The diamond industry in particular can attest to the changes underway across India as it evolves from serving solely as a polished sourcing center and grows into a successful marketplace for luxury goods as well, according to www.diamonds.net. The Confederation of Indian Industry (CII) held a luxury goods forum yesterday to address ways in which luxury firms can transform and grow their market share as consumerism increases.
In a presentation shared by A.T. Kearney and titled Indian Luxury Market, the group contended that India's luxury marketplace represents $4.76 billion today, but has the almost immediate potential to tap another $3 billion to $3.5 billion. More importantly, A.T. Kearney found that a major component of this market share could be generated by jewelry. The group's principal Neelesh Hundekari said that the mature luxury markets have reached a plateau, but the middle class in India -- with an annual household income of around $23,000 (Rs. 10 lakhs)-- represented a vastly untapped market.
"Another interesting fact emerges from this study is that lndian luxury market is 60 percent dominated by men, if we remove the jewelry," Hundekari said. "The hindrances are supply-chain constraints...and scattered customer. What is needed is micro segmentation of the customer. What is also needed is getting the real estate component with local knowledge of real estate and right pricing for the Indian customer to hit it off the right way."
Jyotiraditya Scindia, India's minister of state for commerce and industry, urged foreign designers to establish manufacturing hubs in India and make it the gateway to other parts of the world for their products, according to a closing statement released by CII.
Scindia (pictured at the lectern) explained that the potential for growth in the luxury goods sector exists because consumers are hungry for products, there is continued high income growth in tier I, II and III cities, and credit and leverage in finance is more readily available.
CII's retail committee chairman, Thomas Varghese, who is also chief executive of Aditya Birla Retail Ltd., said one challenge marketers face is how to best understand the psyche of India's luxury customer. "This understanding will drive the product and service offerings, formats and business models. On one hand, we have new customers emanating from the middle class backgrounds whose higher disposable incomes may not necessarily translate in to higher spend.
"We need to induce trials, educate and create awareness about various luxury brands, products, services at suitable price points. On the other hand, we need to ensure that the expectations are well catered to in terms of range and freshness of merchandise. Also infrastructure development, regulatory framework (especially FDI), fiscal incentives and suitable employee skill sets are also challenges," Varghese stated.
The aspiring middle-class, tier II and III cities in India represent an emerging population that is on the brink of explosive growth, noted Sanjay Kapoor, managing director for Genesis Luxury Fashion Pvt. Ltd. "Luxury goods awareness is growing exponentially. The mindset of the discerning customer is changing slowly to suit our lifestyle."
One of the sessions during this luxury forum, centered upon the unique Indian luxury consumer, and trends in luxury retailing in a market where growth of high-net-worth individuals is astounding and consumers are increasingly exposed to international firms offering luxury goods.
John Hooks, deputy chairman of the Giorgio Armani Group, said that India must remove trade barriers on luxury products and marketers must penetrate the marketplace with new, innovative campaigns that resonate with consumers.
The forum touched upon successful business plans that have managed to succeed in India and ensured price competitiveness for luxury goods compared with those of main, regional, competitors in Dubai and Singapore.
Marco Bizzarri, chief executive of Bottega Veneta, indicated that "super specialization" was paramount for brands in India to succeed and maintain identity given the ways that local competitors utilize regional flavors to suit local tastes.
