Luxury shopping which is often supposed to be the ‘prerogative’ of the well-off metro residents is getting democratised—thanks to a growing young working population which doesn’t shy away from spending big on products they like and the rise of digital media that has made a flood of information available to consumers at the tap of their smartphone screens.
“Consumption of luxury in smaller towns is increasing with better accessibility. Typically, their purchases are similar to those of status seekers in the metros. As a result, logos make a difference. These consumers also prefer more expressive products,” says Amit Pande, brand head, of The Collective & International Brands at Aditya Birla Fashion & Retail (ABFRL). To translate the growth in the adoption of luxury shopping in the non-metros in numbers, Tata Cliq Luxury gets about 40% of its revenues, whereas ABFRL’s The Collective gets 50% of its sales from non-metro stores. Myntra has seen more than 50% of its customer base in tier-II cities and beyond purchasing luxury products on the platform.
“The share of even tier-III and tier-IV towns is increasing year-on-year. We are seeing good revenue contributions from HSM (Hindi-speaking markets) markets like Ludhiana, Chandigarh, Amritsar, Karnal, Assandh, and Rewari. Some markets in the south, like Hospet, Nellore and Gangtok, Dhaka (East Champaran, Bihar) in the eastern region have also been contributing to our revenue,” says Gitanjali Saxena, business head at Tata CLiQ Luxury.
With small-town Indians getting chicer in their sartorial approach, the strategy now for luxury retailers is to tap into the non-metro markets by curating a wide selection of products at varied price points. The pricing of ABFRL’S luxury offering The Collective, for instance, can range from some thousands to as much as Rs 3,50,000. After all, in a fragmented market like India, the opportunity for brands rests in consumers’ diverse taste palates and choices.
For many, the route to the consumption of luxury products is often built through the adoption of entry product categories like sunglasses and perfumes. “Everybody may not be able to afford Gucci but almost everyone has heard of it and if they can get it at an affordable price point, they will buy it,” points out Saxena.
Tata Cliq Luxury whose long-term play is to grab a share of the top five million households in the country is building a wide assortment of products; so is Myntra Luxe whose approach will be to widen the spectrum of choice and brands to cater to what it calls the ‘fashion-forward cohort’ better. “A significant chunk of customers shopping for luxury products across all tiers can be classified under the High earning-not rich yet (HENRYs) customer cohort,” says a company spokesperson.
ABFRL’s The Collective plans to broaden its footprint across distribution formats with a particular focus on the digital. The firm is banking on India’s consumption story. “The number of households with incomes greater than $500,000 is expected to increase from 5 million to 25 million over the next decade,” says Pande. Given that the reach of luxury brands is still underpenetrated in India, the scope for local players is immense.
“A lot of these (global luxury) brands today don’t exist fully in India. Entering India is not that easy. We have a lot of brands which have only gone online with us or they have gone first time online with us. As brands embrace digital, we will see more such luxury brands going online. As the market matures, we will launch more brands,” says Saxena. The brand from the house of the Tata Group, which recently inked a partnership with Gauri Khan Designs as its exclusive online retail partner, may also broaden its play and venture into segments like fine arts, and passion sports going ahead.
Inflation hasn't dampened growth in the consumption of luxury products. Luxury, industry executives say, is an ‘inflation-proof category.’ And there are numbers to substantiate the claim. . “We have sold a perfume from Roja Parfums priced at upwards of ₹1.5 lakh that was exclusively available on the platform. Recently, we sold a very high-end treadmill worth Rs 3 lakh,” says Saxena.
The diversity of Indian households in terms of income, purchasing power and choices has given a fillip to the adoption of luxury retail. Consumers are increasingly experimenting. While earlier people used to subscribe to only core luxury categories, they are today widening their shopping carts and spendings on segments like home, watches and even small items like candles. Consumers are also looking at brands which promise a unique and differentiated proposition.
“While many go only for big brands, many others like to discover new brands..that’s where a lot of our brands in the IndiLuxe segment do well. People are looking at brands from a sustainability angle, they are looking at the brand design, its suitability with respect to a particular occasion..shopping is becoming more and more personalised,” says Saxena.