Global luxury bets on India’s tech and intellectual prowess

In the backdrop of an increasing emphasis on sustainability and technological advancements, the luxury goods market in India is on the path to a significant transformation. India has made consequential contributions to the global luxury industry, which surged to $347 billion in FY2022, as per Deloitte’s 2023 Global Powers of Luxury Goods report. The strategic integration of technology, particularly GenAI, which facilitates personalised customer experiences and real-time support, was credited with driving the overall rise in the sector.

India has grown into the world's second-largest market for gold jewellery due to its expanding middle class and an escalated market for weddings. Jewellery and watch segments are undergoing rapid change as contemporary retail chains featuring well-known luxury brands are giving tough competition to traditional gold retailers (mostly unorganised). Six Indian luxury businesses that specialise in vertically integrated jewellery and rank in the top 100 worldwide producers of luxury products feature in this year's report. The new players, who join Titan Company Limited, Kalyan Jewellers India Limited, and Joyalukkas India Limited, are Malabar Gold & Diamonds, Senco Gold Limited, and Thangamayil Jewellery Limited. These businesses contributed to the industry's 32.8% composite growth in FY22 and recorded sales growth of more than 20%.

“Luxury brands are swiftly embracing environmentally responsible, circular economy models driven by evolving consumer preferences and regulatory mandates. Digital technologies, such as artificial intelligence, machine learning, and the Internet of Things play a crucial role in advancing this green shift while enhancing brand-consumer relationships,” says Anand Ramanathan, partner, Consumer Products and Retail Sector Leader, Deloitte India.

He anticipates these innovations to revolutionise the luxury market, globally. Moreover, with the surge in discretionary spending, Indian consumers are increasingly inclined towards luxury purchases, accentuating India’s pivotal role in shaping the future of luxury retail. He believes the country’s growing economic, demographic, and urbanisation trends are amplifying the demand for jewellery, especially amongst the burgeoning middle-class segment.

Global outlook

As the recovery from the COVID-19 pandemic's effects continued, the world's top 100 luxury goods companies reported personal luxury goods revenues of $347 billion in FY22 (financial years ending between 1 January and 31 December 2022). This represents a sharp increase from $305 billion in the previous year.

Sales of luxury goods continued their recovery from the pandemic in FY22, with double-digit growth across all product categories. 26.5% growth was recorded by the 37 fashion companies, which recovered from a 4.7% decline in FY21. Businesses in the various luxury goods industry expanded on their 37.9% growth in FY2021 and saw a 20.3% increase in sales in FY22.

The jewellery and watch industry accounted for one-third of the top 100 companies and saw 21.0% sales growth in FY22. At 13.0% and 15.5%, respectively, the prestige beauty and bags, and accessories categories both saw double-digit growth. “The data depicts a positive outlook for the future of luxury goods companies across the world in the longer run expressing the rising trend of premiumisation in consumer preferences,” says the report.

Rajeev Singh, partner and consumer industry leader at Deloitte Asia Pacific, says while luxury brands continue their process of moving towards an environmentally responsible, circular economy business model, pushed by customer demand and increasing regulations, technology can help accelerate the green transition while improving the relationship between companies and their customers. “We strongly believe that recent developments in digital technology, including artificial intelligence (AI), machine learning, and the Internet of Things (IoT), may change the luxury market forever, estimating it to grow 5x by 2030,” he adds.