Luxury brands are showing increased interest in India, with the number of affluent Indians set to surge.
The Belgian chocolatier Godiva Chocolates is planning to expand to India. Saks Fifth Avenue is also reported to be eying the market. The Geneva-based Richemont group, which has brands including Cartier and Van Cleef & Arpels, is also planning to open stores in India, according to a Reuters report in January.
The company plans to invest US$5 million initially, according to an anonymous government source.
“We see India as a market with long-term growth potential,” Richemont said. “There is a growing market of affluent young consumers.”
The luxury market in India is forecast to close to double over the next three years to $14 billion.
“A young demographic profile, growing number of millionaires and billionaires and aspirational integration with the globe are all among the driving factors for the luxury markets which see a big potential in India,” said D S Rawat, the secretary general of the Associated Chambers of Commerce and Industry of India (Assocham).
“Since the high-end products and lifestyles are not price-elastic, they don’t get much affected by the slowdown.
“ Be it a family holiday to exotic locations in Europe or US, sporting branded jewellery, driving around in top-end SUVs, going out for a fine dining in five star hotels, India’s luxury life style market has remained largely affected by the economic slowdown in 2013.”
Assocham said that sectors including five-star hotels, fine dining, electronic gadgets, luxury personal care, and jewellery were expected to rise by 30 to 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 15-20 per cent over the next three years,” it added.
Challenges remain for international luxury retailers, however, including regulatory hurdles and high import duties.
“While some of the foreseeable challenges include those related to shortage of quality staff and real estate, the industry is already trying some business models whose success is likely to overcome them,” said Rajat Wahi, a partner at KPMG India.
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