The Indian economy and its rapid rise in global consumer markets rankings have thrown up its own unique set of challenges that confound the brands and consumers alike. While globally the Indian market is the 5th largest consumer market, its share in luxury segment is yet to capture the top 50 for most categories.
In such a scenario, where will growth come from? Are tier 2 & 3 cities destinations next for global luxury brands? A CII-IMRB luxury report ‘Emerging Consumers of Luxury – India Tiers 2 & 3’, jointly published by CII and IMRB International, attempts to answer a few pertinent questions about this important piece of the luxury growth story in India.
This insightful report has been created through a face-to-face research with high net-worth individuals in non-metros, men and women in the age group of 20-55 years, with an annual household income of over Rs 1 crore, about Luxury product categories owned by them and how do they currently access and engage with luxury products/ brands in India.
Research was conducted in tier 2 & 3 cities like Chandigarh, Ludhiana, Kanpur, Coimbatore, Bhopal, Patna, Kochi and Rajkot.
From the report, it’s amply clear Indian men in non-metros continue to seek power and status to validate their position in life, just like their urban counterparts. While non metro women are happily indulging themselves, encouraged by the exposure to international fashion and fascinated by the easy availability of hitherto inaccessible luxury products, they seek high fashion and style and are ready to pay for it. However women are a cautious group with just a couple of designer handbags to ensure just the right impression in society. The small town woman still carries her cultural baggage along with her new found modern and semi westernized identity. The top three aspects Indian consumers value in Luxury Products currently are Quality, Luxuriousness & Fashion Quotient! However, despite this, luxury brand communication in India is very imagery and celebrity-led, except in categories like automobiles.
In the Tier 2 and 3 cities surveyed, luxury automobiles have the highest penetration, followed by apparel for women and accessories for both sexes. Electronic gadgets like mobiles and home electronics also have a reasonably high penetration. In keeping with what we saw as the psychological characteristics of the consumer in these cities, men tend to need to signal their power or status that is possibly best done through automobiles which by sheer size and presence is hard to miss, even on crowded roads. Women on the other hand tend to be more hedonic and buy to enjoy, possibly explaining the prevalence of luxury apparel. Men’s watches too, are a category often portrayed as signals of power, heritage and opulence, thus fitting in with the need for social signaling, whereas men’s apparel even in metro India is yet to get into the luxury sphere with any intensity.
The more esoteric or experiential aspects of luxury ownership – art, travel etc – are still at very low levels of penetration, arguing for a consumer who is as yet on the preliminary, signaling, level of luxury consumption. Few luxury consumers in the smaller cities seem to be in the individual/ self-identity state of mind.