With increasing brand awareness amongst the Indian youth and purchasing power of the upper class in Tier-II and Tier-III cities, Indian luxury market is expected to cross $18.3 billion by 2016 from the current level of $14.7 billion growing with a compound annual growth rate (CAGR) of about 25 per cent, according to a Assocham study.
The factors that have fuelled the luxury industry’s growth are the rise in disposable income, brand awareness amongst the youth and purchasing power of the upper class in Tier-II & Tier-III cities in India, said D. S. Rawat, Secretary General, Assocham.
The sectors such as five star hotels and fine-dining, electronic gadgets, luxury personal care, and jewellery performed well in 2015 and are expected to grow by 30-35 per cent over the next three years. Big ticket spends such as on luxury cars mainly SUV are likely to continue, growing upwards of 18-20 per cent over the next three years, driven by consumption in smaller towns and cities.
With the luxury market expected to grow at over 25 per cent year-on-year, Private Equity investments (PE) in the luxury segment are expected to increase and support the enhanced size of the Indian luxury market.
The chamber paper segregated the luxury sector into products: apparel and accessories, pens, home décor, watches, wines & spirits and jewellery, services: spas, concierge service, travel & tourism, fine dining and hotels and assets: yachts, fine art, automobiles. The high internet penetration across tier-II and tier-III cities along with high disposable income shall lead to approx. 100 mn transactions on the Internet by 2020. As a result, the luxury consumption is going to increase manifold in the country, according to the study.
The size of the High Income group consumers continue to enlarge and spend over 40% of their monthly income on some of the world’s largest luxury brands whereas the middle income group (MIG) consumers spend 8-10 per cent of income on luxury products,
