Professional Documents
Culture Documents
BRIEF REPORT
ON
LIFESTYLE PRODUCTS IN INDIA
February, 2015
1.1
Background
Twenty years ago, urban Indias lifestyles and buying trends were no way similar to what we see
today. With limited choices, consumers had few brands to choose from. In 1991 India threw its
doors open to international trade, and the situation changed dramatically and so did consumerism in
India. Today, consumers are spoilt for choice and fully acknowledge that they rule the market.
Manufacturers cater to their whims and give the consumer complete control of market trends.
Despite India having a low per capita income, it still remains a lucrative market, even for trendy,
lifestyle products. One reason is Indias large population. A sizable section of the countrys citizens
forms the working population. As foreign trade grew, it opened up numerous jobs opportunities and
gave the bulk of the working population significant spending power. The mantra of this section of
society is working hard and spending luxuriously and are responsible for the current boom in
consumerism.
In general, Indian consumers have a high degree of value orientation and thus brands need to
strategically price their products to gain a foothold in India. Also the Indian consumer tends to
associate himself with products that communicate the message of family values, traditions, care and
affection. These nuances set India apart from other developing nations. Companies are forced to
considerably tailor their products to suit the local market and meet the requirements of
consumerism in India. Lifestyle changes occur due to following reasons:
a. Major change in income, that is if the consumer has more money to spend therefore their life
style started to change.
b.
c. Life styles can be environment driven new generation sweeps comes in and find that new things
begin to happen, new technology comes, and new ways of doing things happens as we are
seeing with the telecom world and the impact of media on us.
1.2
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change can be seen in their buying behavior. The Indian consumer now days want to live in present
and prefers a life full of luxury & comfort and are not much price sensitive. They are highly aware
about the product, price, quality and options available with them. Indian consumers believe that
branded products are more reliable. The brand which identifies and support family values are more
popular and accepted easily by them. Introduction of credit culture has made the Indian consumers
to purchase products on credit and pay tomorrow.
Since markets are changing rapidly, they create immense. Life- style, simply reflect on what you do,
what your opinions are and what your interests are In typical marketing language they are activities,
interests and opinions. The Indian consumer market, which is primarily dominated by young
generation, is becoming increasingly sophisticated and brand conscious. A typical upper middle class
young consumer is beginning to look beyond the utility aspect of a product to seek intangibles like
brand and lifestyle statement associated with the product. This modern consumer wants his
purchases to reflect his lifestyle or at least the one he aspires for. As a result of this brand
consciousness, the food and beverage segment of the FMCG sector is already witnessing a
significant shift in demand from loose to branded products .The Indian affluent class has always had
a penchant for premium branded goods and this fetish will continue.
The luxury market in India accounts for 10% of the total retail and expanding on a faster pace to
reach $18 billion mark by 2017 from its existing level of $14 billion. Looking back into the past, the
market was reported at 8.21 billion USD in 2013.Luxury retail in India is distinguished by a twin
focus on short-term luxury products, notably jewellery, and long-term investment in luxury assets,
particularly cars. Increasing brand awareness among the Indian youth and rising purchasing power
of the upper class in tier II and III cities would lead to consumer spending touching $4.2 trillion by
2017. These facts and numbers shows that India is a fast growing luxury consumer market and is
definitely the country that fashion and luxury brands should look at, for expansion and future
development. International brands that have been drawn to India by its large willing and able to
spend consumer base and the rapidly growing economy have benefitted in attaining quick
acceptance in the Indian market and given their high desirability meter, most international brands
have positioned themselves at the premium-end of the market, even if that is not the case in the
home markets. In addition, Indian companies manufacturers or retailers have been more than
ready to act as platforms for launching these brands in the market and today there are over 200
international fashion brands in the Indian market for clothing, foot wear and accessories alone, and
their numbers are still growing. Global consumer spending is also rising and is expected to reach $40
trillion by 2020, with an unprecedented growth of $12 trillion in a decade.
1.3
Luxury Products
The luxury products market in India is expanding its ambit from the conspicuous-consumption
consumers of the early years to the truly affluent households that wish to stand apart from the
crowd.In therapid growth of the luxury market, the 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.
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1.3.1
1.3.2
Jewellery and watches are the largest luxury industry segments with 47% of the total market
followed by apparel and accessories with 14% of the total luxury market. The luxury electronics and
car segments have seen a growth of above 35%, while fine dining has seen a whopping 40% growth
in this period. All of these segments have seen higher growth than expected in the last year. Apparel
and accessories, watches and personal care have also seen robust growth, between 24-30%.
1.3.3
Product
Jewellery
Watches
Apparel
Automobile
Brand
Maria Cristina Buccellati
Omegas, Rolexes, Tissots and Mont Blancs
Louis Vuitton, Giorgio Armani, Hermes
Rolls Royce, Bentley, Mercedes, BMW, Audi and Porsche
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region. Also, the exclusive and refine design of bags should definitely be appealing to Indian
clientele, who are very sensitive to seek refined fashion products.
The Temperley brand has made its India foray via multi-designer store Kitsch, a property co-owned
by Priya and Charu Sachdev.
Indian consumers and their preferences have changed over the years, and many retailers are
considering it to be a positive factor to invest in India.
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3 MARKET GROWTH
Key Growth Drivers
Indias consumer class is estimated to grow nearly twelve-fold (from 50 million at present) to
583 million by 2025, with more than 23 million people likely to be listed among the worlds
wealthiest citizens
An increase in the young working population especially women and growing opportunities in
the service sector act as biggest growth drivers for the luxury retail sector in India. 60 per cent
of Indias population is below the age of 30
Growing incomes coupled with optimism about the future. A recent report by The Nielsen
Company puts India on top of the consumer confidence index
Easier consumer credit & loans - With the emergence of concepts such as quick and easy loans,
easy monthly installments (EMI), loan through credit cards and loan over phone, it has become
easy for Indian consumers to purchase expensive products
Real estate development in the country, for example, the construction of mega malls and
shopping malls, is augmenting the growth of the organized retail business.
On-going liberalization of retail sector. Already, 51% FDI allowed in the luxury sector in India
by the government
The number of Ultra High Net (UHN) worth Households, with a minimum net worth of Rs
250 million is expected to triple to 0.5 million in next five years with a five-fold increase in their
net worth to Rs 260 trillion. HNIs will be double in number by 2015 to over 0.4 million with a
collective wealth of USD 2645 billion. These projections along with the increasing price parity
in the luxury products with other international destinations like Singapore or Hong Kong, and
customized products offerings would indicate that the luxury market in India would evolve
quickly
Foreign investment in luxury retail comes with strings attached-100 per cent FDI in both single
and multi-brand retail requires 30 per cent of local sourcing, a clause which luxury players find
difficult to comply with-and there just isn't enough quality retail real estate available. These
issues have been known since the outset. Industry growth of 23 per cent, while good, is
expected, given the small base. Many larger consumer industries do grow in mid-double digits
With this level of growth and subsequent investment from luxury businesses, it is estimated that
by 2020 the luxury market in India will be responsible for employing 1.8 million people. This
will not only preserve traditional craft skills and heritage, but will also support communities,
create employment and provide training
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4. FUTURE PROSPECTS
With increasing brand awareness amongst the Indian youth and purchasing power of the upper class
in tier II and III cities, Indian consumer spending are expected to grow four times to USD 4.2
trillion by 2017. The ideal marketing strategy to penetrate in these towns is to begin retailing ladder
to luxury brands. This segment bridges the gap between the luxury and mid- market segments and
provides an entry point for new consumers of luxury.
High internet penetration across tier-II and tier-III cities along with high disposable income shall
lead to approx. 80 million transactions on the Internet by 2020. As a result, the luxury consumption
is going to increase manifold in the country.
The growing exposure of international brands and the desire to indulge in luxury has penetrated
smaller cities and towns of India and it is not surprising to note that more than 50% are using social
media platforms as a brand connects and to increase awareness within this new target segment.
Thirty percent of Indias population lives in cities, which is predicted to rise to 40% by 2030. Indian
consumers have shown increased demand for premium products and services and that the luxury
market is expected to grow by 21% by 2015. Bollywood and celebrity endorsements are changing
the grooming habits of urban men with more of them paying attention to personal grooming as a
result of the mass influence that two mediums have. Even outside cities, although less affluent than
their urban counterparts, rural India is being described as a new goldmine with it being worth an
estimated $425 billion. Despite being less well off than their urban counterparts, rural consumers are
increasing their consumption due to their increasing aspirations towards a better lifestyle.
The growth in India between 2015 and 2020 will become even larger as more people come into the
consumption curve. Nine million households will be targets for luxury or near luxury consumption.
Almost 22 per cent of Indian consumers try foreign products and brands. With the Indian luxury
market estimated to touch $30 billion mark by 2015 and the country aiming to become the worlds
fifth largest consumer market by 2025, this conference surely struck the right chord in its target
premium segment of a rapidly growing economy.
While China is on track to become the worlds second largest luxury market within the next five
years, India too is not far behind. With positive regulations and policies for the retail industry being
put in place by the government along with a burgeoning middle class which aspires to own and
experience luxury goods and services, India is a market that can no longer be ignored by
international brands.
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