Despite The Downturn, India's Market For Luxury Goods Grew 20% Last Year
When one of India's largest real-estate developers opened DLF Emporio — an exclusive shopping mall devoted to fashion designers and international luxury brands — the mall charged would-be patrons a stiff fee just to get through the doors.
The charge was about the equivalent of a week's salary for many Indians. The customers poured in anyway.
These days, the mall doesn't charge admission. But from the looks of things, it could still get away with it.
Even as the government debates whether 32 rupees a day (or about $0.65) is enough to survive on, the sellers of the world's most expensive and ostentatious brands are doing a booming business in India — a land whose most cherished idol once dressed in a loincloth stitched out of cotton thread he spun himself.
“The traffic in the mall has increased incredibly, because it's one of its kind in India,” said a salesman at Louis Vuitton's Emporio outlet. “We have all the luxury brands in a single location. That's a big advantage.”
Louis Vuitton, Ermenegildo Zegna and company aren't just for socialites and Bollywood stars anymore. Luxury retailers in New Delhi say that in India's major metropolitan cities, the market has expanded to include people from all professional backgrounds, and India's growing, and aspiring, middle class.
“We have a number of customers who come in to experience the store, even buying a belt or a shirt,” said a saleswoman at Ermenegildo Zegna. “We have a mix of customers. Yes, we do have lawyers who are looking for a business suit, but there are also people who need formal wear for social occasions.”
Clearly, the days when Mohandas Gandhi urged Indians to spin their own yarn and sew their own clothes are long gone.
Despite the economic downturn of the past year, India's market for luxury goods grew 20 percent last year to reach around $5.8 billion as top brands penetrated second-tier cities like Gurgaon, Pune, Chennai and Hyderabad, according to a new study conducted by the Confederation of Indian Industry (CII) and the global consultancy AT Kearney.
As the Hindu festival of Diwali approaches, and India enters the busiest shopping season of the year, CII and AT Kearney forecast that the country's luxury market will grow to $14.7 billion by 2015, despite continuing problems with infrastructure and curbs on foreign investment, the report said.
That's because even though the economy has slowed somewhat as the central bank works to rein in inflation, consumer confidence in India remains at an all-time high. In a recent survey conducted by Mastercard, for instance, more consumers in India were planning to buy luxury goods over the next year than in any other country in the Asia Pacific region, apart from Singapore — where the per-capita income is more than ten times higher.
“The kind of spending power people have is expanding, so Armani and Gucci is no longer a dream,” said Bhauya Nagpal, a salesman for Jimmy Choo.
According to CII and AT Kearney, jewelery, electronics, cars and fine-dining grew faster than expected, while apparel, accessories, wines and spirits have continued their strong growth. The market for jewelry, for example, grew 30 percent, compared with an expected 20 percent jump, while the fine-dining segment grew 40 percent versus expectations of a modest 10 percent blip.
That makes India the surprising darling of retailers combating flagging sales in their traditional cash-cow markets in Europe and the U.S. Already, nearly all of the world's luxury brands are competing for a slice of India's new wealth, though currently the law limits foreign investment in single-brand retail businesses to 51 percent. Retailing experts say global brands will launch some 200 stores devoted to luxury brands by 2020.
Rolls-Royce sold 80 cars here last year, while Ferrari entered the market in May.
Zegna has tapped the haute Indian wedding market with a special “guru collection” of Nehru suits — named after Jawaharlal Nehru, India's first prime minister and the architect of its socialist economic policies — that run around $3,500. French apparel-maker Hermes unveiled a new range of limited-edition saris starting at $6,000 a pop over the weekend.
And even Paris Hilton recently visited the country to launch a luxury boutique that will sell her personal line of fragrances, handbags and apparel in Mumbai.
So what would Nehru think of the country's enthusiastic embrace of ostentation? Not so much, one expects. With more than 3 million wealthy households, India now has more affluent families than any European country, but the annual average income remains around $3,500. That's just enough for Zegna's take on Nehru's signature suit.
