Luxury goods market in India on a lower growth curve

In 2012, India once had the fastest growing luxury markets in the Asia pacific region. India grew much faster than China but lost steam due a lack of sustenance of the growth which once made the country an attractive market.

“The entire luxury goods market in India has seen a significant dip in the growth rate and is likely to see a couple of more turbulent years. However, the long term outlook remains positive and India’s luxury market is expected to rise with a strong performance. To supplement this long term growth trajectory, holistic implementation of new reforms and initiatives by stakeholders and regulators would only facilitate the vision,” said Gaurav Gupta, Senior Director, Deloitte in India.

The very rapid growth of recent years have created a bottle neck leading to inflation this has caused the Central bank to tighten its monetary policy to control inflation and stabilize the currency hence further slowing the booming market. From the regulatory side, there was not much of a focus to implement reforms that could boost productivity, unleash, more investment and induce a faster growth rate in the sector.

"Global Powers of Luxury Goods’" highlight the fact that along with Indian markets, many emerging markets like China, Brazil and Russia have seen deceleration of growth in the past year. This follows a period of rapid growth that was driven by several factors. Going forward, the emerging world is likely to have a year or two of disappointing growth while imbalances are unwound. However the long term view remains positive.

In the last five years the expanding global middle class in the emerging markets has supported growth in the luxury sector and is continuing to grow through 2018. According to Euromonitor the emerging markets like Asia Pacific, Latin America, Middle East and Africa combined together accounted to 9% of the luxury market in 2008 these figures spiked to 19% in 2013 and is expected to leap upto 25% in 2025.

The developed economies like U.S. and Europe benefits from the emerging markets. Over the 2012 to 2017 Euromonitor projects China to lead the tourist expenditure growth followed by India and the other emerging Asian countries. The appetite for American and European brands in the underpenetrated markets is strong and growing many luxury companies to expand its international presence hence creating opportunities in emerging markets like India.

As the global economy recovers, the global luxury industry is growing accordingly. Not unexpectedly, growth is disproportionately focused on Asia Pacific region. Demand to luxury good still remain pulsating as the statistics of top 10 luxury brand boast positive results, seven of the ten companies share strong net profits in double-digit figures. The world’s 75 largest luxury goods company generates total goods sales of $ 171.8 billion. Three of the top ten companies are conglomerates.