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GenNow buyers living life king size
If conspicuous consumption is a measure of how close India is to catapulting into the superpower league, then several market surveys, looking into consumer spending habits, say we are almost there, writes Sushmita Bose.Your take
If conspicuous consumption is a measure of how close India is to catapulting into the superpower league, then several market surveys, looking into consumer spending habits, say we are almost there.
Take the 2006 AC Nielsen Global Consumer Confidence Index (CCI) report. It puts India at the top of a list of 40 countries in Asia-Pacific, North America and Europe, and it does so for the third time in a row since CCI started being tracked in early 2005.
The rise of disposable incomes had led to the firming up of the luxury segment, and India is now a key market to invest in high-end brands.
KSA Technopak, in its report "India Luxury Trends 2006", estimates that the luxury segment is worth $444 million, spanning across 1.6 million high-income households with an earning capacity of Rs 45 lakh (approximately $1 lakh) annually. These high-net worth households are growing at 14 per cent per year, and are spending nearly $9,000 per annum on luxury goods.
Significantly, there is also a mindset change in Indian consumers: one key demand among the affluent class is that it wants 'global brands' being launched in the international marketplace to be available here - and now.
An American Express one-of-its-kind survey ('I've Made It!') on affluence in India also found that consumers are, increasingly, demanding a sound delivery system; that "right" possessions and accessories are important; and that simple living is passé as everything has to be "nothing but the best".
Together, all these dynamics are building up a consumer who is living out what Devyani Raman, CEO-India of Leading Brands of the World, calls the 'I' factor. The Indian market, she feels, is extremely value-driven - not to be confused with value-for-money.
"Consumers are conscious of the value that the brand is going to give them - so the brand stands for self-reflection, gratification and the 'I' factor." If somebody is going to invest in a Fendi bag worth Rs 50,000, it better pander to the self.
The riches story is on a roll. "The number of millionaires in India is expected to grow at the rate of 12.8 per cent annually, and their wealth will be around $322 billion by 2009," says Rob Hennin, country manager and vice president, American Express, India.
Currently, there are 7,11,000 Indians who have liquid wealth of $1,00,000 or more, and this figure is going to go up to 1.1 million in the next three years - reflecting huge potential buying power.
According to AT Kearney, India's total retail market is pegged at $202 billion, and this is growing a compounded rate of 30 per cent. The indicators of high-end growth is evident from the following categories: the luxury watches market is growing at 40 per cent, branded jewellery at 40 per cent, luxury cars at 50 per cent, wine at 30 per cent and international travel at 35 per cent.
Over the last three years, brands like BMW, Audi, Fendi, Chanel, Bvlgari, Roberto Cavalli and Moschino have made their presence felt in the market.
In the US, according to Merrill Lynch and consultancy Capgemini, the 'affluents' account for $33.3 trillion, which is more than double the country's economic output. Comparing the Indian luxury market with its more evolved US counterpart is like "comparing how a 5-year-old views Disneyland with a 15-year-old", says Raman. But the point to be noted is that we are growing up - and fast.
