Indian Luxury Goods Buyers Set to Treble by 2010
Essay title: Indian Luxury Goods Buyers Set to Treble by 2010
India has more consumers for luxury goods than the adult population of several countries.
The Knowledge Company, an initiative of KSA Technopak, has produced India Luxury Trends 2006, a study on the sector that has over one million consumers in the segment, a number that is expected to treble by 2010.
This report aims to demystify Indias highly sophisticated, intelligent, and complex luxury consumer.
According to the report, the immediate priorities for many consumers for luxury goods fall into the categories of housing, travel, education, higher-end automobiles, entertainment electronics, and other home lifestyle improvement products.
However, the report estimates that within 2-3 years the market for luxury goods will boom in the categories of mens clothing, womens jewellery, womens accessories – including handbags and footwear – watches, and gourmet food and wines.
Announcing the release of the report, The Knowledge Company Chairman, Mr Arvind Singhal, said: “India Luxury Trends 2006 is the first of a series of such reports from us. We expect luxury marketers in other countries to find this report extremely useful when looking to enter the Indian market.
“The Knowledge Company will also prepare reports on market insights, such as Consumer Outlook 2006 and Market Tracks, which will study resources in markets like China, West Asia, and Russia, to name a few.”
India Luxury Trends 2006 divides consumers for luxury goods into four categories:
Luxuriented: Source of affluence is largely traditional and inherited wealth. Most importantly, they have high levels of exposure and awareness to world-class living.
New Rich: Adequate spending power. Acquiring orientation to luxury.
Getting There: Acquiring spending power. Spend mainly on high-end white goods, education of children, better housing, and larger automobiles.
Mid Affluents: Acquiring orientation to luxury, but unlikely to indulge beyond a limit.
The single most important reason for luxury retail not taking off in India is the lack of luxury retail environments. It is important to see how this segment will evolve in the future considering that existing retail formats in India are in 5-star hotels or as stand-alone stores.
The marketing of luxury brands
“Luxury brands are brands whose ratio of functional utility to price is low while that of intangible utility to price is high.”
THE market for luxury brands in our country has expanded in recent times. With income levels going up, customers prepared to buy such brands are growing in numbers. According to an NCAER Household Income Survey, in 2001-02, there were 20,000 families in India with annual incomes of more than Rs 1 crore. By 2005, that number is expected to increase to 53,000. By 2010, India will have some 1,40,000 crorepatis. Retail management company KSA Technopak estimates the market for luxury and high-end clothing in India at Rs 1,000 crore and for accessories at another Rs 1,000 crore.
In the past, brands like Liz Claiborne and Pierre Cardin tested Indian waters but made a hasty retreat following poor customer response. This led to a general perception that India is still not ready for luxury brands. But now that impression is changing. Many leading global luxury brand marketers have started taking our market seriously.
Luxury, derived from the Latin word luxus, means indulgence of the senses, regardless of cost. Luxury brands are brands whose ratio of functional utility to price is low while that of intangible utility to price is high. Such brands share characteristics like consistent premium quality, a heritage of craftsmanship, a recognisable style or design, a limited production run of any item to ensure exclusivity, an element of uniqueness and an ability to keep coming up with new designs when the category is fashion-intensive.
Luxury goods marketing is a different ball game as the type of customers involved fall in a different class altogether. These customers are influenced more by glamour and style and want to stand out in a crowd. They do not bat an eyelid whey they buy a Vuitton bag costing Rs 50,000 or a Mont Blanc diamond-encrusted pen for Rs 50 lakh, Ermenegildo Zegnas top-of the-line, custom-tailored suit costing Rs 6 lakh or a mid-range Louis Vuitton briefcase priced Rs 1.27 lakh.