Despite the global economic slowdown, size of the
High Income group (HIG) 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 have come under heavy pressure, reveals the
ASSOCHAM latest survey.
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 & III cities in India
whereas the middle income groups spending on food products and education have
increased significantly in the last 10 years.
The ASSOCHAM recent survey on “Indian Luxury Market
Holds Strong despite Global Economic Downturn” was conducted in major places
like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh,
Dehradun etc. A little over 200 employee were selected from each city on an
average.
Delhi ranks first in spending most on luxury brands followed by Mumbai
(2nd), Ahmedabad (3rd) Chandigarh (4th), Kolkata (5th), Bangalore (6th),
Chennai (7th) and Dehradun (8th), says Mr. D S Rawat, Secretary General
ASSOCHAM.
Around 55 per cent of the survey respondents fall
under the age bracket of 20-29 years, followed by 30-39 years (26 per cent),
40-49 years (16 per cent), 50-59 years (2 per cent) and 60-65 years.
The survey was able to target employees from 18
broad sectors, with maximum share contributed by employees from IT/ITes sector
(17 per cent). After IT/ITeS sector, contribution of the survey respondents
from financial services is 11 per cent. Employees working in engineering and
telecom sector contributed 9 per cent and 8 per cent respectively in the
questionnaire. Nearly 6 per cent of the employees belonged from market
research/KPO and media background each. Management, FMCG and Infrastructure
sector employees share is 5 per cent each, in the total survey. Respondents
from power and real estate sector contributed 4 per cent each. Employees from
education and food& beverages sector provided a share of 3 per cent each.
The report says that the slowdown in the economy has
not affected the spending patterns of high income group (HIG), with many of
them stating that maintaining their lifestyle is an extremely important facet
of their social life. “Throwing lavish parties such as business success,
wedding or launch parties has become a new area of spending”, reveals the
survey.
The survey also highlights that majority of women
tend to make purchasing decisions around cosmetics, perfumes, spa treatments,
clothes, footwear, bags and jewelry. Men on the other hand mostly decide on
purchases related to alcohol, watches and automobiles. Joint decisions are made
on hotels, resorts and restaurants. While there are some similarities in terms
of motivation, women appear far more likely to buy luxury as a form of
self-reward and pampering, whereas men are traditionally driven by status,
mentioned the ASSOCHAM survey.
A majority of survey respondents (85%) said they
purchase luxury items during overseas trips, with cosmetics, watches, bag, and
perfumes etc. The survey also notes that buying habits don’t change whether it
is a business or a leisure trip.
The survey data shows that around nearly 75% of
potential consumers search for luxury brands on the internet at least once a
month. There are also increasing signs of changing consumption patterns in
major cities.
High income group (HIG) in metro cities are
increasingly engaging via online forums in discussions around luxury brands;
data shows that around 75 percent of potential consumers search for luxury
brands on the internet at least once a month, a substantial increase from 25
percent in 2013.
The demand for luxury goods in metros are booming as
incomes continue to rise. The survey also reveals the role of digital media and
the extent to which it is being used as a tool to engage high-end consumers,
adds the survey.
The brand recognition continues to rise as consumers
become more discerning and seek experiential luxury as well as unique
one-of-a-kind luxury brands and products, said Rawat.
Many of the major luxury brands are continuing with
their current investments, despite the ongoing global economic slowdown, women
are an important target market for luxury players, as their purchasing power
rises and start to seek a wider range of products, adds the survey.
The survey respondents cited convenience as the main
motivation to purchase online, while cost saving did not matter as much as a
factor. In terms of barriers to online purchasing, they cited concerns over
authenticity of products, payment safety concerns and lack of after-sales
service, highlights the survey.
Over 66% of survey respondents said they prefer to
purchase well known luxury brands, whilst 69 percent separately indicated they
would pay a premium for well-known, popular luxury brands.
The luxury market in India is pegged to grow at 25%
in 2013 till 2015, and is likely to touch US$ 15 billion from the current level
of US$ 8 billion, reveals a study by industry body ASSOCHAM.
While the Indian Government's recent Foreign Direct
Investment (FDI) policy for single brand retail is one that can revolutionize
the retail sector, further fine tuning keeping all stakeholder interests in
mind, is needed to facilitate the smooth entry of foreign luxury brands into
India, said Rawat.
The luxury
sector in India can be broadly split into the following verticals: Products: Apparel and Accessories, Pens, Home
Décor, Watches, Wines & Spirits and Jewelry Services: Spas, Concierge service, Travel
& Tourism, Fine Dining and Hotels Assets: Yachts, Fine Art, Automobiles
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