The past 10 years of economic growth has given rise to a new wealthy class in India —‘closet consumers’— who are a major force behind the country’s luxury market growth, according to a report.
Published by the Confederation of Indian Industry and marketing firm IMRB International, the report, titled ‘The Changing Face of Luxury in India’, focuses on identifying and understanding India’s closet consumers. These are new generation entrepreneurs, senior corporate executives, farmers who have sold their land to developers and the BPO generation that lives with parents and has money to splurge.
Despite their newfound riches, the report indicates that there is an inherent middle class mindset among this class, even as they can no longer be classified as middle class based on their income.
“The inner conflict between a middle class mindset and the globally rich income level, between conspicuous consumption and a level of luxury is what we call the ‘closet consumer’,” says the report.
It also gives an overview of the luxury goods market, which has witnessed a growth of 15 per cent over the past three years and is estimated to have reached $7.58 billion (around Rs 48,000 crore today) in 2012.
Luxury products have grown the fastest at 22 per cent compared with luxury services at 15 per cent and luxury assets at 9.4 per cent – primarily contributed by slow growth in luxury real estate.
It is luxury categories such as apparel and accessories, perfumes, fine dining and automotive that have contributed to this growth, the report says, adding the Indian luxury market still accounts for almost a negligible 1–2 per cent of the global luxury market.
Industry experts believe multiple factors are contributing to the slow growth – low priority status assigned to luxury goods by the Government, lack of adequate range of luxury goods and service levels that are below par. They also believe Indian culture dissuades customers from flaunting their wealth. Yet they are optimistic about the above factors changing in the coming years and predict that the luxury market will boom in India over the next few years.
Closet consumers are cost-conscious and seek “value” even when buying luxury products. And their definitions, symbols of luxury are often in variance with conventional ones, the report adds.