The Indian luxury market, which is estimated to have touched around $5.8 billion (nearly Rs 28,500 crore), is spreading beyond the metros as adoption of global trends is fast catching up in smaller cities, where many firms are expanding their base.
According to a report by CII-Kearney, the luxury market has grown beyond expectations at a rate of 20 per cent over the past year and is likely to grow at the same rate in the coming years as well. "The (Indian) luxury market witnessed robust growth of 20 per cent over the past year and is estimated to have reached $5.8 billion in line with our five year projections," the report said. Luxury has gone beyond Delhi, Mumbai and Bangalore to Chennai, Hyderabad and Pune.
The latter three cities collectively have over 30 stores in apparel, accessories, watches and personal care, the report added. Similarly, North Mumbai and Gurgaon are two new distinct catchments that have emerged, it said. Explaining the rapid growth of the luxury market, the report said, "Consumers are accepting and adopting global trends much faster than anticipated. Digital and social media have made it possible for companies to connect with the once hard-to-reach Indian consumer." Among different sectors, luxury jewellery, electronics, cars and fine dining have grown beyond expectations, while apparel, accessories, wines and spirits have continued their strong growth, it said. Car dealerships have the maximum penetration with more than 50 per cent of their dealerships outside the metros --Mumbai, Delhi, Bangalore, Chennai and Hyderabad, the report said. The report, however, pointed out that despite the growth, infrastructure challenges and regulatory constraints continue to exist and are unlikely to be resolved easily in the near future, creating doubts about the sustainability of this sector.
According to the report, the key challenge still remains in effectively reaching the target consumer. "The need for Indianisation is being realised by players and some efforts are visible in apparel, watches and cars. Challenges around infrastructure still remain," it said. Besides, the report said if the government allows 100 per cent FDI in single brand retail, it will act as a growth stimulant and remove supply constraints.