Indian luxury goods market to touch USD 14.

72 billion by 2015 08 Oct 2010 The luxury goods market in the country is set to touch a mark of USD 14.72 billion by 2015. According to the Luxury in India: Charming the snakes and scaling the ladders report, which was released at the 'Luxury Goods Forum' organised by Confederation of Indian Industry (CII) on October 7, the growth of India as a luxury goods market and its emerging potential can be gauged by the increasing number of premium luxury brands entering into India. Jyotiraditya Scindia, minister of State for Commerce and Industry, Government of India, remarked, "India has historically been a sourcing area and now its becoming a market for luxury goods. India is already aware of creating luxury with the skilled workforce, but what is needed is consistency, marketing and technology to transform this niche market." Scindia urged the foreign designers to establish manufacturing hubs in India and make it the gateway to other parts of the world. He summed up the five reasons for the huge potential: ready consumer market; high growth in tier I, II and III

cities with disposable incomes; credit and leverage in finance available; brand awareness; and role of government. Armando Branchini, executive director, Altagamma, announced that Italian brands will soon announce investment plans in India. Thomas Varghese, chairman, CII National Committee on Retail and CEO, Aditya Birla Retail, said, "The challenges faced by the market are to segment exactly and understand the psyche of luxury customer in India. This understanding will drive the product and service offerings, formats and business models. On one hand, we have new customers emanating from the middle class backgrounds whose higher disposable incomes may not necessarily translate in to higher spend. We need to induce trials, educate and create awareness about various luxury brands, products, services at suitable price points. On the other hand, we need to ensure that the expectations are well catered to in terms of range and freshness of merchandise. Also infrastructure development, regulatory framework (especially FDI), fiscal incentives and suitable employee skill sets are also challenges." Sanjay Kapoor, chairman, CII Luxury Goods Forum and MD, Genesis Luxury Fashion, said, "The new

aspiring middle class, tier II and III cities with emerging population will lead the growth story forward and they present a huge scope. Luxury good awareness is growing exponentially. The mindset of the discerning customer is changing slowly to suit our lifestyle." Neelesh Hundekari, principal and head, Luxury and Lifestyle Practice, AT Kearney India remarked, "In the matured markets growth has plateued and the Indian middle class with an income of around Rs. 10 lakhs household income per annum, this market is the one which is highly under penetrated, will give the luxury market in India huge fillip. Indian Luxury market is currently estimated to be at 4.76 billion in USD and has a latent demand of USD 3-3.5 billion, which is ready to be tapped. The major component of this market is jewellery. The hindrances are supply chain constraints and initiatives are needed in this side and scattered customer. What is needed is micro-segmentation of the customer. What is also needed is getting the real estate component with local knowledge of real estate and right pricing for the Indian customer to hit it off the right way." John Hooks, deputy chairman, Giorgio Armani Group said, "New vistas of marketing need to be delved, and India needs to remove barriers in trade

to luxury market to become more accessible." According to the report lack of proven real estate model, a highly fragmented consumer base and no central organisation to address regulatory issues are the main problems that luxury retailers still face in India. The report further stated that the critical success factors for a luxury player include attracting the right footfalls, getting the pricing right, providing a world class experience, getting the cost structure right, experimenting with new formats and developing a robust real estate management capability. IndiaRetailing Bureau What's changing, of course, is India's demographic makeup as the nation's booming economy mints a critical mass of newly affluent consumers. Last year, the average Indian salary surged 14% (18% for IT professionals), the highest wage growth in Asia, according to a study by Hewitt Associates, a global human-resources company. There are now about 1.6 million Indian households that spend an average of $9,000 a year on luxury goods, according to The Knowledge Company, a management-consulting firm in New Delhi. "With multi-income families and increasing international exposure through travel and

the Internet, the attitude is changing from the traditional [emphasis on] savings to a spending approach," says Thakran of LVMH. "The expense basket is shifting from necessity to lifestyle products." Younger Indians from wealthier families increasingly match and even eclipse the purchasing power of their European and American counterparts, says Priya Sunder, director of PeakAlpha, a Bangalore-based financial-planning company that advises IT professionals on their investments. "Most of their disposable income goes towards buying luxury products, be it a Chanel lipstick, Fendi belt or Hermes scarf." Foreign brands that got in early have made rapid progress. Upscale watchmaker Tag Heuer, which has averaged 40% growth in India over the last three years, has plans to expand from 80 shops to 120 ; and Jimmy Choo is looking to open 10 shoe stores in India by 2011. The first was launch in New Delhi at the end of 2007, under the terms of a distribution agreement with the New York-based Murjani Group, which also distributes the Tommy Hilfiger brand in India. It helps that more retailing locations are becoming available. Two luxury malls are being planned in Delhi, and hundreds of others are in various stages of construction and planning throughout his country. Chanel's Bertrand says the

company is in talks about distributing its shoes in top retail chains like Shopper's Stop, Lifestyle, and Ebony. Still, many luxury-goods retailers predict that their India business will develop relatively slowly compared with their business in other emerging markets such as China. One major barrier is India's stiff tariffs on high-end imports the tax on imported watches, for example, is 50%. Joseph Wan, Group Chief Executive for Harvey Nichols, the Londonbased retailer, says India's recent economic growth and indications that New Delhi is prepared to liberalize its markets are encouraging, but adds that prime real estate in Indian cities is too expensive and that tariffs are prohibitively steep.

Abstract:

The article discusses the state and scope of luxury retailing in India. Understanding consumer psychology in a diversified market with a huge potential of growth is challenging. Since luxury is still in its introductory stage in India, there is vast scope of research specially in evolving marketing

practices in the related field with special reference to a culturally distinguished consumer group.

Famous fashion Designer Gabrielle Coco Chanel (1883-1971) stated that luxury is a necessity that begins where necessity ends. Similar ideas were acknowledged by the famous economist Veblen (1899), in his book The Theory of the Leisure Class, who explains the concept of conspicuous consumption as the waste of money and/or resources by people to display a higher status than others. Luxury is concept related to status, ego and psychogenic needs; it is not necessary for survival. Luxury goods have always been associated with high quality, craftsmanship, uniqueness, creativity, exclusivity and innovation. Apart from these product attributes, the consumers also get the additional psychological benefits like esteem, prestige and a sense of a high status that reminds them and others that they belong to an exclusive group who can afford these expensive goods.

The overall sales of luxury goods in the year 2011 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian

subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not stay put. They now have money to burn. The competition for their attention is intense, and their consumption patterns-if you have not noticed- are changing life for the rest of us." Patrick Normand, managing director of Cartier (Middle East & South Asia), discusses the potential of Indian luxury market, The growth of India as a luxury products market, and its emerging potential is very obvious now especially as the economy is booming and there is a general positive sentiment towards global brands. According to the latest Asia-Pacific Wealth Report, there were an estimated 1, 23,000 millionaires at the end of 2007 in India, up 22.7 percent from the previous year; making it a huge potential market for the international luxury players. As per Forbes magazine (March, 2008), financial capital of India-Mumbairanked seventh among worlds top 10 cities where largest number of billionaires resides. Still luxury market is at a very nascent stage in India. As

discussed in Luxurion World 2009 in Mumbai, the Indian Luxury Market is estimated to be to be USD 4.35 billion and this forms only 2% of the global share. For an Indian owning a luxury brand would mean accomplishment. According to a study by American Express, Inside the Affluent Space, Indian consumer has a desire to prove that Ive made it. He is an aspirer and for him luxury is a reward, which is a mindset very different from a European consumer for whom luxury is an experience.

India as a retail market is not uniform, especially when it comes to preference for luxury in terms of need fulfillment. Moreover, the market is not as mature as the European market where consumers seek fulfillment through experience. Few players have been able to fulfill the needs of the Indian luxury consumer. Since this segment of market remains untapped, huge potential lies in the same. Therefore, it becomes important to delineate the needs of the Indian consumer to target them better. To be successful in India as a retailer, it is necessary to gauge both, the financial potential as well as the mindset of the Indian luxury consumer. Localization of global luxury brands is essential to tap the huge potential of the diverse market. It requires understanding of luxury product market

characteristics and developing the brands accordingly. This will help in bringing forth the right product offerings to the Indian consumer as well as targeting them better. Moreover, limited accessibility to luxury in India is a barrier to its growth and acceptability. There are several cities in India which have a huge potential for luxury which still remains untapped.

Luxury products are exclusive pieces of craftsmanship driving the aspirations of many but owned by a few. Luxury has different meanings for different people (Kate, 2009). To some consumers luxury goods provide a means to lifestyle, some adapt luxury to their lifestyle and there are still others who require these to make a statement of their wealth (Okonkwo, 2007). The perception varies with the maturity of the market and the exposure to which the consumers have been subjected.