With its vast population and expanding economy, India is the fastest growing globe shopper nation in Southeast Asia. What is fuelling this growth and how can European retailers realise its potential?
Currently accounting for a modest 1-2% of total spend on global luxury goods, India is increasingly proving its position as a critical globe shopper market and an opportunity impossible for international luxury brands to ignore.
According to Global Blue data, Indian globe shopper spend increased by +23% during 2017, with destinations including the UK (+30%), Italy (+21%) and Switzerland (+30%) experiencing the largest advances.
In addition, 15% of transactions by Indian globe shoppers were over €5,000, in comparison to 5% of Chinese transactions, and frequent Indian globe shoppers spent an average of €3,400 during the year in comparison to a global average of €2,460.
What will drive continued growth in India’s global luxury spend?
A number of factors are fuelling India’s global luxury goods consumption:
Rising incomes: Rising incomes are starting to benefit wider sectors of the population, rather than only the educated and elite. As a result of increased spending by the middle classes and affluent working classes (described as the Urban Mass by Goldman Sachs), the Boston Consulting Group predicts that India will be the world’s third-largest consumer market by 2025.
Meanwhile the rich list continues to grow; around 500 new ultra-high-net-worth individuals (defined as those with investable assets of at least $30 million) have emerged each year in India over the past decade, reports Knight Frank. Over the next 10 years, that number is predicted to double, to approximately 1,000 per year.
Increased relevance of luxury brands: While the Chinese luxury buyer is highly aware of international brands, India has not yet demonstrated this massive demand and brand awareness derived from travel.
However, Indian consumers are starting to demonstrate a stronger preference for international luxury fashion brands. Their exposure to these brands is becoming more pronounced through increased internet consumption (set to reach 500 million by June 2018, says IAMAI/Kantar) and due to several major luxury players (including Ermenegildo Zegna and Longchamp) recently joining or expanding their presence in the country.
In addition, Indian brands are making a name for themselves in global luxury circles; Titan, Gitanjali Gems and PC Jeweller have all recently been added to the Deloitte list of the top 50 global luxury brands.
A growing and motivated youth market: With Millennials projected to account for 40% of the global market for personal luxury goods by 2025 (Bain & Company), India’s rising tide of style-conscious, brand-savvy young consumers is set to propel its expenditure into new highs. India’s 440 million Millennials and 390 million Generation Z members (Goldman Sachs) outnumber even China’s young people.
The opulent wedding industry: Estimated at $50 billion, the Indian wedding market is focused on luxury spending and presents a huge opportunity for international brands, particularly when it comes to watches and jewellery, and fashion and clothing. Global Blue January 2018 data showed spending by Indian globe shoppers in these two categories grew by +50% (watches and jewellery) and +19% (fashion and clothing) year-on-year in Europe.
Attracting Indian globe shoppers to European stores
India’s emerging consumer market is diverse and complex. Retailers looking to attract the Indian globe shopper to their European stores should ensure they understand these clients’ different profiles and behaviours in order to best market to them.
Digital communication and social media presence provides a vital opportunity for those looking to engage and capitalise on the youth market. Digital influence on purchase decisions is growing in India; currently about 70% of those who have access to the internet go online to make informed purchase decisions, says the Boston Consulting Group.
Finally, strict measures including a tax on luxury goods introduced by the Indian government in 2016 are a further factor. Indian consumers, typically more value-conscious than their Chinese counterparts, are increasingly looking beyond India’s borders to get the best deal. Luxury brands should take advantage of opportunities to offer their Indian customers savings, for example with Global Blue’s Tax Free Shopping scheme.