India’s Luxury Retail Market Growing Steadily Amidst Challenges


    India’s luxury retail market is growing at a phenomenal pace.

    #DigitalErra Thought Corner

    An annual sector trends report from the Confederation of Indian Industry (CII) and research agency Kantar notes that between 2015 and 2016, the Indian luxury market grew from 14.7 billion dollars (Rs 96,751 crores) to a whopping 18.6 billion dollars (Rs 1,18,498 crores), at a growth rate of 25 per cent year-on-year.

    With a growing affluence, India’s tier-II and III cities are also emerging as new reservoirs of luxury spending. India’s share of the global luxury market is presently 1 to 2 per cent, and sales of luxury goods grew faster in India than anywhere else in the world in the last few years.

    Some of the reasons for the growth are:

    • Changing consumer behavior and increasing brand consciousness

    Burgeoning aspirational, younger middle class and growing sense of ‘brand-consciousness’ are driving growth of luxury sector in India. Moreover, increased Internet penetration and digitization have contributed immensely to this consumer behavior, allowing consumers to search and satisfy their desire to own and possess designer brands. The top-selling items in the luxury market are fragrances, watches, jewellery, skincare and apparel.

    • Entry of foreign players

    With growth in online shopping, it is expected that online luxury stores will see investments of $35 billion dollars (Rs 2,30,365crores) in 2016, which will double by 2020.Removal of the cap on foreign ownership in single-brand retail and liberalization of FDI limits in multi-brand retail will encourage international brands to invest more. Brand like Louis Vuitton, Gucci, BottegaVeneta and others have successfully integrated itself into the Indian luxury market by offering luxury as an experience.

    • Women become a force to reckon with

    With increasing disposable income and on gaining financial independence, women tend to make purchasing decisions around personal care and beauty products, spa treatments, apparel, footwear, bags and jewellery. Luxury personal care and jewellery are expected to witness growth of around 30-35% over the next 3 years. This is also driving an increase in the institutional capital being invested in the sector, for instanceNykaa (Luxury beauty products retailer) recently raised Rs 82 crores, Bluestone (online jewellery seller) raised Rs200 crores in Series D funding in July 2016.

    Key Trends to be seen

    • Customization: To cater to the desire of the individual customer, brands offer customization services, limited edition collections and bespoke services.
    • Brand collaborations: International and Indian brands are now collaborating across product segments to create unique offerings for the ever-demanding luxury consumer. For e.g. Christian Louboutin and Sabhyasachi put together a unique line of shoes with Indian design and western aesthetics.
    • Jewellery: Brands such as NiravModi, PC Jeweller, Gitanjali Gems (Nakshatra, D’damas) and Tanishq have made their mark both at home and internationally as well for gold and diamond jewellery. International jewellery brands like Cartier and Tiffany have minimal, if any, presence in India.
    • Ethnic apparel: Indian designers are the top choice for ethnic wear for the well-heeled Indian consumer. Brands / collections by Indian designers are now worn by global Indians and international celebrities with equal panache.

    Having said that, there are challenges that need to be dealt with:

    • High duties make a lot of luxury brands, in some cases 15-30% more than elsewhere.
    • High street malls and other high end retail infrastructure have limited presence in Indian metros and are virtually non-existent elsewhere.
    • Most luxury brands housed in locations with high rentals also incur high maintenance and upgrading costs to continue to meet the defined standards of the brand and attract the demanding luxury shopper.
    • An understanding of spending habits across regions and states of India is essential for luxury brands to succeed at the micro market level in India.


    When it comes to luxury market, India still lags behind disproportionately to its economic growth.Fragmented and diversified customer base offer a challenge as well as a huge opportunity to the retailers. The brands will have to tailor make their products to cater the need and demand of Indian consumers.