Perfect strategy to win the Indian Luxury Market in 2025

Although, India is still at the early stages of establishing itself as a prominent player on the global luxury map, it is undoubtedly a rapidly growing market. India is witnessing a substantial growth in demand for luxury goods, similar to what China saw in the early 1990s. One of the key drivers of this growth is the rising middle class, which has a growing appetite for luxury goods.

 While high-end luxury brands like Louis Vuitton or Gucci have a strong presence, it's the more affordable luxury brands, like Michael Kors, Coach or Armani Exchange that are resonating with the Indian consumer base. Global luxury brands operating in this segment have humongous growth opportunity in India- All thanks to the refined taste and penchant for high-quality products among new-age Indian consumers! 

The affordable luxury market segment is expected to experience a CAGR of 13-19% in India from 2024 to 2029. By 2030, addition of 110 million middle-income households is predicted according to Deloitte report. This demographic is not only multiplying in numbers but is also evolving in preferences, leading to growing demand for premium branded products in the Indian market. 

Affordable luxury brands have tapped into the desires of India's burgeoning middle class by offering high-quality products that maintain an air of exclusivity but are still within reach for a larger portion of the population. This allows them to cater to aspirational buyers who are looking for luxury but are more price-sensitive than the traditional luxury consumer. For instance, plethora of global beauty brands, ranging from Chanel to Prada to Dior, have increasingly captured the attention of the Indian audience. Having a Mac lipstick or Dior skin care or Chanel perfume is considered a status symbol for many, reflecting success, elegance, and sophistication. These brands have introduced products suited for different Indian skin tones, types, and preferences to break in the Indian market.

E-commerce has truly transformed the Indian luxury landscape. It has provided great avenue for brands to reach interiors of India which otherwise was a great challenge to tap. Online platforms have empowered customers from tier2 and tier3 cities to explore, discover, and engage with high-end brands, that were previously out of reach due to handful of malls available in the country only in select tier 1 locations.

Realizing the power of internet, global luxury brands have introduced entry level products tailored to attract aspirational buyers. Platforms like Tata Cliq Luxury and Ajio Luxe are promoting this growth by offering over 400 international brands and catering to young demographics beyond tier1 cities. These offerings serve as a gateway to the world of high-end goods, allowing first-time luxury buyers to experience prestige that was once a distant dream.

While India is still not at the level of Western markets in terms of luxury spending, the middle class’s growing interest in premium and affordable luxury brands is undoubtedly setting the stage for future growth in the sector. By offering entry-level products or affordable luxury lines, these international brands are essentially "recruiting" a new generation of consumers who may not be able to afford the full range of high-end products initially but will aspire to do so as their purchasing power increases. As these middle-class consumers move up the economic ladder and their disposable income grows, they are more likely to consider upgrading their purchases from affordable luxury to high-end luxury or haute couture collections. As once people start to experience luxury, whether it's a luxury car, high-end fashion, or premium skincare, they often develop a taste for the best things in life and it becomes hard to settle for something of lower quality. This creates a cycle where the consumer aspires to move to the next level, wanting to experience the highest level of sophistication and craftsmanship.

By starting with affordable luxury lines products, global brands are not just targeting immediate sales—they are planting the seed for long-term relationships. Brands that invest in cultivating relationships with these consumers at an early stage can reap long-term rewards as these customers continue to upgrade their purchases. For example, someone who first buys a Tiffany silver bracelet might later purchase a diamond necklace or even a Tiffany engagement ring.

At the outset affordable luxury lines could be a strong strategy for penetrating the Indian luxury market, however long-term success will depend on how well the brand manages perceptions of exclusivity, the quality of the products, and the ability to connect with aspirational consumers. It is important to balance affordability with the aspirational aspects of luxury.

(This article was earlier published in ET Retail).