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Cruise Norway’s Antarctic voyages cost as much as $10,000. But that has not deterred Indians by the boatload from perusing the company’s website.

“We were getting so many hits from India that we felt that there was a market here,” says John Ambat of Cruise Norway, which has now opened offices in several Indian cities. “Indians were booking suites and the most expensive cabins.”

Cruise Norway’s typical Indian customer works for one of the country’s large corporate houses or a booming technology company. “Many of them are businessmen who are very well travelled and have ‘been there, done that’,” Mr Ambat says.

India’s share of the global luxury market is still small. But purveyors of luxury goods and services are keen to set up shop as affluence grows and Indian consumers become more discerning.

Companies such as upscale electronics maker Bang & Olufsen and fashion designers Escada and Brioni have recently opened shops in New Delhi and Mumbai, joining the likes of Chanel, Louis Vuitton, Versace, Fendi and Valentino. Ermenegildo Zegna, the luxury suit retailer, yesterday launched the country’s largest luxury store, a 3,000-square-foot shop in Mumbai’s Taj Mahal Palace and Tower Hotel.

Although at least 200m Indians struggle in extreme poverty, the uppermost ranks of the country’s 1.1bn citizens are enjoying unprecedented prosperity.

India has the most billionaires of any Asian country, with 36 together worth $191bn, according to Forbes’ annual list of the world’s wealthiest people. Fourteen Indians were new to Forbes’ list this year.

Apart from the very wealthy, there are another 1.6m households in India that earn more than $100,000 per year, according to a study by market research firm The Knowledge Company. Their rolls are growing by about 14 per cent annually. These households spend about $9,000 a year on luxury and premium goods and services, translating into a market worth $14.4bn.

Early entrants to India have dispelled doubts about the country’s appetite for premium goods. When luxury carmaker Bentley launched in Delhi in 2003, says Satya Prakash Bagla, director of Bentley New Delhi, “people thought we’d close down within a year”. A Bentley costs about $430,000 in India, including 114 per cent import taxes.

But Mr Bagla says sales have been so encouraging that Bentley is considering opening an outlet in Mumbai next year. Rolls Royce, Maybach and other luxury carmakers have since followed Bentley into India.

BMW this spring opened an assembly plant in southern India to cater specifically to domestic customers. The plant will roll out about 1,700 cars a year priced from Rs2.67m ($62,000) to Rs4.2m, or at least 12 times the local price of entry-level compact cars. BMW sold 257 cars in India last year but growth expectations are so high that its new plant could expand to eventually roll out 10,000 cars a year.

And at the top end of the market, private jet makers Dassault and Bombardier regard India as one of their most promising growth markets for planes that cost tens of millions of dollars. Dassault sold five business jets last year in India, one short of its total sales in the country over the previous 14 years. Bombardier opened a sales office in Mumbai last year.

As purchasing power increases, Technopak, the consulting company parent of The Knowledge Company, foresees that the items of most interest will be women’s jewellery, handbags and shoes, men’s clothing, watches, gourmet food and wine.

“There are so many young entrepreneurs or chief executives who are very wealthy. Power dressing would be a clear indicator of their position in business,” says Saloni Nangia of Technopak. “And Indians are extremely fond of jewellery.”

About 1m Indians buy luxury products. Another 6m- 7m can afford to do so, but are holding off because they are unfamiliar with the brands and products.

Thus purveyors must spend more time cultivating the Indian market and building brand awareness. Premium goods were introduced to China more than a dozen years ago and luxury retailers are now reaping the benefits of a robust market. Similar growth is expected of India but the luxury market will take five to eight years to gestate.

“Brands need to be present in the market but there needs to be a more individual, one-on-one approach than just plain advertising,” says Ms Nangia. Retailers might use tactics such as hosting small receptions or sending customised literature.

Mr Ambat says Cruise Norway aims to do more internet marketing, such as buying advertising on financial websites, but its Indian offices cater to the market because Indian travellers “like someone to be close by and holding their hand”.

Mr Bagla agrees that Bentley relies on “relationship selling” and getting to know customers who will upgrade from a car such as a Mercedes or BMW. “They come much later to us. We have to get our presence known.” He says that for customers considering a Bentley, it is “not a question about affordability but deciding whether they want to spend [their money] on a car”.

The biggest obstacle to the growth of the luxury market is a lack of “luxury retail shopping environments” says Technopak. Many retailers are wary of older, dilapidated commercial areas. “Today what is the major problem of brands like us is the lack of suitable retail space,” said Paolo Zegna, president of Ermenegildo Zegna Holditalia.

However, investors are developing luxury malls and the real estate crunch should ease within a couple of years. A slew of high-end brands have already signed up for space in one such mall that Indian property developer DLF is building near Delhi’s airport.

“Once they have the right location more luxury retailers will come,” says Ms Nangia.

Additional reporting by Joe Leahy in Mumbai

Copyright The Financial Times Limited 2017. All rights reserved.
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