As is evident from a luxury shopping festival currently underway at the DLF Emporio Mall in New Delhi, the luxury goods sector is facing a definite chill this festive season. However, some brands continue to do well. In recent years, the luxury sector has been at the receiving end of various policy changes but it hopes to register strong sales this year. As Dinaz Madhukar, Executive Vice President of DLF’s luxury retail and hospitality vertical reveals, some of his brands are doing exceedingly well others are seeing tepid sales. The brand hopes to get a clearer picture of the situation in the next couple of weeks.
Gayatri Ruia, Director of Phoneix Mills that runs Palladium, also expects to grow 5-6 per cent this year as consumers are still spending on luxury goods. As Statista estimates, the Indian luxury goods segment is expected to grow by a 6.6 per cent CAGR growth during 2019-23. Market research firm Euromonitor forecasts the Indian luxury goods segment will grow at 18.1 per cent during 2019-23. It counts luxury eyewear, jewellery, leather goods, time pieces, writing instruments and consumer electronics for its estimates.
Though India is emerging as a major luxury market due to the massive expansion of Indian economy in the post-liberalisation decades, the country is yet to live up to its potential compared to China.
Slowdown in some luxury segments
Luxury segments such as watches and air charters are witnessing a perceptible slowdown. As the Federation of the Swiss Watch Industry, a leading trade association reveals, the export of Swiss watches to India between January and August this year declined to 96.3 million Swiss Franc, or CHF (approximately Rs 685 crore), from 98.7 million CHF during the same period last year.
Air charters too are witnessing a slump as the 18 per cent GST levied on them is preventing corporate clients from chartering jets for travel. Also, the government made PAN card mandatory for all purchases above Rs 2 lakh. This alongwith the rise of online channels makes it difficult to arrive at an accurate picture of luxury consumption in the country.
Brands witnessing strong growth
Recent reports suggest, some of luxury brands have demonstrated strong growth. For example, Reliance Brands, reported an operating profit of Rs 378 crore in FY19, up from Rs 336 crore the previous fiscal. Similarly, Aditya Birla Fashion & Retail’s retail chain’s The Collective plans to expand through two more stores in the next 8-9 months in Pune, and one more store in Delhi. The company witnessed double-digit like-to-like growth this year. It has also expanded its network by adding brands like Ralph Lauren and Ted Baker to its kitty this year. As ‘Global Powers of Luxury Goods 2019’ report by Deloitte had said, these companies are betting on the ‘high earners, not rich yet’ (HENRY) consumers that have a significant discretionary income and a strong chance of being wealthy in the future.