Home to an ever-growing affluent class of spenders, India is becoming an irrevocable force in the luxury market. Unlike a decade ago, the success of any legacy brand cannot be assessed without considering the contribution of the 20 lakh households earning more than two crores annually (approximately $240,000) and the additional 90 lakh households earning between ₹50 lakhs to ₹65 lakhs per year. These households exhibit a burgeoning taste for fine living, driving the evolution and expansion of luxury consumption in the country.
The Indian luxury industry, valued at ₹1,394 billion presently, is projected to reach ₹6,970 to ₹7,380 billion by 2030, according to a study by Bain and Company. This growth underscores India’s emergence as a significant player in the high-end luxury market. News portals are full of reports of how around 30 luxury brands have entered India in just the last two years. Stalwarts like Bulgari, Versace, Tiffany, and Hermes—that left India in 2013-14 owing to the country’s political, infrastructural, and income inequalities making operations difficult—are today bullish on their presence and are going the extra mile in trying to capture the increasingly deep pockets of India.
Take, for instance, Christian Dior, the French fashion house that made a historic, extravagant showcase of their Fall 2023 collection of sari-inspired cuts and Indian embroidery. Jimmy Choo launched an India-exclusive Diwali collection in 2023, and Louis Vuitton released a capsule India collection around the country’s festive season. Italian luxury brand Bulgari has options for mangalsutras, and the list goes on. All of this in just a span of two years.
Indian consumers spent ₹656 billion ($8 billion) on luxury goods at the close of fiscal year 2022. This figure is projected to more than triple by 2030, according to the Bain & Company study. To reach a deeper Indian audience, in just over the last five years, celebrities like Priyanka Chopra, Deepika Padukone, and Alia Bhatt, among others, have become the global faces of brands like Bulgari, LV, Cartier, and Gucci. Many more are now cashing in on the Indian celebrity value.
All this is to show the undeniable force India is. When so much happens at the top of the funnel, it begs the question of why only a limited number of native Indian brands have been able to make a mark on the global luxury market.
Indian Luxury Startup Dilemma
India still has a complex regulatory landscape, supply chain vulnerabilities, and ever-evolving consumer preferences that make entrepreneurs navigating the market look like a big risk. A case in point is Darveys, an online discounted luxury retail venture that is an Indian equivalent of Farfetch, a global luxury retail platform. Started in 2014, the membership-only platform runs on a simple idea; bridging the gap between the cost of luxury goods sold in India and abroad.
Darveys had to deal with legal proceedings against alleged intellectual property rights violations by selling high-end fashion products. While the case was settled in 2018 with the founder, Nakul Bajaj, having to disclose information, it was still a roadblock for the brand to grow initially. Today, however, Darveys claims to be generating a revenue of close to Rs 100 crores.
“It takes time to establish oneself as a luxury platform and people generally don’t have that kind of patience,” says Aditi Chand, co-founder of Tilfi, a direct-to-customer luxury Banarasi saree brand. “To be in this market implies that you’re in it for the long haul,” she adds. Tilfi sells its products exclusively through its website and its flagship retail store in Varanasi. Since 2016, Tilfi has served around 20,000 customers in over 30 countries. With a repeat customer rate of more than 50 percent, they have an average order value of over Rs 40,000.
“We are slowly and gradually building the network, we focus on the craft more than aggressive marketing,” says Chand, adding that they have avoided the mainstream advertising and marketing channels as they want to build on one-on-one customer relationships. “When you want to become a market leader, you cannot be mainstream or tread the same path as every other brand,” she says.
Tilfi’s sells primarily in Mumbai, Delhi and Bangalore. This is in keeping with the 2023 World’s Wealthiest Cities Report by Henley Global that highlights Mumbai, Delhi, and Bengaluru, as collectively boasting 102,200 millionaires, 409 centi-millionaires, and 53 billionaires. Knight Frank, a real estate consultant platform, reports that the number of HNIs in India is expected to surge by 63% from 2020 to 2025.
Is India treading the China path?
“Although there will never be ‘another China’ in terms of outsize growth contribution to the industry, India and emerging Southeast Asian and African countries have significant potential, if the luxury industry’s infrastructure (such as malls) and regulation can evolve quickly enough in those markets,” the Bain report says. “India stands out; its luxury market could expand to 3.5 times today’s size by 2030, propelled by younger customers and an expanding upper and middle class.”
That said, the growth of luxury brands in India has been slower compared to that of China. Why? “The new generation of consumers with substantial disposable income may not be familiar with the history or heritage of luxury brands. This can make it difficult for global luxury companies to establish their brand identities and connect with consumers on an emotional level,” claims, Ashok Som, Professor of the Management Department at ESSEC Business School, in a report.
“While many international luxury brands have expanded their brick-and-mortar offer, opening a retail location in India remains a challenge. This is because there is a lack of available options: there is not always space in a neighbourhood conducive to luxury shopping, and there are strict regulations on retail ownership,” he adds.
This scenario, however, is changing. Multiple international luxury fashion brands among the likes of Brioni, Roberto Cavalli, and Dunhill are said to be launching through 2024. The French luxury company SMCP, in partnership with Reliance Brands, will launch its flagship store Sandro and Maje this year. Galeries Lafayette, a leading shopping centre based in Paris, also plans to enter India by opening two stores in Mumbai and Delhi-NCR in collaboration with Aditya Birla Fashion and Retail; the exact date, however, is yet to be finalised.
Reliance Brands and Aditya Birla Fashion have been aggressive with their plans for international luxury brands in India. Yet much more can be done.
The global luxury startup boost
“What India lacks is a boost from government and/or companies for people to experiment with this market,” says Shubham Raj, a luxury brand manager with IWC Schaffhausen. Citing the LVMH accelerator program that welcomes 50 international startups each year.
LVMH launched La Maison des Startups in 2017 to accelerate collaboration between the group’s 70 Maisons and potential startups. “The program enables engagement with entrepreneurs whose innovations are relevant to the different LVMH business groups: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry and Selective Retailing. With 89 workstations, the LVMH program at STATION F welcomes 50 international startups each year during two six-month terms,” states the LVMH website. “If Reliance or Aditya Birla starts an initiative like this, it would drastically change the face of luxury entrepreneurship in India for the better,” claims Raj.
Another example of a luxury startup incubation success comes from Deependra Pandey, a venture capitalist in Geneva, who founded the Luxury Venture Group (LVG), a Swiss incubator dedicated to the collaboration between startups, established luxury brands, and investors. Aiming to build Switzerland as an ecosystem of startups, venture capitalists, and business incubators in the luxury space.
Switzerland holds a reputation for high-end mechanical watches, jewelry, leather goods, hospitality, furniture, and even private jets. What was missing though was a dedicated collaboration venue for startups in the luxury space. LVG identified the gap to connect entrepreneurs, who hold some of the keys to the future of luxury, with established companies and financiers.
Numbers show that India is poised to become a luxury superpower, not only in terms of buying but of production of world-class, high-quality, handcrafted legacies as well, as the world embraces the ideas of slow, purposeful, artisanal luxury. What remains to be seen is how Indian brands capitalise on this massive growth.
