India’s luxury market, pegged at $7.5 billion in 2012, seems to be shaking off slowdown blues and slated for a revival with a 16 per cent compounded annual growth over the next three years.
This follows a slack in year-on-year (y-o-y) growth from around 20 per cent in 2010, when the industry was pegged at $5.74 billion, which subsequently dipped to 16 per cent in 2011 ($6.68 billion) and 13.5 per cent in 2012 ($7.58 billion).
However, the worse seems to be over for the fledgling lux industry.
According to a joint study by market research firm IMRB and the Confederation of Indian Industry, the market is expected to effect a turnaround, growing by 14 per cent in 2013 ($8.65 billion), and cross the $10-billion mark in 2014, with a 17 per cent y-o-y growth.
Driving the revival is new breed of luxury consumers -- largely self-employed professionals such as doctors, dentists, architects, designers, and mid-to-senior corporate professionals, first-gen entrepreneurs, and youngsters from wealthy business families.
This has been aided by availability of an expanded portfolio of luxury products and services and wider geographical reach.
For many young consumers from wealthy families, buying luxury is seen as a way of life. However, most traditional consumers of luxury do bulk of their purchases abroad.
The study says sectors such as hotels and fine-dining, watches, electronic gadgets, wines and spirits, luxury personal care, and jewellery are expected to grow by 20-25 per cent over the next three years.
Big ticket spends such as luxury cars are likely to continue, growing upwards of 15 per cent over the next three years, driven by consumption in smaller towns and cities such as Chandigarh, Ludhiana, Raipur, Vadodra, Jalandhar, Surat, among others.
Another big-ticket luxury spend segment -- real estate -- which includes branded residences, is expected to see an uptick from 2014 onwards, the study adds.
The segment, pegged at around $1.5 billion, has stayed flat over the past three years.
The rapid growth in high net worth individuals is expected to add momentum to the growth of luxury industry in India.
However, the study finds that for a majority of consumers, any such spend is more occasional in nature related to important milestones in life and festivals.