According to estimates, emerging markets are set to be responsible for 50% of the global luxury market in the next five years. India is likely to be a major contributor with its Luxury market growing at an absolute value of over 255 million USD per year, fuelled by the uplifted economy, greater disposable incomes of the urban middle class and their fascination with luxury goods.
Manufacturers of luxury goods have been eyeing India as a large potential market for the sale of their wares. With over a million youth joining the workforce every year, no other country can provide the demographic benefits India can. The luxury market in India consists of brands that ore one or two notches below the best brands, thus appealing to a wider section of the market. The main reasons people are willing to spend on luxury goods are as follow:
- Indians penchant for ornaments resulting in a high demand for luxury accessories
- The perception that luxury goods are investment rather than expenditure
- Luxury brands providing certain luxury items at affordable rates to appeal to the masses
The growing capitalist class in India as well as the high exposure to global luxury brands, especially among youth frequently travelling abroad has converted them into informed consumers, coveting the best of products and aspiring to purchase them when able.
In spite of the massive potential for growth, the sector has faced a few issues in the past which have still not been satisfactorily resolved creating barriers to entry into the market. The scarcity and high cost of retail space in the urban areas where people are more likely to purchase luxury goods reduces profits. The infrastructure available for ventures of these sorts are poor at best and the prevalence of bureaucratic red tape and other regulatory hurdles have been responsible for the less than optimal growth of the industry.