In May this year, Louis Vuitton created a big buzz when it roped in actor Deepika Padukone as its first ever Indian “House Ambassador”. The fact that the luxury fashion brand decided to feature Padukone in its Dauphine handbag’s Spring Summer campaign along with actors Emma Stone and Zhou Dongyu was no idle whim. While luxury brands had been catering to a small elite consumer cohort in India for decades, it is only now that they are scenting big growth in the country.

A host of factors ranging from newly affluent consumers, desire to consume better, and increased choices in the top end segment now available right here in India, is driving the luxury sector onwards. And this has led to a lot of action in the space.

Just last month, Aditya Birla Fashion and Retail Limited (ABFRL), inked a strategic partnership with Galeries Lafayette, and announced plans to open luxury department stores and a dedicated e-commerce platform in India. The flagship stores in Mumbai and Delhi will bring more than 200 luxury and designer brands under one roof, it said.

Finer things in life

While announcing the plans, Ashish Dikshit, MD, ABFRL, called it the “coming-of-age” moment for the Indian luxury sector. “India is now home to a generation of young and affluent consumers with global exposure, who are willing to spend on the finer things in life. This is visible in the boom and dynamism of the luxury market. The partnership with Galeries Lafayette is a ringing endorsement of India’s significance as a global luxury market and a future engine of growth for luxury brands,” he pointed out.

“We are seeing a never before buoyancy and assurance in the Indian consumer,” concurs Shweta Jain, Chief Business Development Officer, Luxury, Reserve & Craft - India & South Asia at Diageo. The spirits major has been on a premiumisation drive and the strategy seems to be paying off as the luxury labels in its portfolio have registered a deep 30 per cent annual growth. “The segment on top is certainly growing faster than the one below,” says Jain, describing how so many consumers are looking at Johnnie Walker Blue Label despite the price increases. “More consumers are including our top end portfolio in their celebrations,” she said. 

This has spurred Diageo to do some innovative marketing. “As we get into the celebratory quarter with weddings, you will start spotting Gold Label experiential bars at these events,” she says. 

Diageo is also expanding its top end portfolio – there is a Johnnie Walker Blonde, a bright sweeter whisky specially made for mixed drinks. Some time back it launched the disruptive Godawan single malt, which captures the spirit of the Rajasthan desert and caters to Indian pride. Made in India luxury is another driver for the segment.

And the timing could not be more right. As Harminder Sahni, MD, Wazir Advisors, says, “In the post-Covid world, China which has been a key luxury market has slowed down and markets in Europe have been badly hit. So luxury brands are looking at India with a sharper focus as a key market as the new age affluence is fuelling the growth of this sector. There are expectations that India is close to reaching a tipping point in the luxury sector.”

According to Euromonitor, India’s luxury goods market is expected to grow by 42 per cent to $8.5 billion in 2022, up from $6 bn in 2021. “Over the next 3-5 years, luxury brands are expected to ramp up their bases by 3-4 times,” says Sahni.

Take for instance, luxury watch retailer Ethos Ltd, which has now accelerated its growth plans to add 40 new stores in the next 24 months, from the originally planned 13 stores. In an investor call last month, Yashovardhan Saboo, Chairman and MD, Ethos Ltd, described how the luxury watch market in India was gaining traction, with the rising discretionary income of HNIs and growing base of these consumers. “Watch buyers now know that luxury watches in India are competitively priced in comparison to other global retail destinations. Despite higher import duty and GST, India’s prices are similar or even better than other global shopping locations,” he pointed out.

The company is in fact looking beyond luxury watches with agreements for distributing Messika Jewellery, and luxury luggage brand, Rimowa, in India.

Expanding portfolio

Others are expanding their portfolios too. Says Gitanjali Saxena, Business Head, Tata CLiQ Luxury, which has seen exceptional growth this year, “This festive season, we expanded our current portfolio with the launch of new brands and collections across categories such as fashion, accessories, Indian luxury, and designer wear. We recently introduced a home fitness category as well.”

Saxena says Tata CLiQ luxury had a successful festive season, with a surge in the average order value for categories such as Indian designer wear, home, handbags, beauty kits, and gifting, and says the platform has been thoughtfully curating offerings based on consumers growing appreciation of finer things in life.

“Apart from metro and Tier I cities, our strategy also focused on customer acquisition in Tier 2 and Tier 3 markets, where we have noticed an increase in demand. The non-metro markets contribute to almost 40 per cent of the platform’s revenue.”

Saxena says e-commerce has helped the luxury sector thrive by increasing its reach and accessibility. “Brands have been able to reach out to HNIs and luxury aspirants in Tier 2-4 cities, in addition to metros via their online presence, thus increasing their growth and acquiring new customers,” she says.

Growing corporate interest

On one hand as global luxury brands look to grab a stronger foothold in the country, many Indian designers led luxury fashion brands are charting their next phase of expansion backed by corporate funding.

“So far Indian designer brands were largely funding their business themselves but there has been a wave of corporatisation where they have now got external funding from big conglomerates. I think in the next phase, we will see the rise of younger designer-led brands and investments flowing in some of the new-age luxury brands which are expected to scale up much quicker,” sums up Sahni.

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