The factors that have fuelled the luxury industry's growth are the rise in disposable income, brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India, said Mr. D S Rawat, Secretary General ASSOCHAM.
The sectors such as five star hotels and fine-dining, electronic gadgets, luxury personal care, and jewellery performed well in the year of 2015 and are expected to grow by 30-35 per cent over the next three years. Big ticket spends such as on luxury cars mainly SUV are likely to continue, growing upwards of 18-20 per cent over the next three years, driven by consumption in smaller towns and cities.
With the luxury market expected to grow at over 25% year on year, Private Equity investments (PE) in the luxury segment are expected to increase and support the enhanced size of the Indian luxury market.
The chamber paper segregated the luxury sector into products: apparel and accessories, pens, home dor, watches, wines & spirits and jewellery, services: spas, concierge service, travel & tourism, fine dining and hotels and assets: yachts, fine art, automobiles.
The high internet penetration across tier-II and tier-III cities along with high disposable income shall lead to approx. 100 mn transactions on the Internet by 2020. As a result, the luxury consumption is going to increase manifold in the country, highlighted the study.
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The size of the High Income group (HIG) consumers continue to enlarge and spend over 40% of their monthly income on some of the world's largest luxury brands whereas the middle income group (MIG) consumers spend 8-10% of income on luxury products , reveals the ASSOCHAM latest survey. Globally too consumer spending is on a rise, expected to reach USD 40 trillion by 2020 with an unprecedented growth of USD 12 trillion in a decade, adds the report.
Luxury jewellery, electronics, SUV cars and fine dining have grown beyond expectations, while apparel, accessories, wines and spirits have continued their strong growth in 2016, according to the ASSOCHAM assessment. Consumption of branded wine is also likely to register over 30% increase in the metro cities.
Some of the significant players across various verticals who performed well in 2015 included - GUCCI, Christian Dior, Louis Vuitton, Ocean Style Yachting, Canali India, L'Oreal Luxe India, LVMH India, Judith Leiber, The Phenix Mills, The SPA Group, Geetanjali Group, The Bauers, Starwood Asia Pacific Hotels & Resorts, Da Milano Leathers, Reliance Brands, Hidesign and others.
The aspiration and disposable income of consumers in India is on the rise, the purchasing power of women has improved, and men are fast emerging as a separate consumer category. As per the estimate, luxury beauty products market has been growing at average 28% over the last three years.
The survey was conducted in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh, Dehradun etc. A little over 250 employee were selected from each city on an average. In 2015, Delhi ranks first in spending most on luxury brands followed by Mumbai (2nd), Ahmedabad (3rd) Pune (4th) and Bangalore (5th).
Around 55 per cent of the survey respondents fall under the age bracket of 20-29 years, followed by 30-39 years (26 per cent), 40-49 years (16 per cent), 50-59 years (2 per cent) and 60-65 years.
Mr. Rawat further said that the slowdown in the economy has not affected the spending patterns of high income group (HIG), with many of them stating that maintaining their lifestyle is an extremely important facet of their social life. Throwing lavish parties such as business success, wedding or launch parties has become a new area of spending, reveals the survey.
According to survey majority of women tend to make purchasing decisions around cosmetics, perfumes, spa treatments, clothes, footwear, bags and jewelry. Men on the other hand mostly decide on purchases related to alcohol, watches and automobiles, mentioned the ASSOCHAM survey.
A majority of survey respondents said they purchase luxury items during overseas trips, with cosmetics, watches, bag, and perfumes etc. Nearly 85% of potential consumers search for luxury brands on the internet at least once a month. There are also increasing signs of changing consumption patterns in major cities.
The demand for luxury goods in metros are booming as incomes continue to rise. The survey also reveals the role of digital media and the extent to which it is being used as a tool to engage high-end consumers. Indian Luxury market is poised to expand five fold in next three years and the number of millionaires expected to multiply three times in another five years.
Many of the major luxury brands are continuing with their current investments, despite the ongoing global economic slowdown, women are an important target market for luxury players, as their purchasing power rises and start to seek a wider range of products, adds the survey.
Over 69% of survey respondents said they prefer to purchase well known luxury brands, whilst 65 percent separately indicated they would pay a premium for well-known, popular luxury brands.
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