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LUXURY SPACE IN INDIA

LUXURY is no stranger to India. The erstwhile maharajas and princes led a life of
opulent splendour. The only way to be a part of the elite was to be born into it.
The lifestyle was also associated with hunting, polo and other games of the rich.
New money could never get into this circuit. The aspiration was always there. But
the princes operated in a different league altogether. The era of the self-made
millionaire was yet to arrive. So small possessions, or copied fashion designs with
a few gewgaws thrown in, became the height of luxury. An achiever of the 1970s
could only get by with a good foam mattress — no Omega, Rolex or BMWs.

This trend saw a shift, a gradual one, in the 1980s. Luxury began creeping into
upper class homes through small things and symbols. The colour TV came in, the
humble pen was elevated to a Parker, successful self-made people began to be
featured in magazines. The concept of luxury as a reward for achievement gained
acceptance, though royalty and the aristocracy continued to remain the
benchmark of the elite.

The real change came in the 1990s when more people started making more
money. There was a sudden explosion of colour and things and objet D'arts
began to appear. In order to gain access to luxury and class one could just go out
and charge it.

What contributed to this shift? India opened up to the world. The liberalization
process brought more than high economic growth rates. It showed the people
what was possible. In the process, it has altered mindsets.

The IT revolution, and the consequent demand for Indian brainpower, has created
a whole new breed of wealthy global Indians. At the other end, an increasingly
open economy has created new business opportunities, which has resulted in a
slew of new, extremely successful first generation businessmen. They are
millionaires. They spend. They sport Vertu mobiles. But they may not even be
comfortable with English. All of a sudden, wealth is no longer the preserve of the
elite.

India has been identified as an important source of this growth and is likely to
grow at an annual rate of 28% in the next three years. The accelerating pace of
economic and social change is transforming the Indian luxury landscape. The so-
called luxurification of society is a phenomenon that can be attributed to the
following dynamics.

THE BOOMING
ECONOMY
According to the McKinsey Global Institute, consumers earning more than Rs
1,000,000 a year will total 24 million by 2025, which will be larger than China's
comparable segment.
It is, however, the emergence of mass affluence combined with aspirational
mindsets and lifestyles that are helping to stimulate consumer demand. The
rapid growth of the Indian middle class means that a larger number of consumers
are able to afford luxury goods than ever before.

LUXURY IS NOW
MAINSTREAM
The media-cultural phenomenon is, however, not restricted to the pages of glossy
magazines. Mainstream media is taking a greater interest in luxury brands,
fashion trends and consumer lifestyles. Weekend supplements in national
newspapers devote pages to fashion features and product reviews.

Increased product knowledge and brand awareness are translating into greater
consumer confidence an important catalyst for luxury consumption in a fast-
emerging market. Luxury brands are now following the Indian consumer,
expanding their sales operations not only in Delhi and Mumbai, but to smaller
cities. Luxury boutiques which were confined to the secure but often inaccessible
surroundings of exclusive hotels have been thrown open.

BRAND
S
Luxury brands are brands whose ratio of functional utility to price is low while
that of intangible utility to price is high." Luxury brands have begun making
inroads into India over the past few years

Indian markets from low-involvement to high-involvement product categories


have been experiencing sweeping changes in the past decade. Changing
lifestyles, fragmented market segments and consumer preferences, and intense
competition from the brands of multinational corporations (MNCs) have made
branding strategies a prerequisite for marketing success.

INCREASING NUMBERS

◆ 1.6 million households; this number is likely to cross 3 million by 2010

◆ Each household earns around Rs 45 lakh (about $100,000) per year

◆ The spend is about Rs 4 Lacs ($9,000) per year on luxury/very premium goods
and services

◆ The number of households is growing at 14 per cent per year

Source: India Luxury Trends 2006, Technopak

TOP DRAWS

The five top purchases of the affluent consumer

◆ Jewellery
◆ Clothing

◆ Digital accessories

◆ Timewear

◆ Cosmetics and skincare

According to industry experts, India spends $8,000 to $9,000 on luxury brands as


compared to $29,000 in the US.

The dazzling array of luxury goods available today is clearly catering to the
growing number of Indians who are enjoying unprecedented level of affluence.
Statistics show that in 2001-2002 there were 20,000 families in India with annual
income of more than Rs 1 crore .By 2005 ,that number has increased to 53,000
families and by 2010 ,India will have an astounding 1,40,000 millionaires.

MARKET
REGULATION
Although high import duties on luxury goods continue to prevail, India's policy of
liberalisation and deregulation has improved its image as an attractive
destination for foreign investment. The luxury market has traditionally been
segmented according to two very separate and distinct customer groups namely
the affluents' and the non-affluents'. The transition towards a consumer society
has changed the profile of the luxury consumer.

MAXIMIZING THE INDIAN LUXURY


RUPEE

There are seven guidelines set out to guide high-end brands to capture India's
growing fascination with luxury consumption.

Respect: Connect with luxury consumers as a selective target. Luxury brands


need to respect this point of difference in all interactions between the brand and
the consumer.

Segment: Acknowledge luxury consumer subsets. Luxury brands need to


identify, differentiate and prioritise the most profitable subsets for targeted
strategies.

Insight: Identify what is important to the defined target. Motivations could be


based on personal and non-personal factors.

Connect: Brand interactions really matter. For example, respondents cited that
friends and family are an important influence on luxury consumption.
Experience: Establish emotional connectivity. Deep and meaningful
relationships need to be developed in order to win the soul of the luxury
consumer.

Indianness: Embrace and celebrate the Indianness brand. India has a very
powerful and unique identity, and this needs to be leveraged within a luxury
brand context.

Consistency: Adopt a truly holistic approach, to ensure that all brand


interactions, whether advertising or customer service, are consistent with the
brand positioning. Contemporary Indian society is challenging traditional
consumption patterns. The Indian consumer is ready to embrace luxury
consumption.

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