By Radhika ButalaFounder and strategic leader at Better Collective (TBC)
Imagine walking into a luxury store with wooden floors and high vaulted ceilings. There’s a soft jazz soundtrack and along the walls are shelves, empty and polished, showcasing a graceful leather tote bag here, a tri-fold wallet finished in alligator skin, a pair of two-tone calfskin leather brogues. The store is empty, just a freshly shaved man in a suit who greets you with a warm, unobtrusive smile. You explore the bag, feel its expensive softness, examine the delicate stitching, the scent of lily in the air, as you imagine yourself wearing it to the next board meeting. The ruby tones of the leather draw you in, the AmEx is discreetly charged, a thick embossed shopping bag is awarded and it’s all over in a flash.
Total expenditure: 1,67,000 plus tax.
Now imagine the same charge on your credit card, while you are at home on your iPad, watching The Crown, 3 lines description, 3 photos, add to card, payment, confirmation received, Waiting for delivery in 48 hours. Same bag, same brand, same price. It still feels like a luxurious buy or run of the factory Amazon Transaction?
development definition of luxurious in India
Luxury means a lot to the consumer, but at its core, luxury is an experience, slowing down time, enhancing sensory pleasure, a clear acknowledgment of your achievement. The product is almost random. And this ephemeral experience, expertly created in a single store, is something the world’s luxury brands are trying to recreate online with technology and design.
Luxurious sell in India is expected to grow to $7.74 billion in 2023 thanks to a strong post-pandemic recovery and growing consumer demand in tier 2 and Gen Z cities. this comes from offline retail but the contribution of online sales has increased from 3.5% in 2017 to 6.5% in 2021. What is more surprising is that estimates suggest that the online component will increase by 10 % in the next few years.
This begs the question, why would consumers choose to make luxury transactions online? How can brands meaningfully capitalize on this desire? And can it replace or even eclipse traditional offline retail?
The answer lies in looking at emerging luxury consumers, who are dipping their toes in the water but are expected to make up the largest component of luxury shoppers in India in the next 10 years – Generation Z.
Indian luxury buyers
As a generation, uniqueness and identity are extremely important to Gen Z and that means they are very open to luxuries not because of badge value but the influence of purchase. for their ability to express their individual identities and values. This generation acknowledges fashion as their No. 1 expense category while rejecting traditional brand messaging. In the hunt for something truly unique, the luxury price tag shouldn’t be a deterrent. And if that’s the case, they’re equally excited about emerging brands and used luxury goods. And since online is where these consumers spend most of their lives, shopping for luxury goods online becomes less unusual.
Another reason for the shift to online shopping is that substantial demand actually comes from tier 2 and 3 cities, where there are no physical stores. The HNI community in these areas is expanding rapidly, and so is the desire for luxury. According to Knight Frank Wealth Report 2021, Asia has been at the top for 5 years UHNWI Growth forecast (Extreme net worth individuals) with 39%, led by Indonesia with 67% and India with 63%. Brands are investing heavily in luxury markets such as Ajio Luxe, Darveys and tata cliq Luxury to meet this need and is offering a range of services such as virtual styling, personal shopping and digital fitting rooms to bring a real retail experience to customers in cities like Raipur, Indore and Ludhiana. Along with well-thought-out return and refund policies, these marketplaces are also allaying customers’ fears about product authenticity.
Another emerging micro-opportunity is luxury rentals. Used car rental opportunities, high-end jewelry, luxury vacation homes and other properties are finding traction among value-conscious end-segment luxury shoppers . According to a report in 2021, the used luxury car market in India has grown by 15 to 20% annually with sales averaging over 60,000 units per year. Apart from autos, India’s used luxury goods market is expected to grow at a CAGR of 12.18% between 2022-2027.
The way forward for premium brands
One way luxury online potentially further development is with emerging metaverse platforms. Luxury brands are embracing virtual real estate and have the ability to build stores, organize events, and deliver virtual products. This chic hybrid approach could be the future as the demographics and buying behavior of shoppers as well as the media environment rapidly shift into unknown territory.
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