Is India Splurging on Luxury? Decoding Sectors on the Rise

Priyal Singh, Mumbai Uncensored:

From Sabyasachi Mukherjee’s debut in New York to Dior’s iconic Mumbai showcase in March 2023, India’s luxury scene is making waves globally. This pivotal year marks a “coming-of-age” moment for cementing India’s presence in the luxury market. A surge in local interest and positioning India as a magnet for Western brands, the luxury sector has made a steady mark in the Indian market. The luxury goods market in India is forecasted to reach a revenue of US$7.86 billion in 2024, according to Statista. Online sales are anticipated to contribute 2.6% to the total revenue of the luxury goods market by 2024. With a young, affluent, and flourishing demographic, India’s luxury market is attracting international players through diverse entry strategies.

It is critical to highlight India’s rapid growth trajectory, establishing it as Asia’s fastest-growing premium market. This developing sector is driven by a number of causes, including rising disposable incomes among the growing middle class, increased urbanisation, and shifting consumer preferences towards premium and luxury goods and services. Luxury now isn’t reserved for special occasions, it’s slowly but surely integrating into the way of life

Despite being a relatively small market, India’s high growth rate of 33% as of 2022 places it as the fastest-growing Asian market and the world’s second quickest. Moreover, with a market size of $7 billion, India is Asia’s third-largest luxury market, exceeding Thailand, Vietnam, and even South Korea.

The aspirational character of luxury consumption in India goes beyond material things; it represents social status, distinction, and sophistication. As a result, consumers are more willing to invest in high-quality, premium items that reflect their discerning taste and lifestyle aspirations, fuelling the expansion of the luxury industry.

The luxury market is divided into several sectors, each of which is expanding due to shifting consumer preferences, developing markets, and changing lifestyles.

• Despite economic swings, luxury fashion is resilient, propelled by brand loyalty, new designs, and aspirational advertising.
• The demand for luxury accessories is witnessing upward trends due to unique designs and craftsmanship helping drive the growth of this sector.
• Luxury automotive sales continue to grow, fuelled by expanding markets, customisation possibilities, and environmentally friendly advancements.
• Rising disposable incomes and increased tourism are driving global expansion in luxury hotels, thus giving a boost to the luxury hospitality sector post the pandemic.
• Affluent patrons crave comfort, privacy, and a name that speaks of a long-standing legacy, which drives demand for luxury living spaces.
• Discerning consumers prioritise unique experiences, personalised service, and authenticity, which is propelling growth in the luxurious brand experiences sector.

The growth of e-commerce platforms and social media has democratised access to luxury products, allowing firms to reach a larger audience and interact with customers directly. Millennials and Gen-Z consumers seek personalised products and experiences that represent their style and tastes. The emergence of social media platforms such as Instagram, TikTok, and YouTube has a tremendous impact on consumer attitudes and purchasing decisions, particularly among young people. Influencers and Content Creators have emerged as powerful advocates for luxury goods, displaying products in aspirational, lifestyle situations and increasing interaction with their audiences.

Tier 2 cities are rapidly urbanising as people move from rural areas in quest of better prospects. Urbanisation brings a shift in lifestyle and consumption patterns, including an increased demand for stylish clothing and accessories. Fashion businesses understand the value of getting into these growing urban consumers. Consumers in these locations are growing more fashion-conscious and adventurous, looking for unique and aspirational products from both domestic and international companies.

Smita Shah, Co-Founder, WOOT Luxe shared her insights on this market trend quoting, “India has all of the characteristics for a successful luxury market—heritage, artistry, savoir-faire of the craftsmanship, as well as the right people to buy. Thus, making it a powerful and rising market. From a Western perspective, it is an exciting market to promote cooperation and collaboration, the Sabyasachi x Bergdorf Goodman is a latest example. It’s also intriguing to see how Indian consumers respond to our home labels that are now luxury brands. These are positive indicators for the future of the luxury sector in India.”