India's changing demographics

The Economic Times is currently holding a Dialogue on Luxury in New Delhi, and Neelesh Hundekari of AT Kearney gave a highly-anticipated presentation on 'Indian Luxury Industry - Opportunities and Challenges'.

One of the surprising findings of the study, aided by the Indian Market Research Bureau (IMRB), was the demographic profile of the Indian luxury consumer. According to their research, 52 per cent of luxury expenditure is exercised by consumers belonging to the 25 to 34 year age bracket.

Defining the Indian consumer profile, Hundekari said, "The Indian luxury consumer is a high net-worth individual (HNI) who expects exclusivity, quality and service yet value for money. While he is willing to make an expensive purchase, he expects the best bargain."

The Indian consumer has turned a corner, it seems, as guilt was no longer associated with luxury buying. Ending on an encouraging note, Hundekari highlighted the expected rate of growth within the luxury industry in India, saying, "The luxury products category comprising watches, jewellery, high-end electronics, personal care and apparel and accessories will grow at a rate of 28 per cent per annum. In terms of revenue, the present $377 million will rise to $1 billion by 2010."

Highlights
Indians splurge $2.9 billion on luxury assets (essentially private jets and luxury homes, cars or yachts and art), spend another $953 million on luxury services and top it by buying luxury goods worth $377 million

Big spenders identified in the survey include industrialists, professionals, self-employed and top guns working for leading corporates. Consumers of luxury are located across the nation, be it Kanyakumari or Kancheepuram in the south, Jalandhar and Lucknow in the north, Surat and Pune in the west or Asansol in the east. Mumbai, Delhi and Bangalore are the top three cities in terms of rupee millionaires

A very interesting fact highlighted by the survey was the potential of India to be a source for luxury goods for consumers across the world. Manufacturing luxury items in India can grow to $500 million and India's strengths include traditional craftsmanship and low labour cost

There are a number of challenges, too, including regulatory issues and high taxation. The import duty on premium cars, for example, stood at 205% while wines & spirits invite 185% customs levy. The survey also pointed out that that import duty was high in the case of personal care items, fragrances, leather accessories and watches

Source: Economic Times