India has both a fast-growing elite class and an aspirational class to be the next luxury giant.
Gaurav Bhatia
According to McKinsey, as compared to China with 1.6 million households who can afford the luxury, India is a promising nation with 1.5 million households. It makes up 0.4 percent of global luxury goods sales, therefore, the luxury market is growing at 25 percent a year in India, states a report of Bain & Co. study. Gaurav Bhatia, Sotheby’s Ex Managing Director, explains how India offers a myriad of opportunities for luxury markets to shift their focus and strengthen their roots here.
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A report by India Retailing states that the size of the luxury market in India is estimated to surpass $200 billion by 2030. With that in line, India becomes a global luxury hotspot with international brands increasingly expanding their footprint in the country. Gaurav Bhatia explains, “In a time when supply chain chaos has created uncertainty and China is undergoing a historic transformation of capitalist smackdown, luxury brands are considering India as a promising country to expand their market. India has already been an active giant in producing for top luxury brands worldwide from Hermes to Louis Vuitton and many others across categories from Fashion to Home and Lifestyle.”
It is also evident that the luxury goods industry has also benefited from the projected rise of the country’s super-wealthy population. India is already famous for the rapid pace of producing high net worth (HNWI) and ultra-high net worth (UHNWI) individuals.
However, the luxury industry has not taken advantage of India’s potential until recently. But now, it understands the transformation and has positioned India as a great equaliser to China and reduced its dependency on the Middle Kingdom. “Big luxury companies including Louis Vuitton, Hermes, and Gucci are focusing on strengthening customer relationships in India. This shift has managed to develop and replicate market entry strategy in India after China,” says Gaurav Bhatia, Ex MD of Sotheby’s and present CEO of Maison India who has also worked with LVMH for a decade.
Statistics show that the Indian component of Hermes International marked a hike of 55 per cent in net profit at Rs. 18.7 crore for the fiscal year 2019. Louis Vuitton’s revenue grew by 41 per cent from 2017 to 2019 showing a net profit of approximately 57 per cent. With these numbers into consideration, there’s no doubt in saying that India seems to have luxury consumption behaviour as China.
With reference to a paper published in the Journal of Customer Behaviour, Bhatia quotes, “India has always had wealthy elites such as the maharajas and royalty that consume luxury items throughout its consumption history. Therefore, the culture of richness prevails through centuries in our country. And we are most capable of inheriting luxury.”
Sotheby’s Ex MD Bhatia, also states that Indian shoppers are becoming aware and conscious of quality when buying apparel or luxury items with the transformation in the fashion and luxury industry. He further compares this shift in consumers' choices to be the one noted in China.
With one of the largest populations of millionaires in the country and a strong middle class that chooses luxury as a reward, India is now providing exceptional opportunities for luxury brands. This positive development has made the country a global luxury hotspot. It is undeniable to say that India will outrun the U.S. and China anytime soon as the global luxury market, however, the country’s market is relatively modest, expected to be worth $8.5 billion in 2022.
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