumers and is helping to expand the market.
The big fat Indian wedding, festivals, and gifts for such occasions remain to be large consumption opportunities. The pandemic has changed the wedding celebration into a much smaller event with limited guests but high-value expenditure on the venue, food, liquor, and of course gifts. It is not uncommon to see expensive cars, dresses, watches, etc being gifted away.
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