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  • The Luxe Life

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    Indicus Analytics
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    There is no clear definition of either luxury products or luxury consumers. In fact, the various expressions used when describing the luxury market only add to the confusion. Broadly, in the Western world, luxury consumers are defined as the top 2-5% of earners or the 10% of income. The Bureau of Labor Statistics (BLS) classifies the 111 million households of the United States into equal-sized quintiles based upon household income. The lower cut-off for households in the upper quintile, about $75,000, provides a reliable definition of the luxury market—households with income within the upper quintile of the BLS's model. The average income for those households in the upper quintile is $1,21,367. In the Indian context, there are three defining levels of incomes at which consumption of luxury products and services take place. At Indicus, we define these levels as * Luxury consumers – HHld income > Rs 1 million pa * High end luxury consumers – HHld income > Rs 2 million pa * Super luxury consumers – HHld income > Rs 5 million pa Notice that although in exchange rate terms, Rs 1 million is only $25,000, in terms of value of good and services it can buy, it is closer to $80,000-90,000. Thus when a household crosses the threshold of Rs 1 million, it is in consumption terms already equivalent to the upper quintile of the US households. Our research indicates that there are about 4 million households (21 million people) in urban India that can be classified as luxury consumers. Of these, 1.4 million households (7.3 million people) are high-end luxury product/services consumers And, 1,65,000 households (9,17,000 people) are super luxury product/services consumers. The numbers of rural luxury product consumers are estimated to be less than 10% of the urban numbers. While India is still emerging in terms of number of luxury consumers, there are no more than a handful of countries on the planet that have more luxury consumers. In five years, India will scale past many of the G8 nations. It is the fastest growing market in terms of number of consumers, and by 2020, only China, the US and Japan will have more consumers in the high-end luxury and super-luxury categories than India. India is at an inflexion point and the demand for luxury products is set to grow at near about 20% pa plus (in value terms) for an extended period of time lasting a couple of decades. During the next five years, this growth is expected to be at 25% pa. The current market size for luxury products/services is estimated to be of the order of $2.5 billion. The growth patterns suggest that now is perhaps the most opportune time for marketers of a whole cluster of goods and services under the 'luxury' umbrella. While there are several characteristics of luxury consumers that are common across countries and cultures, there are a distinct set of attributes that define the bulk of the luxury consumers in most emerging economies, including China and India—the 'nouveau riche syndrome'. It must be remembered that India is an economy where large-scale wealth creation is a relatively new phenomenon and people in large numbers are climbing up the income ladder. A very typical behaviour pattern (which has also been observed in emerging Asia, including China) is the need to announce 'the arrival' and consume conspicuously. This is music to the ears of luxury product marketers. The large numbers graduating to high income levels and the sustained growth rates indicate that the market is not going to dry up any time soon. Further, considering the fact that India has a base of 18% of the world’s population, one can imagine that within a couple of decades it will outstrip most other markets in size by a considerable margin. Yet, in some ways, there are unique dimensions to this phenomenon not seen anywhere else in the world—the grand weddings, supercharged festivals, and the like. The impact is already being seen across several categories of products and services—housing, t

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    There is no clear definition of either luxury products or luxury consumers. In fact, the various expressions used when describing the luxury market only add to the confusion. Broadly, in the Western world, luxury consumers are defined as the top 2-5% of earners or the 10% of income. The Bureau of Labor Statistics (BLS) classifies the 111 million households of the United States into equal-sized quintiles based upon household income. The lower cut-off for households in the upper quintile, about $75,000, provides a reliable definition of the luxury market—households with income within the upper quintile of the BLS's model. The average income for those households in the upper quintile is $1,21,367. In the Indian context, there are three defining levels of incomes at which consumption of luxury products and services take place. At Indicus, we define these levels as * Luxury consumers – HHld income > Rs 1 million pa * High end luxury consumers – HHld income > Rs 2 million pa * Super luxury consumers – HHld income > Rs 5 million pa Notice that although in exchange rate terms, Rs 1 million is only $25,000, in terms of value of good and services it can buy, it is closer to $80,000-90,000. Thus when a household crosses the threshold of Rs 1 million, it is in consumption terms already equivalent to the upper quintile of the US households. Our research indicates that there are about 4 million households (21 million people) in urban India that can be classified as luxury consumers. Of these, 1.4 million households (7.3 million people) are high-end luxury product/services consumers And, 1,65,000 households (9,17,000 people) are super luxury product/services consumers. The numbers of rural luxury product consumers are estimated to be less than 10% of the urban numbers. While India is still emerging in terms of number of luxury consumers, there are no more than a handful of countries on the planet that have more luxury consumers. In five years, India will scale past many of the G8 nations. It is the fastest growing market in terms of number of consumers, and by 2020, only China, the US and Japan will have more consumers in the high-end luxury and super-luxury categories than India. India is at an inflexion point and the demand for luxury products is set to grow at near about 20% pa plus (in value terms) for an extended period of time lasting a couple of decades. During the next five years, this growth is expected to be at 25% pa. The current market size for luxury products/services is estimated to be of the order of $2.5 billion. The growth patterns suggest that now is perhaps the most opportune time for marketers of a whole cluster of goods and services under the 'luxury' umbrella. While there are several characteristics of luxury consumers that are common across countries and cultures, there are a distinct set of attributes that define the bulk of the luxury consumers in most emerging economies, including China and India—the 'nouveau riche syndrome'. It must be remembered that India is an economy where large-scale wealth creation is a relatively new phenomenon and people in large numbers are climbing up the income ladder. A very typical behaviour pattern (which has also been observed in emerging Asia, including China) is the need to announce 'the arrival' and consume conspicuously. This is music to the ears of luxury product marketers. The large numbers graduating to high income levels and the sustained growth rates indicate that the market is not going to dry up any time soon. Further, considering the fact that India has a base of 18% of the world’s population, one can imagine that within a couple of decades it will outstrip most other markets in size by a considerable margin. Yet, in some ways, there are unique dimensions to this phenomenon not seen anywhere else in the world—the grand weddings, supercharged festivals, and the like. The impact is already being seen across several categories of products and services—housing, t

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    77 views4 pages

    The Luxe Life

    Uploaded by

    Indicus Analytics
    There is no clear definition of either luxury products or luxury consumers. In fact, the various expressions used when describing the luxury market only add to the confusion. Broadly, in the Western world, luxury consumers are defined as the top 2-5% of earners or the 10% of income. The Bureau of Labor Statistics (BLS) classifies the 111 million households of the United States into equal-sized quintiles based upon household income. The lower cut-off for households in the upper quintile, about $75,000, provides a reliable definition of the luxury market—households with income within the upper quintile of the BLS's model. The average income for those households in the upper quintile is $1,21,367. In the Indian context, there are three defining levels of incomes at which consumption of luxury products and services take place. At Indicus, we define these levels as * Luxury consumers – HHld income > Rs 1 million pa * High end luxury consumers – HHld income > Rs 2 million pa * Super luxury consumers – HHld income > Rs 5 million pa Notice that although in exchange rate terms, Rs 1 million is only $25,000, in terms of value of good and services it can buy, it is closer to $80,000-90,000. Thus when a household crosses the threshold of Rs 1 million, it is in consumption terms already equivalent to the upper quintile of the US households. Our research indicates that there are about 4 million households (21 million people) in urban India that can be classified as luxury consumers. Of these, 1.4 million households (7.3 million people) are high-end luxury product/services consumers And, 1,65,000 households (9,17,000 people) are super luxury product/services consumers. The numbers of rural luxury product consumers are estimated to be less than 10% of the urban numbers. While India is still emerging in terms of number of luxury consumers, there are no more than a handful of countries on the planet that have more luxury consumers. In five years, India will scale past many of the G8 nations. It is the fastest growing market in terms of number of consumers, and by 2020, only China, the US and Japan will have more consumers in the high-end luxury and super-luxury categories than India. India is at an inflexion point and the demand for luxury products is set to grow at near about 20% pa plus (in value terms) for an extended period of time lasting a couple of decades. During the next five years, this growth is expected to be at 25% pa. The current market size for luxury products/services is estimated to be of the order of $2.5 billion. The growth patterns suggest that now is perhaps the most opportune time for marketers of a whole cluster of goods and services under the 'luxury' umbrella. While there are several characteristics of luxury consumers that are common across countries and cultures, there are a distinct set of attributes that define the bulk of the luxury consumers in most emerging economies, including China and India—the 'nouveau riche syndrome'. It must be remembered that India is an economy where large-scale wealth creation is a relatively new phenomenon and people in large numbers are climbing up the income ladder. A very typical behaviour pattern (which has also been observed in emerging Asia, including China) is the need to announce 'the arrival' and consume conspicuously. This is music to the ears of luxury product marketers. The large numbers graduating to high income levels and the sustained growth rates indicate that the market is not going to dry up any time soon. Further, considering the fact that India has a base of 18% of the world’s population, one can imagine that within a couple of decades it will outstrip most other markets in size by a considerable margin. Yet, in some ways, there are unique dimensions to this phenomenon not seen anywhere else in the world—the grand weddings, supercharged festivals, and the like. The impact is already being seen across several categories of products and services—housing, t

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    m 

    
     
     
    There is no clear definition of either luxury
    products or luxury consumers. In fact, the various
    expressions used when describing the luxury
    market only add to the confusion. Broadly, in the
    Western world, luxury consumers are defined as
    the top 2-5% of earners or the 10% of income.
    The Bureau of Labor Statistics (BLS) classifies the
    111 million households of the United States into
    equal-sized quintiles based upon household
    income. The lower cut-off for households in the
    upper quintile, about $75,000, provides a reliable
    definition of the luxury market²households with
    income within the upper quintile of the BLS's
    model. The average income for those households
    in the upper quintile is $1,21,367.

    In the Indian context, there are three defining


    levels of incomes at which consumption of luxury
    products and services take place. At Indicus, we
    define these levels as
    * Luxury consumers ± HHld income > Rs 1 million
    pa
    * High end luxury consumers ± HHld income > Rs
    2 million pa
    * Super luxury consumers ± HHld income > Rs 5
    million pa
    Notice that although in exchange rate terms, Rs 1
    million is only $25,000, in terms of value of good
    and services it can buy, it is closer to $80,000-
    90,000. Thus when a household crosses the
    threshold of Rs 1 million, it is in consumption
    terms already equivalent to the upper quintile of
    the US households.
    'ur research indicates that there are about 4 million
    households (21 million people) in urban India that can be
    classified as luxury consumers. 'f these, 1.4 million
    households (7.3 million people) are high-end luxury
    product/services consumers And, 1,65,000 households
    (9,17,000 people) are super luxury product/services
    consumers. The numbers of rural luxury product consumers are
    estimated to be less than 10% of the urban numbers.

    While India is still emerging in terms of number of luxury


    consumers, there are no more than a handful of countries on
    the planet that have more luxury consumers. In five years, India
    will scale past many of the G8 nations. It is the fastest growing
    market in terms of number of consumers, and by 2020, only
    China, the US and Japan will have more consumers in the
    high-end luxury and super-luxury categories than India.

    India is at an inflexion point and the demand for luxury products


    is set to grow at near about 20% pa plus (in value terms) for an
    extended period of time lasting a couple of decades. During the
    next five years, this growth is expected to be at 25% pa.

    The current market size for luxury products/services is


    estimated to be of the order of $2.5 billion.

    The growth patterns suggest that now is perhaps the most


    opportune time for marketers of a whole cluster of goods and
    services under the 'luxury' umbrella.
    While there are several characteristics of luxury consumers
    that are common across countries and cultures, there are a
    distinct set of attributes that define the bulk of the luxury
    consumers in most emerging economies, including China
    and India²the 'nouveau riche syndrome'.

    It must be remembered that India is an economy where


    large-scale wealth creation is a relatively new phenomenon
    and people in large numbers are climbing up the income
    ladder. A very typical behaviour pattern (which has also been
    observed in emerging Asia, including China) is the need to
    announce 'the arrival' and consume conspicuously. This is
    music to the ears of luxury product marketers. The large
    numbers graduating to high income levels and the sustained
    growth rates indicate that the market is not going to dry up
    any time soon. Further, considering the fact that India has a
    base of 18% of the world¶s population, one can imagine that
    within a couple of decades it will outstrip most other markets
    in size by a considerable margin.

    Yet, in some ways, there are unique dimensions to this


    phenomenon not seen anywhere else in the world²the
    grand weddings, supercharged festivals, and the like. The
    impact is already being seen across several categories of
    products and services²housing, travel, education, high-end
    automobiles, entertainment electronics, home lifestyle
    improvement products, men's and women's clothing,
    women's jewellery, women's accessories, watches, gourmet
    food and wines.

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