Luxury Brands Growth in India

Lack of quality luxury space, environment and dearth of high street or super premium malls is a prime reason for restricted presence of luxury brands in India, thus there is a dire need for modernized and dedicated luxury retail areas in protected vicinities such as airports, according to a recent ASSOCHAM-KPMG joint study.

"Setting up stores in high streets affects luxury retailers' profitability due to sky-rocketing rental costs, moreover, high streets are very cluttered, crowded and are unsuitable due to the absence of exclusive ambience that luxury retail demands," according to a study on 'Challenges highlighted by luxury retailers in India,' jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and KPMG.

The Indian luxury market grew at a healthy rate of 30% to reach $8.5 billion in 2013 and is likely to continue growing at a healthy pace of about 20%, and reach $14 billion by 2016 owing to rising number of wealthy people, growing middle class, affluent young consumers and other related factors.

Though, India currently enjoys just one-two per cent share in the global luxury market but it is the fifth most attractive market for international retailers. Fragmented and diversified consumer base in India is another significant challenge being faced by luxury retailers in India as high net worth individual ( HNI) consumers are not easy to reach, noted the ASSOCHAM-KPMG study.

Luxury brands need to strategically design their growth plans to tap demand across three categories of HNIs, namely - the inheritors (traditionally wealthy) who are habitual spenders; the professional elite who are discerning spenders; a large segment of business giants (entrepreneurs, owners of small and medium enterprises) who have the money but lack appreciation for fine luxury goods because of no prior exposure to such products, it added. "There is a need for luxury brands to focus on expansion in the type and nature of products being offered and...