India’s wealthy are no different from those around the world — they eat, sleep and breathe luxury By Smita TripathiHREYA GULATI'S definition of nice” has changed over the past couple of years. A couple of years ago, she bought silver items when she wanted to indulge herselfand her family. But recently, this 35-year-old senior manager with a leading multinational consultancy in New Delhi spent her weekend shopping at DLF Emporio, the eapital’s Meoca for luxury shoppers. Her purchases included a Michael Kors bag for herself, another one for her sister, Louis, Vuitton laptop bag for her husband, and a DENY iPad ease for her niece. “This Diwali, vant to give something nice to everyone, including myself” she says with a laugh. For Gulati, buying ‘ice’ things now means buying luxury brands. “A luxury watch, bag, shoes and scarf are almost a must-have now. she says, adding that she has her heartset on an Hermés scarf, Giulatiis part ofa growing breed of Indian consumers who have made Tuxury brands a part of ther lifestyle. While big-ticket purchases such as a watch are bought on special occasions Iike birthdays, anniversaries or promotions, smaller items such as wallets, sunglasses, fash- {on jewellery and bags are almost an impulse purchase Take the ease cf Rashmi Khanna, 253-year-old homemaker who bought herself beautiful tea set from Villeroy & Boch. On her way out of the mall, she saw a wallet in the Fendi store. Within minutes, she had walked in, paid Rs 29,000 and walked out with the wallet “The awareness and desire for usury brands are growing,” says Rajat Wabi, partner andBillionaire Watch No.of Billionaires _ Seema TT China 190 UnitedKingdom [E130 Germany M23 Russic na Indio M00 Total billionaire wealth ($ billion) 440 ana 395 365 @e6i a 2 BE = g - ffs 6 2 = ~ I 3 Source: Wealth XondUBS Billoncire Census 2014 head, Consumer Markets, KPMG India, “The luxury market, hough small, will continue to growin the coun~ tay thanks to increasing salaries, higher valuation for ‘companies and inereased disposable incomes,” he adds, ‘The Indian luxury goods and services market was esti- mated at $8.5 billion in 2013, and is growing at 18 per cent per year Itis expected to eross $14 billion by the end (0f 2016, aceording to a KPMG-Assocham report ode: tnktsngharAudDetiSouth On The Growth Curve What's more, India is the fastest growing emerging mar- ket for luxury goods, according to a report from Euro- monitor International. India’s lueury market will grow 86 percent in constant value terms between 2013 and 2018. Over the same period, usury markets in China, Malaysia and Indonesia are expected to grow 74, 62 and 59 per cent, respectively. India’s uwury goods market has been growing by more than $255 million a year in absolute terms, considerably stronger than Singapore and Australia, says the report. “Luxury brands are also realising that India is impor- tant. For instance, earlier they used toonly do up their special windows during Christmas and New years, but now, they are doing it for Diwali’ says Dinaz Madhukar, senior vice-president, DLF Emporio and Promenade. Allthisis on the back of a burgeoning urban middle ‘lass and an increase in the pool of high net worth indi- viduals (HNIs). The number of ultra high net worth households (those with a net worth of above Rs 25 erore) has inereased from 1,17,000 in 2018-14 to 1,87,100 in ‘2014-15 and is projected to grow to 348,000 in 2019-20, according, to the'Top of the Pyramid 2015 report by Kotak Wealth Management And ifthat’snot enough, India ranks sixth globally in terms of billionaires, according to the Wealth-X and UBS Billionaire Census 2014, Dream Wheels Zoom Ahead As the number of afluent households inereases, so does consumption of lasury. Lanxury automakers, for one, are ul set to celebrate the mushrooming HINT population. Lusury car sales are likely to triple from 23,000 a year to ‘over 100,000 by 2020, according to a report by credit agency, ICRA. ‘The report says it finds "a strong correla tion between incremental affluent households and luxHow HNIs Spend Vintage spirits Luxury Art? 6% wotches Paintings Philanthropy 5% 4% Events Jewellery 8% 18% Apparel 18% Electronic ‘gadgets Homedécor Holiday Tex 12% 14% Source: Top ofthe Pyramid 2015, Kotak Wealth Management car sales?’ and as India generates more aflluent house- holds, hnsury cars sales will also climb. Growth In Non-Metros ‘The gap between India and Bharatis fast reducing, at least in terms of the number of rich households and their consumption patterns. Nearly 44 per cent of India’s multi- millionaires live outside the metro cities says the Top of the Pyramid report. Realising the potential of tier-2,tier-3 and tier~+cities and towns, hnsury brands are making their presence felt in these areas with quite a bil ofsuc~ cess. ‘To popularise their brands, they are u India’s luxury goods market has been growing by more than $255 milliona year ways such as trunkshows and exhibitions, to reach their customer base through local partners, exhibitors and brand-connect programmes Luxury travel isalso booming in tier-2 cities with small towns contributing nearly 25-30 per cent of a renowned travel company’s luxury customer base, as per the report. More Retail Space One of the biggest complaints that lnsmry brands have always had is the lack of suitable infrastructure in India Swelling Ranks Fy2010-1 [CET as FY20n-12 LAUT 65 FY2012-13 [TOC TOR so FY2013-14 STAC a 104 FY2014-15(e) 137,100 128} WENo.ofHNHs* li Combined Networth (Rstrillion) “Anultrahigh networthhouseholdis detinedasonewitha minimum netwerthof R25 craremapped over 10 years ‘Source:Topof the Pyramid 2015, Kotak Wealth Management Currently there are just four lusury malls in the country DLF Emporio in New Delhi, Pelladium in Mumbai, UB City in Bangalore and Quest in Kolkata. High streets in Indian cities are not developed and most brands have opened outlets in five-star hotels. However, this dents their visibility and affects their sales take-off: But there is, good news for luxury brands as retail space for hixury brandsis set to double in the next three to four years, according to a report by property consultant CBRE. DLFis building two new luxury malls, onein Delhi and ‘one in Gurgaon, “The Chanakyapuri mall (in Delhi) will be ready soon. By this time next year, you could be shop- ping there,” says Madhukar adding that several brands including two luxury departmental stores have shown interest in taking up space there. The Gurgaon mall will take longer, Challenges Ahead ‘Though things are going well for lusary brands, they still face a number of hur- dies in India. “High custom duties on imported goods, a ‘booming counterfeit market and the lack of well ‘rained staff are primary concerns’ says Wahi. He adds, that as much as 5 per cent of the Indian luxury market isof fake goods. Hurdles notwithstanding, the Indian luxury marketis on an upward curve and will continue to grow as long people like Gulati are happy shopping- Monitatripnhi@gmailcom sy @emitabre Formareon kusnry, gntowancbusinesswortdin