New Delhi: At the Mint Luxury Conference in New Delhi on Friday, Joydeep Bhattacharya, head of consumer products and retail practice for India at Bain and Co., spoke about the challenges in luxury retail in India that has led to a “steady, but not spectacular” growth of the sector over the past few years. However, over the next few years, Bhattacharya said in an interview that the right mix of investments by luxury brands as well as the right product portfolio will be important to cater to the growing luxury consumer base in the country. Edited excerpts:
What do you think is causing the lag between the luxury market and the growth of high networth individuals in the country?
The two key factors we see that have not helped luxury brands realize the potential of the market is firstly the extent of investments made by luxury brands both in terms of creating the environment and in terms of the investments they have made in awareness creation and secondly getting the right products that address the market with the right price points. As we noticed in the (Bain) report today (presented at the Mint Luxury Conference), there has been a significant jump in the number of high networth individuals in India over the past six years, so we do believe that there is potential far in excess of what the market figures today would suggest.
What can luxury brands do to target the aspirational consumer?
First and foremost, one is to make sure that you are providing the right product service experience, to get products which are relevant for the target audience/consumer you are catering to and at the right price point, i.e., getting the right product portfolio. Second is to be innovative. There is a shortage of the kind of retail environment that brands have experienced abroad. It is time for brands to be innovative, go to high-end malls, and look at converting heritage buildings into the right kind of retail spaces. Currently, the product and the right retail approach are the two key factors that will help luxury brands.
You said 10 years from now there will be a major shift in the profile of the luxury consumer.
It’s happening as we speak. Today, the traditional wealthy are more dominant. But over the next 10 years you will see that the growth in the number of high networth individuals will come from young professionals as well as the first-generation entrepreneurs, who will be key consumers of luxury brands.
What will be the key factors driving retail growth?
At a minimum, there’s got to be a more favourable regulatory environment than one that is there right now. Secondly, there has to be far more availability of the right kind of infrastructure, but that’s more like a necessary and not a sufficient condition. What’s going to help realize the potential of the market is making sure the right luxury brands make the appropriate investments in retail, in awareness, in brand-building in order to generate demand.
What categories will see growth in the luxury market?
Segments such as luxury cars, hard luxury—i.e. watches and jewellery—will see promising growth for sure. Other categories (such as apparel and accessories) are small enough that any specific supplier-led push or investment by a particular brand can drive growth for a short period of time.