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India is cementing its position as a growth market for luxury. Rising numbers of young, high-net-worth individuals, coupled with the rapid improvement in the country’s online infrastructure amid pandemic lockdowns, have enabled brands to reach new, affluent consumers in both tier-one and tier-two cities.
International luxury players are taking advantage: Balenciaga will enter the market this year, Valentino is expanding, and Galeries Lafayette is gearing up to open a 90,000-square-foot department store in Mumbai. As a sign of the country’s growing importance on the global stage, both Louis Vuitton and Cartier last year signed Indian actor Deepika Padukone as ambassador. However, experts advise caution: Indian consumers expect brands to demonstrate a connection with the local culture, and they can be price sensitive.
With the current uncertain economic conditions around the globe, India appears to be a safe bet for international brands. While still relatively small, market research provider Euromonitor expects the Indian luxury market to grow by around 3.4 per cent from an estimated $5.9 billion in 2022 to $6.1 billion this year. The designer apparel and footwear market is expected to grow by around 5.2 per cent to $523 million. The country is also slated to overtake China as the country with the highest number of millennial consumers this year, according to the United Nation Department of Economic and Social Affairs.
The luxury industry has had its eye on India for a while: Louis Vuitton was the first big international brand to enter the market in 2002. However, efforts to expand have been hindered by several factors, including high real estate costs and the underdevelopment of its e-commerce capabilities. “The reason ‘conventional’ luxury has not grown very big is due more to supply-side factors [brands being slow to enter the market] than intrinsic demand [from customers],” says Abheek Singhi, managing director and senior partner at global consultancy BCG, who is based in Mumbai.
That is changing. Several of US-based Authentic Brands Group’s (ABG) premium and luxury labels have a presence in India, including Brooks Brothers and Judith Leiber. It is looking to bring more labels from its portfolio into the country, such as Vince Camuto. “In the early 2000s, India was seen as one of the rising economic powers. Luxury brands became very focused on this market, but I do not think India belonged in this group at that time. India had to find its own place, and it seems to have done that now,” says Henry Stupp, president of EMEA and India for ABG. Reflecting on a recent trip to India, he adds: “The market has settled. Retail is more structured now than it was before the pandemic and will continue to get more structured. Plus, now, India has such a high cellular connectivity [boosting its e-commerce].”
Valentino’s boutique in a luxury hotel in Delhi shut after a few years of operation. Last year, the brand re-entered the market with a flagship in a prime position at the DLF Emporio Mall in Delhi, and a second store is expected to open this year in Mumbai. This time its local partner is Reliance Brands Limited (RBL), India’s largest player in the luxury market (it partners with over 80 brands, including Tiffany, Bottega Veneta and Giorgio Armani, and will launch Balenciaga in India this year).
In November 2022, Aditya Birla Fashion and Retail Limited (ABFRL), which distributes international brands such as Ralph Lauren and Ted Baker in India, announced a partnership with French retailer Galeries Lafayette to open a 90,000-square-foot department store in Mumbai in 2024, which will house 200 luxury and designer brands. This will be followed by a 65,000-square-foot store in Delhi in 2025.
At the time of the announcement, Ashish Dikshit, managing director of ABFRL, said: “This is a coming-of-age moment for Indian luxury. India is now home to a generation of young and affluent consumers with global exposure, who are willing to spend on the finer things in life. This is visible in the boom and dynamism of the luxury market. The partnership with Galeries Lafayette is a ringing endorsement of India’s significance as a global luxury market and a future engine of growth for luxury brands.”
As more brands have entered India, be it the super brands or niche players such as Cult Gaia and Self-Portrait, the Indian consumer has grown more used to them. Pushpa Bector is executive director of DLF Retail, which owns luxury malls, including DLF Emporio and The Chanakya. She attributes the growth of international luxury brands over the past couple of years to an omnichannel approach, which has helped them reach more customers. “A combination of on-ground luxury stores, unique digital experiences without compromising on the rarity component of luxury, tailor-made selling points, and social media engagement is what will give [the luxury market] its tipping point,” she argues.
New opportunities in tier-two cities
With luxury malls confined to larger cities such as Delhi and Mumbai, the digital transformation that took place during the pandemic was a game changer, making brands available in India’s tier-two cities.
India is currently Instagram’s largest market, and e-commerce has begun to take off in the country. In the last few years, corporate behemoths, including Tata Digital and RBL, have launched online platforms dedicated to luxury. “Luxury was largely restricted to the larger cities early on. Even in Pune, a tier-one city, you do not find a lot of luxury brand outlets,” explains Anul Sareen, senior research analyst at Euromonitor. “Online gained a lot of traction during the pandemic period: platforms like RBL’s Aijo Luxe and Tata Cliq Luxury have given access to consumers living in cities without luxury outlets but with disposable income and a taste for luxury. This is what is going to drive luxury in India in years to come.”
An early corporate-backed, multi-brand retailer to work with international luxury labels in India was The Collective, launched in 2008 by ABFRL and now in 11 cities across the country. “2022 was a year of expansion for us. We opened stores in new areas like Lucknow, Ludhiana, Pune,” says Amit Pande, brand head for The Collective. “We have got off to a great start in all the new stores. Digital continued to expand [its e-commerce platform launched in 2015]. Addition of new brands added freshness to our brand portfolio. In 2023 we will continue to expand aggressively. We will deepen our omnichannel play.”
While the arrival of digital has made it easier for tier-two cities to access luxury goods, stores still play an important role. RBL launched The White Crow (TWC), a multi-brand concept store catering to tier-two cities, in 2019. The first TWC opened in Gujarat in Ahmedabad, spread across 8,000 square feet, with most of it dedicated to retail, stocking more than 44 premium fashion brands. Since then, TWC has opened a further nine stores.
“Physical stores will continue to play a strong role in the Indian luxury market. We also need to remember that we are in the early stages of penetration of international luxury in India. It is stores that do the heavy lifting for creating the market,” says Pande. Although he notes that, with 25 per cent of growth at The Collective from digital, luxury brands should have a multi-pronged approach when looking at tier-two cities.
The challenge for many brands is finding the right locations in these cities due to a lack of suitable malls or high streets. “A lot of these localities may be many years away from receiving a mono-brand store,” says Pande.
Vocal for local
The pandemic gave rise to a new attitude towards homegrown designers in India.
Luxury brands have long depended on Indian craftsmanship for their decorative arts and specialised handwoven textiles. However, the pandemic left many of these artisans unemployed and living away from their families. In response, Gen Z and millennial Indians began to show support for local designers, and #vocalforlocal became a trending hashtag. “Indian consumers have increased their preference for Indian brands over the last decade,” says BCG’s Singhi. “Other things being equal, [Indian] consumers would prefer an Indian brand more than 50 per cent of the time.”
Against this backdrop, Indian corporations are investing in homegrown brands. In the last two years, RBL has grown its portfolio to include a majority stake in Manish Malhotra, Rita Kumar and Abu Jani Sandeep Khosla, and a 60/40 joint venture with designer Rahul Mishra to launch a ready-to-wear line. In recent years, ABFRL bought a majority stake in homegrown labels Shantanu & Nikhil, Sabyasachi Mukherjee and Masaba Gupta, and acquired a minority stake in Tarun Tahiliani.
This is transformative for local brands, offering them the resources to go global — Sabyasachi Mukherjee opened a New York store last year, and Manish Malhotra is expected to open one in Dubai by summer — as well as amping up their e-commerce and retail footprint within India. “With India welcoming foreign brands through foreign direct investment in the 1990s, the country witnessed a sudden influx of international giants wooing Indian customers,” says DLF Retail’s Bector. “Taking a cue, local manufacturers and players understood that quality was of utmost importance for the consumer who had more exposure, understanding and options than before. This shift has occurred because people today trust home-grown companies that offer products at a competitive price and understand the tastes and needs of an Indian buyer.”
Experts say there is space in the market for homegrown and international brands. However, international brands need to be sensitive to the culture and taste of the Indian luxury consumer. They need to localise. “Brands should be asking, how do we take the best of both worlds while maintaining the distinct brand DNA? Can you put a twist on it that speaks to the local market?” says ABG’s Stupp.
Last festive season, Louis Vuitton launched an exclusive shoe collection for India in locally popular hue rani pink. This capsule is an example of international brands realising the need to show they are connected to Indian culture. “European fashion labels tend to lag in terms of understanding of the Indian market,” says Euromonitor’s Sareen. “To give you an example, Indians are still purchasing gold [jewellery] in the thousands of dollars, but they're not purchasing it from Tiffany or other such luxury brands. They still go into their traditional jewellers, [who] understand the requirements of an Indian consumer.”
The growing and evolving bridalwear market has also boosted opportunities for international luxury brands. Some Gen Z brides have begun to wear dresses rather than saris to wedding reception parties — opening this market up to ready-to-wear brands such as Valentino or Zimmerman. And, be it a Chanel tweed jacket over a sari in winter, or a crisp Ralph Lauren shirt with an embroidered lehenga skirt, brides are embracing a mixture of traditional and global trends. “International designers have offered customers fusion wear that appeals to the local taste, but there's still a huge opportunity for these brands to fully tap the market,” says DLF Retail’s Bector.
Italian luxury brand Canali was an early mover into India, launching through a partnership with RBL in 2009.
India is already an important market for Canali, and in May 2023, we will be opening our seventh boutique. It is overall a relevant market in men’s fashion due to its large population (1.4 billion) and growing young middle class (average age 28) with a rising per capita income, leading to increasing demand for high-quality fashion products.
In more recent years, the Indian fashion industry has grown rapidly and has seen a rise in international brands catering to the market. We have learnt that you have to be able to seize the right opportunities without haste: it is not a market that guarantees sudden and exponential growth, but investments made at the right time can give great satisfaction.
Identifying the correct local partner is essential to being able to fully grasp the business opportunities in this vast and complex country. Equally vital is the help in understanding and respecting the local culture and taste, as well as practices and regulations. It is important to offer products and styles that cater to local taste and demand, while maintaining brand identity. We are very proud of our Nawab project in which we reinterpreted the traditional Indian ceremonial dress with Canali fabrics and patterns [the Nawab is Canali’s take on the popular Bandhgala style of formal jacket].
In terms of marketing, a local partner provides insights on the specific audience and helps identify channels and influencers that are popular in the region.
India remains an accessory-driven market in fashion and luxury, but the clothing and footwear segments are also growing rapidly as Western-style clothing is becoming increasingly common, especially in urban areas.
Bollywood actors and celebrities are trendsetters, and their sense of style and fashion choices influence those of their fans. Bollywood films often feature actors dressed in trendy and fashionable clothing, which can inspire men to adopt similar styles. Many Bollywood actors endorse fashion brands, making them more popular among men in India.
E-commerce platform Tata Cliq Luxury stocks 600 premium and luxury brands, including Baume & Mercier, Diesel, Emporio Armani, Gucci and Michael Kors. It was launched in 2016 as a subsidiary of Tata Digital. Last year, Tata Cliq Luxury partnered with Le Mill, one of India’s first concept stores, to introduce labels like Acler, Ulla Johnson and Chloé.
Given that access to these brands and premium malls across India is limited, customers are naturally gravitating towards shopping online. E-commerce has contributed to the growth of the luxury market by expanding its reach and accessibility, which has spurred a lot more consumers to shop online for luxury. While offline shopping has seen a surge, online platforms have also seen tremendous growth by focusing on increasing the assortment, expanding the reach to tier-two and tier-three markets, tapping new audiences, and so on. Bricks-and-mortar and digital are not in opposition, but rather work in tandem. The objective is to allow the consumer the opportunity to experience their favourite brand on their preferred channel at that time.
Consumers today seamlessly shift from one channel to another, and this is where omnichannel plays the biggest role in providing consumers with a consistent and unified brand experience.
Online offers reach and accessibility, which in turn helps brands reach out to a large consumer base and recruit new customers. Consumers across the country have embraced online shopping and are actively seeking out products across various categories. This has led to direct-to-consumer brands venturing into the online space.
Shopping is a social experience, and several brands have leveraged the concept of social and live commerce. Live commerce is an attractive proposition given the kind of engagement it offers. It also helps brands attract new audiences. The implementation of an omnichannel retail strategy that allows for a seamless experience across platforms is a trend that has seen widespread adoption. Buy-now-pay-later is becoming increasingly popular in e-commerce as an alternate payment method. In addition to the above, the metaverse, artificial intelligence, augmented reality, Web3, and voice search commands will also grow and shape the sector further in 2023. From a category perspective, occasion wear, sneakers, collectibles and gifting will continue to grow.
Consumers today are celebrating conscious consumption. Brands and e-commerce platforms are putting more emphasis on sustainability to ensure that they are giving back to the environment through their various efforts.
In an endeavour to support our green goals, we have introduced a circular packaging programme which allows customers to return their empty packaging boxes after their purchase is received, thus allowing us to recover, refurbish and reuse them. Slow commerce is one of our major marketing initiatives and is built on principles of craftsmanship and excellence. On social media, the goal has been to promote the slow commerce ethos, humanise the brand through creative storytelling, and position Tata Cliq Luxury as a thought leader in the luxury e-commerce space.
Key takeaway: The Indian market is at a tipping point: the number of high-net-worth individuals is on the rise, who have an appetite for luxury. International brands need to adapt their buys, edit and marketing strategies to work with the country’s cultural expectations. To succeed in this youthful market, brands need to consider its complexities. Targeted micro-strategies are required.
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