As India marches on to becoming one of the strongest and biggest economies to watch out for, its luxury segment is proving to be the best example of scorching growth which has taken the world by storm. All thanks to the demographic advantage and spectacular growth momentum of the country. Ever since the pandemic ended, Indians have come out in droves, first with revenge shopping, and then backing it up subsequently with some serious spending on expensive brands.
Keeping this in mind, it comes as no surprise that various industry experts are expecting India’s luxury market to grow rapidly over the next few years. As global brands are making a beeline for Indians’ pockets, this emerging trend pushing the growth of the luxury segment is not going anywhere soon.
According to a research report of CBRE, premium watch, jewellery, fashion and apparel brands leased more than 600,000 square feet space in 2023, the highest in the last six years, amid the rising demand in the luxury segment. Notably, the share of luxury brands in overall leasing in India surged to 9% last year from 3% in 2018. The brands leased 230,000 sq ft space in 2022.
Factors Driving the Growth Of Luxury Segment In India
Two of the main reasons why global luxury brands are expanding their presence in India are – growing aspirations and interests of consumers regarding international products. Secondly, the surge in the share of disposable income. Moreover, the increasing number of retail spaces in the top cities of India including Delhi, Mumbai, and Bangalore has also encouraged the foreign brands to establish their footprints in the country.
As global companies continue to expand, it will give a major boost to the retail leasing in our country. The retail leasing in India recorded an all-time high in the previous year, taking up 7.1 million square feet across eight cities despite the top retailers slowing down on store expansion.
Some of the notable expansions by international players include French fashion and apparel brand – Bugatti Fashion and American furniture brand – West Elm opening their stores in Pune in 2023. In addition to this, Canadian lingerie retailer La Vie en Rose made its debut in India in partnership with Apparel Group India.
The brand launched its first store in Noida and later expanded to Pune and Bangalore. Similarly, a German luxury luggage brand Rimowa entered India by partnering with Reliance and opened its first store in Mumbai.
Retail Leasing Outlook For 2024
As per CBRE report, the retail sales and consumer spending can witness a downtrend in the upcoming months as compared to 2023. Hence, the retailers need to enhance their in-store experiences to increase customer engagement. On a positive note, India’s luxury market is expected to reach $85-90 billion by 2030, propelled by increasing ultra-high-net-worth individuals (with net assets of at least $30 million), growing entrepreneurship, greater penetration of e-commerce and demand from tier-2 and tier-3 cities, according to the Bain & Co report.
The tier 2 and tier 3 cities in India are now emerging as the best investment hotspots and retailers can tap these high-potential markets at lower operating costs to gain larger consumer traction. Although, they will still be needing to build brand and facilitate in-person shopping experiences in such areas.