Luxury seems to have found a new address in India, with emerging cities and small towns contributing to nearly half of the country’s Ultra HNH (high-net worth household) segment.

In other words, luxury brands are finding new patrons who have both money as well as taste from small towns.

Big markets This is an evident change since non-metro regions today account for nearly 45 per cent of lucrative growth opportunities for the luxury segment players in India. Luxury consumption is not restricted to the metro cities any more. Region-specific sales figures and increasing demand of consumers clearly reflects the growing desire for luxury goods. International luxury brands are on their toes to cater to this new segment of customers who belong to Tier 2 and Tier 3 cities and contribute to 70 per cent of luxury consumption sales.

 According to a recent Kotak report, 55 per cent of the total revenue is generated from major metro cities such as Mumbai, Delhi, Chennai and Kolkata. The other top locations which contribute to the rising sales figures include Bengaluru, Ahmedabad, Pune, Nagpur, Hyderabad and Ludhiana. They account for 16 per cent of sales  while 7 per cent of the revenue is generated by Tier 2 cities such as Surat, Jaipur, Lucknow, Kanpur, Indore, Vadodara and many other such cities. The remaining regions generate 22 per cent of the total luxury segment sales.

Witnessing the current scenario, Indianisation and localisation are increasingly becoming differentiators of success with new customers in new markets.

Luxury brands no longer deal with just the elite and well travelled urban customer. New segments, today, comprise potential targets for luxury brands. Brands are responding by introducing local, Indian elements to their products— Canali Bandhgala, Hermès Sari, Moët’s Indian version of wine and various other products are being introduced to grab the attention of new customers.

Customisation

Lifestyle brands are signing up with Indian designers and are hiring relationship managers who speak local languages and are tweaking their offerings to suit Indian festivities and occasions. They are increasingly targeting the big fat Indian weddings with customised versions of products to cater to customer needs.

Education in luxury Indian HNI customers are highly fragmented and divergent in their mindsets – from the traditionally wealthy, who are habitual spenders, to entrepreneurs or owners of SMEs who are new entrants and more prudent. This not only necessitates brands expanding their range of products but also calls for a more “inclusive” customer service. With the evolvement of the local market, several luxury brands have “Indianised” their pitch to suit shoppers. This includes focusing on educating shoppers new to luxury goods and more comfortable in regional languages, and making them feel more comfortable and connected. The luxury players are likely to remain convinced about India’s demand story, as growth in large markets continue to get saturated.

With the growth of luxury consumption, brands are bound to increase their experiential initiatives in India. Customisation to match the taste of the customer will be the next big trend. It is only a matter of time, and soon versions of Fifth Avenue will be sprouting up across the country, for India demands more. And it is only fair to say, luxury is here to stay. 

Mishti Bose is Group CEO, Quintessentially Lifestyle

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