Citing dire need for modernised and dedicated luxury retail areas, a study has said lack of space is restricting luxury brands' growth in India.
Lack of quality luxury space, environment and dearth of high street/super premium malls are the prime reasons for restricted presence of luxury brands in India, thus there is a dire need for modernised and dedicated luxury retail areas in protected vicinities such as airports, said a study conducted by industry body Assocham and consultant KPMG. "Setting up stores in high streets affects luxury retailers' profitability due to sky-rocketing rental costs; moreover, high streets are very cluttered, crowded and are unsuitable due to the absence of the exclusive ambience that luxury retail demands," the study said.
The Indian luxury market grew at a healthy rate of 30% to reach $8.5 billion in 2013 and is likely to continue growing at a healthy pace of about 20% to reach $14 billion by 2016 owing to rising
number of wealthy people, growing middle class, affluent young consumers and other related factors.
Though, India currently enjoys just 1-2% share in the global luxury market but it is the fifth most attractive market for international retailers. Fragmented and diversified consumer base in India is another significant challenge being faced by luxury retailers in India as high net worth individual (HNI) consumers are not easy to reach, the study said.
Its also suggested that luxury brands need to strategically design their growth plans to tap demand across three categories of HNIs, namely - the inheritors (traditionally wealthy) who are habitual
spenders; the professional elite who are discerning spenders; a large segment of business giants (entrepreneurs, owners of small and medium enterprises) who have the money but lack appreciation for fine luxury goods because of no prior exposure to such products. "There is a need for luxury brands to focus on expansion in the type and nature of products being offered and increasingly adopt innovative marketing plans to tap rapidly evolving consumer behavorial trends," said D S Rawat, secretary general of Assocham.
"Luxury retailers need to plan out of the box marketing strategies and come up with products that are tailor-made to suit the whims and fancies of varied Indian customers," he said.
According to the study, luxury is no longer a 'status symbol' but is now a lifestyle and the global brands need to fast evolve and learn ways to adapt within the local environment so that they can get
accustomed to nuances of the market by understanding the cultural identity of Indian consumers.
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