15 May 2023, Mumbai
Western luxury brands are not exactly strangers to India as they have inspired luxury concepts and designs and many Indian suppliers have been catering to Western luxury houses for years. However, it wasn’t really considered a hot ticket in the market.
Well, all that’s changed as the nation emerges as the fifth largest global economy, and the domestic appetite for luxury is fuelled by a growing number of millionaires and unicorn entrepreneurs who can’t seem to have enough touches of luxury in their lives.
As per Credit Suisse Global Wealth Report 2022, the number of millionaires in India is expected to double from 796,000 in 2021 to 1.6 million in 2026. Euromonitor International states, India’s luxury goods market will grow by 4.8 percent over the next five years and is expected to reach an estimated $7.5 billion.
Western luxury brands have now included this dynamic and thriving market as a “must-have” destination. In 2002, Louis Vuitton was the first international premium luxury brand to arrive, followed by Dior, Hermes, Burberry, and Chanel.
Entry of global luxe conglomerates
The iconic Paris department store, Galeries Lafayette in India’s financial capital, Mumbai is the mark of growing demand for all things luxury in India. The store has taken over and refurbished two-hundred-year-old buildings in the Swish Fort area.
With a portfolio of over 200 luxury brands in a space that spans 90,000 sq. ft, Galeries Lafayette will open its doors in Mumbai in 2024 with a second store in Delhi spread over 65,000 sq. ft in 2025.
The grande dame of Boulevard Haussmann has tied up with Aditya Birla Fashion and Retail (ABFRL) in a strategic partnership that truly heralds that India has indeed arrived in the circles of luxury.
Nicolas Houzé, CEO, Galeries Lafayette and BHV Marais is excited. He says the Indian entry in 2024 is the store’s strategic plan to have 20 outlets outside France and for this reason, it is focused on the Gulf region, China, and other parts of Asia.
The Galeries Lafayette tie-up with ABFRL reinforces the entry of such Indian conglomerates unto the echelons of luxury brands. Reliance Brands (RBL) is India’s largest player in the luxury market and has partnerships with 60 brands, including Tiffany, Burberry and Giorgio Armani.
Spend on luxury to grow
Ernst & Young recently published a report that said India’s GDP will reach $26 trillion and its per capita income will touch $15000 by 2047, placing it among the top developed economies.
Over the next decade, India will be the fastest-growing economy owing to its strong domestic demand, physical and digital infrastructure, and global competitiveness.
As per a Bain and Company report, India’s luxury market is expected to grow 3.5 times the current size and reach the $200 billion mark by 2030, propelled by a rising number of UHNWIs (net assets with $30 million or more), growing entrepreneurship, strong middle class, greater penetration of e-commerce and demand from Tier II and III cities.
The number of ultra-rich grew 11 times in the last decade in India, making it third in the billionaire population globally after US and China in 2021, as per Wealth Report 2022 by Knight Frank.
For all the opportunities that India represents for Western luxury brands, this complex market can yield tremendous returns on investments if these brands acquire the deep knowledge of India’s diverse local cultures that end of the day drive perceptions and decisions.
