Luxury market saw modest growth in 2012: CII report1 min read . Updated: 19 Nov 2013, 02:33 PM IST
The report highlights the potential of the luxury industry and indicates demand is likely to bounce back by mid-2014
New Delhi: Growth in India’s luxury market was modest in 2012, impacted by sluggish demand across several product categories as a prolonged economic slowdown hit consumer sentiment, according to a report released by lobby group Confederation of Indian Industry (CII) and market researcher IMRB on Monday.
However, the Changing Face of Luxury in India report highlighted the potential of the luxury industry and indicated demand is likely to bounce back by mid-2014 to grow at nearly 17% a year.
To be sure in 2012, the market saw a compounded annual growth rate (CAGR) of 15.7% to an estimated size of $7.58 billion. It is expected to see a CAGR of 16% over the next three years.
The report suggested that while certain categories saw strong growth, others suffered due to rising import duties and a dip in consumer spending.
Over the past three years, across categories, luxury products grew faster than the services and assets segments, with the former seeing a growth rate of 21.8% a year.
Key reasons attributed to this growth was the increased footprint of luxury players and increasing aspiration among consumers with little impact from the market slowdown.
But growth in the luxury watch market saw a steep decline, with year-on-year growth slipping from 40% in 2010 to around 23% in 2012. Luxury jewellery, too, witnessed a similar fall.
The report suggests demand for luxury vehicles remained subdued, and real estate continued to be impacted adversely.
Growth for luxury cars showed a downward trend, with growth rates falling from 35% in 2010 to 16% in 2012. The segment, however, registered a CAGR of nearly 20% in the past three years. In 2012, the segment size stood at $1.46 billion.
Even though growth rates have been sluggish, an increasing number of rich individuals are likely to spur demand in the near future, the report said. India is home to 2.8 million individuals with a net worth of over $100,000 and 254,000 members of the top 1% of global wealth holders and 2,530 people with wealth over $50 million, as per the Global Wealth Report of Credit Suisse 2013.