Understanding Indian Consumers’ Unique Approach to Luxury Purchasing

Understanding Indian Consumers’ Unique Approach to Luxury Purchasing


India is seen as one of the last great frontiers of luxury purchasing. This colossal market seems to offer great untapped potential for all kinds of retailers, with growing household incomes and undeveloped commercial possibilities. But there are reasons why the luxury sector is underdeveloped in India.

This market has its own tastes and buying habits, and there are structural reasons such as a lack of suitable retail space for luxury brands.

India might be comparable to China in terms of market size, growth and complexity but it doesn’t have a comparable appetite for luxury goods. China presently represents around a third of the world market for luxury retail.

By contrast, India’s luxury goods market is just 7% of the size of China’s, albeit growing at 25% annually.

So why do these two markets have such different ambitions to buy luxury goods? A number of factors are at play. One of these is the fact Indian consumers tend to be quite practical in the way they assess goods.

Indian views of what constitutes quality and value do tend to be fairly unique when it comes to assessing the worth of goods such as jewelry. Gold jewelry has traditionally been used as a form of portable wealth that can be cashed in when needed.

Indian Jewellery

Traditional Indian Jewellery is famous across the world. It’s so embedded in Indian culture that established jewelry brands outside of India have historically found it hard to crack the Indian market on the same scale as the West.

As a result, jewelry tends to be selected based on its carat value and weight. The design is often seen as less significant than the potential resale value in this market.

These views seem to be persistent even with UHNW individuals that have assets in the banking system. As a result, Indian consumers aren’t always that impressed by design, craftsmanship and branding as they are by the value of the mineral and metal components of items such as jewelry.

RELATED: India’s Gold Rush: A Growing Online Jewelry Market


This practical attitude also extends to buying classic cars, when the mileage is taken into account. Luxury car makers such as BMW, Mercedes and Audi have spotted this opportunity and responded with purchasing options for entry-level models that appeal to the practical and frugal Indian consumer.

Even when buying luxury cars, Indians tend to be concerned about the mileage. Luxury brands selling in this market have to take these values into account in their marketing.

Indian style tends to be quite unique and it can be hard for foreign brands to penetrate with new styles. Ethnic Indian dress is still widely worn and well adapted to local climatic conditions.

These well-established preferences make it harder for foreign clothing brands to penetrate the market. Indian women don’t seem very interested in designer shoes, seeing it as a waste of money to spend large sums on footwear in a country that’s dusty, dirty, and periodically very wet. Brands have had some success offering a localized version of their products.

Indian weddings

Indian weddings are a colossal cultural phenomenon and one that tends to account for the lion’s share of luxury spending in this market. Like weddings anywhere else in the world, tradition dominates.

Clothing that’s purchased for a wedding tends to be ethnic Indian clothing from high-profile Indian wedding designers, although modern brides might also add some designer pieces from more Western brands.

It’s commonplace to spend large sums on jewelry for the wedding party – especially gold jewelry. So much money is spent on wedding jewelry that makers of ethnic Indian jewellery PC Jewelry are in the world’s top 50 luxury brands, despite the fact India represents only a tiny fraction of the world’s market for luxury brands.

RELATED: How The Jewelry Industry is Embracing Sustainability


It’s not unusual for a person to spend around a fifth of their lifetime earnings on a wedding ceremony. Any luxury brands they purchase in their lifetime are likely to happen in association with their own wedding or a close family member.

The effect of this is that any luxury spending a person does in their lifetime tends to happen at a very particular point in their life. Any spending on luxury goods is far more likely to be made on wedding-related items than in another market. That’s something brands really need to understand if they’re trying to penetrate the Indian market.

Challenges

Despite all its promise, India remains a challenging and fragmented market to penetrate, particularly if you’re a foreign luxury brand. Many barriers and practical challenges need to be overcome if you’re to thrive in this market.

There’s the same glaring lack of commercial infrastructure that often dogs emerging markets, and commercial rents are high where retail space is available. Outside the top tier cities where luxury brands are most concentrated, India’s high streets aren’t the kind of environment luxury retails aspire to open stores in.

Few luxury malls or quality retail spaces exist, particularly outside big cities such as New Delhi, so brands often partner with other kinds of development such as hotels.

Tax rates are high – imported luxury goods carry high tariffs making it cheaper for Indians to buy overseas if they get the chance. There’s also a thriving market in counterfeit products. A few years ago, ASSOCHAM estimated the counterfeit goods industry was growing by at least 40% annually and most of these sales seem to be made online.

Luxury brands entering a country and making marketing efforts there will inevitably end up boosting the counterfeit trade for their products.

Woman buying goods online using her credit card

India’s rising middle class, shifting consumption patterns and the growth of eCommerce has created a space for counterfeit products to thrive online.

Foreign brands will continue to struggle to really understand the very different consumer tastes that exist within India. India is a highly diverse country, with many regional characteristics, languages, design traditions, climatic conditions, and even personalities.

Montblanc, the retailer of luxury stationery and accessories, approaches this by customizing campaigns for each region it operates in. This doesn’t just extend to translating marketing materials into the relevant local language – the brand also customizes elements of design to suit regional tastes.

To thrive in India, brands really need to get alongside and understand Indian consumers. With a myriad of languages being spoken in the country, this can be challenging. But it seems to be brands that go the extra mile to connect with local consumers that do best in this market of possibility.

Related posts