India isn’t just hopping onto the luxury bandwagon; it’s driving the whole convoy, reshaping the global luxury scene as we know it. With an economy revving up to be the fastest-growing, backed by solid domestic demand and top-notch infrastructure, India is quickly becoming the go-to hotspot for luxury brands.
In the next decade, while major economies grapple with recessionary woes, India is set to soar, with a projected growth of around 7 per cent, catapulting it to the rank of the world’s top five economies. According to EY, India is likely to cross the critical threshold of US $ 5 trillion, US $ 10 trillion and US $ 20 trillion in market exchange rate terms in FY 2028, FY 2036 and FY 2045 respectively. The country is now the fifth biggest economy globally and the Modi government aims to make it the third largest by 2027. No wonder, India is forecasted to be the fastest-growing economy amongst the G20 nations in 2024.
According to Statista, the revenue of the luxury fashion market in India is estimated to reach US $ 1.56 billion by 2024. With the increasing demand for luxury brands, this could be an attractive sector for investors.
Luxury brands significantly expanded their footprint in India in 2023, leasing over 600,000 square feet of retail space across various formats, a 170 per cent jump from the previous year, according to a report by real estate consultant CBRE South Asia and the PHD Chamber of Commerce and Industry.
Luxury brand leases in malls zoomed by 300 per cent to 240,000 square feet. High street store formats also grew, with a 100 per cent increase in leasing to 300,000 square feet, while standalone store leases jumped over 200 per cent to 100,000 square feet.
High street locations comprised around 45 per cent of the total luxury leasing in 2023, malls accounted for 40 per cent and standalone stores constituted the remaining 15 per cent, the report said.
India’s full of ‘Richie Rich’
Between 2023 and 2028, India is poised to experience the highest growth rate in the number of ultra-high net worth individuals (UHNWIs), with a net worth of US $ 30 million or more, as per a Knight Frank’s report. This firmly establishes India as a prominent contender in the global luxury arena.
It said the number of ultra-rich Indians is projected to increase by 50.1 percent to 19,908 in 2028 from 13,263 in 2023. Following India are China (47 per cent), Türkiye (42.9 per cent) and Malaysia (35 per cent). The primary driver behind this rapid growth in India is its robust gross domestic product (GDP) expansion.
The report also notes that in 2023, India witnessed a yearly increase of 6.1 per cent in the UHNWI population compared to the previous year. Globally, the number of UHNWIs rose by 4.2 per cent to 626,619. The cherry on top—these ultra-rich Indians are optimistic about their wealth prospects in 2024.
Report after report forecast the growth of affluent individuals in India. According to a report by Henley & Partners, India is home to 326,400 millionaires (more than US $ 1 million), 1,044 centi-millionaires (more than US $ 100 million) and 120 billionaires (more than US $ 1 billion).
Mumbai, positioned at 24th on the list of 50 cities, boasts a considerable affluent population, with 58,800 millionaires, 236 centi-millionaires and 29 billionaires. The city has seen an impressive 82 per cent increase in millionaires from 2013 to 2023.
Delhi, securing the 37th spot, is home to 30,700 millionaires, 123 centi-millionaires and 16 billionaires. Delhi has witnessed a notable 95 per cent growth in millionaires over the same period, indicating significant wealth creation and accumulation within
the city.
Bengaluru, while not featuring in the top 50 list, emerges as a city to keep an eye on due to its dynamic economic growth. Ranked 9th amongst the ‘cities to watch’, Bengaluru hosts 13,200 millionaires, 42 centi-millionaires and 8 billionaires, demonstrating an exceptional 120 per cent increase in millionaires over the past decade.
Luxury takes flight
The French luxury fashion house, Louis Vuitton, was the first international luxury brand to enter the Indian market in 2002 with its store in Delhi. Owned by Kering, Gucci initially entered India in 2007 through a franchisee arrangement but switched to direct entry via a joint venture in 2009. The Geneva-based luxury goods group Richemont entered the ‘single brand’ retail space in 2014 with a US $ 5 million investment. Since then India has witnessed a deluge of luxury brands establishing their presence in the market, entering through different routes.
For instance, Jio World Plaza, India’s largest luxury mall, opened in Mumbai’s Bandra Kurla Complex on 1st November 2023. The retail mix at Jio Plaza boasts an impressive roster of 66 luxury brands. Notable international newcomers to the Indian market include Balenciaga, Pottery Barn Kids and RIMOWA. Mumbai welcomed its first stores of Valentino, Tory Burch, YSL, Versace, Tiffany, Ladurée and Pottery Barn, while key flagships include other iconic brands like Louis Vuitton, Gucci, Cartier, Bally, Giorgio Armani, Dior, YSL and Bulgari.
Aditya Birla Fashion and Retail Limited (ABFRL) has forged a strategic alliance with Galeries Lafayette, known worldwide for its iconic Boulevard Haussmann location in Paris, to introduce luxury department stores and a dedicated e-commerce platform in India. The flagship stores in Mumbai and Delhi will showcase an extensive collection of over 200 luxury and designer brands.
| Today, China stands as one of the largest markets for international luxury brands. The growth and profitability of the luxury brands heavily rely on their performance in China. Similarly, with the rapid expansion of the Indian economy, India emerges as a crucial segment for international brands. Prashant Aggarwal, Co-founder and JMD, Wazir Advisors |
Some of the brands that can found in Galeries Lafayette’s stores are Maison Margiela, Ralph Lauren, DKNY, Emporio Armani, Wacoal, Prabal Gurung, Alexandre Vauthier, Victoria Beckham, We11done, Ted Baker, Kate Spade, rag and bone, Neil Barrett, Olivia Von Halle, Paladini Gianantonio, Simone Perele, Spanx, Comme Des Garcons, JW Anderson, Ksubi, Eleven Paris, Attico, David Koma, Paco Rabanne, Isabel Marant, Rokh, Paper London and Alexa Chung amongst others.
The Mumbai flagship, spanning 90,000 square feet, is slated to open its doors by 2024. Expected to launch in 2025, the Delhi store covers an area of 65,000 square feet and will be located at DLF Emporio, one of India’s premier luxury malls.
India’s retail sector is growing by leaps and bounds further providing avenues for the growth of luxury segment. For instance, by 2027, Indira Gandhi International Airport’s Aerocity is set to reveal India’s largest mall, covering a vast expanse of 2.8 million square feet. This marks a significant milestone in a US $ 2.5 billion expansion initiative aimed at establishing the nation’s inaugural aerotropolis— a metropolis in close proximity to an airport—which is projected to expand eightfold within the next five years. Currently boasting 15 lakh square feet of leasable area, Aerocity is slated to add over 1 crore square feet by 2029.
Franchising emerges as the preferred entry method
Nearly all luxury brands operate through the franchise or licensing route. Despite significant improvements in the ease of doing business in India over recent years, launching Exclusive Brand Outlets (EBOs) still poses several challenges for global brands. It requires a deep understanding of local business practices, operational culture and regulatory landscape. Additionally, the mandatory 30 per cent local sourcing requirement, despite the permissions for 100 per cent foreign direct investment (FDI) in single-brand retail and 51 per cent in multi-brand retail, presents a significant hurdle.
India’s retail sector is dominated by large local conglomerates such as Aditya Birla, Reliance and Tata, who are actively building retail portfolios. Many global, regional and local brands are leveraging these existing assets rather than investing in their own EBOs. After all, as per reports, 80 per cent or more of the sales for luxury brands still come from bricks-and-mortar stores. Collaborating with these local giants offers luxury brands a swift entry into the market and broadens customer touchpoints. However, this approach also requires direct or indirect competition with local industry leaders, necessitating substantial financial resources, long-term planning and resilience. A comprehensive value chain and economic analysis are crucial before implementing an EBO strategy.
Retailers are adopting unique business models to attract brands. For instance, although Reliance has not yet disclosed details regarding the tenants, lease agreements obtained from real estate analytics firm CRE Matrix indicate that Burberry Group, along with various brands affiliated with LVMH, Kering and Richemont, has committed to leasing retail spaces within the mall. Furthermore, these brands have agreed to share a portion of their monthly net revenue with Reliance, ranging from 4 per cent to 12 per cent.
In order to maintain the luxury appeal of the mall, certain lease agreements, such as that of Dior, include a clause entitling them to a 25 per cent rent reduction if at least four of the 10 luxury brands, including Gucci, Cartier, Bulgari and Tiffany, fail to open their own outlets within the mall within six months.
Luxury brands are now also available in multi-brand outlets. For instance, The White Crow, a multi-brand concept store under Reliance Brands, showcases an array of premium fashion brands such as Superdry, Salvatore Ferragamo, Scotch & Soda, Adidas Originals, Brooks Brothers, Onitsuka Tiger, G-Star Raw, Steve Madden, Armani Exchange, Coach, Diesel, Replay, Dune, DC Shoes, Canali, Kate Spade and many more.
What sets The White Crow apart is its innovative approach to merchandising, which moves away from the traditional shop-in-shop model and organises products based on categories rather than brands. This curated collection features premium brands and includes various fashion and lifestyle categories such as casualwear, formalwear, customisations, fragrances, handbags, shoes, collectibles, luggage and tableware. It has stores in Ahmedabad, Chandigarh, Hyderabad, Surat, Jaipur, Lucknow, Raipur, Dehradun, Indore, Ranchi, Pune. It also has a Pop-up at Jio World Drive, Mumbai.
India next to China for luxury fashion
According to Statista, by 2024, the global Luxury Fashion market is forecasted to generate a revenue of US $ 115.90 billion. Projections indicate an annual growth rate of 3.25 per cent for the period spanning from 2024 to 2028 (CAGR). However, advanced economies like the US are set to remain stagnant this year. China — another important market for luxury — also continues to face macroeconomic headwinds.
Amidst China’s sluggish recovery casting a shadow over the global luxury sector, India’s flourishing growth narrative emerges as a beacon for luxury brands. For instance, Kering’s recent warning of a sharp first-half profit decline attributed to weak demand in Asia, particularly China, alongside challenges in revitalising its flagship brand Gucci, reflects the prevailing uncertainties. Similarly, Ermenegildo Zegna witnessed a revenue dip in the first quarter, driven by dwindling sales in the Greater China region, notably affecting its Thom Browne label.
| 326,400 According to a report by Henley & Partners, India is home to 326,400 millionaires (more than US $ 1 million), 1,044 centi-millionaires (more than US $ 100 million) and 120 billionaires (more than US $ 1 billion). |
LVMH’s reported first-quarter sales decline of 6 per cent in Asia, excluding Japan, underscores the current market dynamics amidst China’s ongoing recovery struggles.
The luxury industry had anticipated a tough first quarter compared to the previous year’s growth following China’s relaxation of stringent Covid lockdowns. However, a confluence of factors, including property crisis, stagnant private sector investments and trade tensions, continues to impede Chinese economic growth. Bain & Co. forecasts China’s luxury sales will slow to the mid-single-digits this year — down by 12 per cent from 2023.
“Today, China stands as one of the largest markets for international luxury brands. The growth and profitability of the luxury brands heavily rely on their performance in China. Similarly, with the rapid expansion of the Indian economy, India emerges as a crucial segment for international brands. Whether its luxury cars, watches, fashion or shoes, all sectors are witnessing significant growth,” said Prashant Aggarwal, Co-founder and JMD, Wazir Advisors, management consultant for the textiles, apparel, agribusiness and consumer goods sectors.
| New Definition of Luxury
Gone are the days when luxury was solely defined by intricately and meticulously designed clothes. Today, simplicity can also exude luxury. The definition of luxury has transcended beyond intricate embellishments and opulent fabrics to include a more nuanced understanding. Brands now adhere to the ‘less-is-more’ philosophy, prioritising essential elements over unnecessary embellishments. “A simple yet impeccably tailored garment crafted from the finest materials can evoke a sense of luxury like never before. Moreover, the idea of luxury has become more inclusive, embracing diversity and individuality. It’s no longer confined to traditional notions of extravagance but includes experiences, sustainability and social responsibility, appealing to a more mindful consumer base finding a personal connection in the expression of their style,” said Gautam Gupta, Creative Director at Asha Gautam and Founder of GG by Asha Gautam, a luxury fashion and lifestyle brand made from indigenous crafts of India. Clean lines and elegant minimalism now hold as much allure as elaborate detailing, emphasising the quality and attention to detail in each piece. “In this new era, luxury is not about what we wear; it’s about how it makes us feel, how it aligns with our identity. This is the luxury I stand for—a luxury that is personal, meaningful and effortlessly chic,” stated Mandira Wirk, Pearl Academy Alumna, Fashion Designer and Founder and Creative Director of the label, Mandira Wirk. “When it comes to consumer preference and trends, while logo love is still prevalent, luxury consumers in the country are associating luxury with being purposeful, authentic, craftsmanship, conscious consumption and more. Sustainability is another key theme. There is an increasing demand for sustainable and ethically produced apparel among consumers. Consumers today are conscious of their consumption, which is encouraging brands to prioritise sustainability,” stated Gopal Asthana. “Today’s Indian luxury consumers are a sophisticated bunch. Forget gaudy displays of wealth; they crave experiences, quality and brands that align with their values. A 2023 report by Kearney highlights this – 72 per cent of Indian luxury shoppers prioritise brands with a strong social and environmental conscience. Sustainability is the new status symbol,” said Somdutta Singh, First-Generation Serial Entrepreneur, Founder and CEO, Assiduus Global Inc., LP Angel Investor and Ex-Member, Niti Aayog. Whereas Mandira Wirk emphasised, “Luxury is no longer confined to the complexity of design; it’s about the integrity of materials and the craftsmanship that speaks volumes. Today, luxury doesn’t scream for attention; it whispers through a perfectly tailored dress that drapes effortlessly and cradles your skin. When executed with precision, simplicity becomes the ultimate sophistication.” |
India’s luxury e-commerce race
As the luxury market in India continues to evolve, benefiting both local designers and international brands, the e-commerce sector is experiencing rapid growth as well.
Platforms dedicated exclusively to the luxury segment, such as Ajio Luxe and Tata CliQ Luxury are competing to serve India’s affluent clientele by offering premium goods. Additionally, online retailers like Myntra, owned by Flipkart, have collaborated with Aditya Birla Fashion Retail Ltd.’s The Collective, a multi-brand luxury lifestyle retailer. This partnership aims to provide a broader range of high-end clothing, accessories, bags and shoes through Myntra’s Luxe section. The Collective boasts long-term exclusive partnerships with renowned brands such as Ralph Lauren, Hackett London, Simon Carter, Ted Baker, Fred Perry, Forever 21 and American Eagle.
Whereas Reliance-owned Ajio has more than 70 luxury brands on its platform such as Emporio Armani, Boss, Coach, Giorgio Armani, Hugo, Michael Kors, Paul Smith, Puma, GAP, Levis, Marks & Spencer, Miss Chase, Nike, Tommy Hilfiger, Vero Moda, Aeropostale, Alcott, Brave Soul, French Connection, Guess.
Similarly, Tata CliQ Luxury, part of the Tata Group, offers a range of luxury apparel brands such as Aldo, Antony Morato, Balmain, Burberry, Chiara Ferragni, DKNY, Davidoff, Ermenegildo Zegna, Gucci, Hermes, La Vie En Rose, Marc Jacobs, Prada and Roberto Cavalli. The platform’s model is based on a mix of Indian luxury labels and international brands distributed in India by Genesis Luxury, one of the country’s largest distributors of high-end fashion brands. This collaboration predates Reliance Brands’s acquisition of Genesis Luxury in 2018. Meanwhile, Tata CliQ Luxury is also venturing into home goods, beauty and fragrances, following from its fashion offer. Investment in e-commerce from large conglomerates such as Reliance and Tata is indeed a positive sign.
| Jio World Plaza, India’s largest luxury mall, opened in Mumbai’s Bandra Kurla Complex on 1st November 2023. The retail mix at Jio Plaza boasts an impressive roster of 66 luxury brands. Notable international newcomers to the Indian market include Balenciaga, Pottery Barn Kids and RIMOWA. |
Reaching Tier-2 and Tier-3 cities, targeting Millennials and Gen Z
Given that wealth is spread across the country, e-commerce allows luxury brands to easily reach a wider audience in the country, increasing accessibility and making it convenient for customers to shop. In addition, online platform growth in other regions.” He also drew attention to the hurdle of high import duties faced by international brands, noting that these duties could lead to increased product costs. Given that many of these brands operate within global supply chains, India’s role in their sourcing mix is minuscule.
Sensible luxury retailers are aiming to replicate the exceptional personal service experienced in physical luxury stores in India within their online platforms. Tata, for instance, ensures luxury chauffeur delivery, provides guarantees and warranties for its brands and offers select loyalty programs with personalised services.
E-commerce firms are employing diverse strategies to attract customers. Take Darveys, for instance, which claims to provide 100 per cent authentic luxury items sourced directly from over 1500 boutiques and retailers across the USA and Europe. The brand assures customers with an ‘authenticity guarantee’, promising to refund twice the purchase price in the event of any authenticity concerns. With over 100,000 luxury products available on Darveys.com and an average of 400 new luxury items added daily, customers have access to an extensive and continuously expanding selection.
