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Jan, 16 2010

Future of luxury retail

Though retail of luxury brands in India has seen a very interesting journey, it is still an enigma to the western world. Luxury is not new to our country. India was the fabled ‘Golden Bird’ in pre-British times, and post-British saw pockets of richness in

Though retail of luxury brands in India has seen a very interesting journey, it is still an enigma to the western world. Luxury is not new to our country. India was the fabled ‘Golden Bird’ in pre-British times, and post-British saw pockets of richness in erstwhile royal families, while newly developed industrial classes used European luxury brands. Even as brands such as Cartier and Louis Vuitton were patronised by the Patiala royal family, many such families in Rajasthan had their own private collection of luxury cars. The last couple of years have seen an abundance of luxury brands in the Indian market - from stand alone stores in five star hotels to luxury malls, such as DLF Emporio and UB city. These labels which were previously seen only in international fashion magazines and high streets abroad, are now household names in India. As a country having one of the highest levels of disposable incomes, the well-travelled Indian luxury consumer was wooed by all.

Though the global meltdown reduced consumer spending patterns and spirits, India was not really affected by the crash of the global giants. However, the recession took a grip on our minds more than on our pockets. Expectedly, the footfalls in luxury malls dropped and the global gloom began to take a grip of this nascent industry in India. This scenario, however, did not last and India was the first economy that showed signs of recovery. Come September and all signs of gloom had lifted. The wedding season was back in its full spending fury, ending the psychological recession.

The Indian luxury market with a GDP of 7.9 per cent is pushing up the Indian economy. The market for luxury products in India is growing at a rate of 25 per cent annually.

The Indian luxury consumer is of two kinds:

  • The old business classes who have been age-old consumers of luxury. These consumers are well travelled, brand aware and shops for his favourite brands overseas. Hence, to make him shop with equal ease for the same brands closer home it is imperative to keep prices at par to whatever degree possible, within 10-20 per cent of the European prices. The merchandise has to be what the latest season offers for the brand globally and of good quality.
  • The newer aspirational buyers from the salaried classes. These consumers have to be seeded with the brand values that create desire and aspiration. The media in India is playing its part very well here.

Given the optimistic consumer spending patterns, the future of luxury seems secure if easing of tax restrictions continue to help keep prices at par with those of products available in the western world; realistic maintenance of real estate costs; investment in the correct luxury infrastructure and development of manpower.

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