After the COVID-19 pandemic, a notable shift has been observed in consumer sentiment towards the premium segment in India. People are increasingly inclined towards premium items, but what is the reason behind this change?
The consumer sentiment in India is gradually transforming, especially among the youth, as the inclination towards luxury lifestyles is on the rise. Post the pandemic, the sentiment seems to be inspired by the notion of ‘you only live once,’ leading individuals to prefer spending on luxury items, with EMI playing a crucial role in motivating people to indulge in expensive purchases.
Let’s delve into the reasons behind the growing attraction towards luxury goods and explore who stands to benefit from this trend.
What’s Happening?
The trend of ‘premiumisation’ gained momentum, and various companies in India noticed the challenge of selling affordable items while high-end products were selling effortlessly. Consequently, companies started exploring new ways to attract affluent individuals, boosting their profits.
Consumers who refrained from spending during the pandemic are now actively engaged in luxury shopping, including luxury watches, cars, motorcycles, homes, and mobile phones.
The image depicts the revenue growth of India’s luxury goods market.
Note: According to Statista, the revenue of the luxury goods market will reach US$7.86 billion in 2024 and this market is expected to grow at 1.34% annually (CAGR 2024-2028).
The Role of EMI
As reported by The Economic Times, in 2021, the market share for mobile phones priced below Rs 10,000 was 35%, but by August 2023, it had decreased to 30%. Conversely, the market share for mobile phones priced above Rs 30,000 increased from 8% to 17%. Consumers generally visit stores to make purchases and are inclined to buy expensive products through EMI, whether it’s a phone, laptop, AC, television, or a car.
Luxury Brands and India
Witnessing the growing luxury market in India, various global luxury brands are preparing to open their first stores in the country. Brands like Gucci, Cartier, and Louis Vuitton are expanding their business in India by opening larger stores. The Jio World Plaza Mall in Mumbai houses the first store of Balenciaga, among others.
According to Mint, Rajesh Jain, MD and CEO of Lacoste India, mentioned that the average price of their casual t-shirts is Rs 7,500. Contrary to expectations, 33% of their online customers fall between the ages of 18 and 25.
What’s in it for Investors?
FMCG companies anticipate double-digit growth in their business, according to a report by PTI. Additionally, during discussions with The Economic Times, Sougat Gupta, MD and CEO of Marico, expressed hope for improvement in demand. It is expected that FMCG companies will work rapidly on new innovations and premium products, focusing on enhancing rural distribution.
Investors may consider monitoring the FMCG and retail sectors, keeping an eye on the growing premium segment.
What’s Next?
A study by Deloitte suggests that by 2030, the entire luxury market in India is expected to reach $30 billion, with 60% of current customers spending on luxury annually. This explains why various Indian companies are entering this segment, and foreign brands are turning their attention towards India.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
