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Industry research on high end retail sector

The Indian luxury market grew at 30% in 2013 to USD 8.5 billion and is projected to reach USD 14 billion by 2016. The sector includes luxury products such as apparel, accessories, home decor, watches, wines/spirits, and jewelry. Growth was driven by lifestyle segments like fine dining, gadgets, hotels, jewelry, and personal care growing 30-35%. Key segments of the luxury market - apparel, footwear, cosmetics, handbags, and jewelry - have all experienced double-digit annual growth rates driven by rising incomes, changing consumer preferences, and global brand expansion in India.

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Luxury market • The Indian luxury market grew at a healthy rate of 30 per cent in 2013 to reach USD8.5 billion in 2013. It is likely to continue growing at a healthy pace to reach USD14 billion by 2016. • The sector includes luxury products such as apparel, accessories, home decor, pens, watches, wines and spirits, and jewelry; services such as fine dining, concierge services, travel, hotels and spas; as well as assets such as fine art, yachts, and automobiles. • Growth was driven by lifestyle segments such as fine dining, gadgets, hotels, jewelry, personal care and wines; growing at 30 to 35 per cent as the luxury consumer refused to compromise on the ‘luxe' life.
Growth of Luxury Market 0 2 4 6 8 10 12 14 16 2012- 13 2013- 14 2014- 15 2015- 16 2016- 17 Column2 Column1 Market size(in billion) Column3 30% 64%
LUXURY Through data and Interpretations.(year 212-13)
Huge potential in Indian Market • Luxury is still in its nascent stages as only 8- 10% of the Indian population in metros is exposed to such brands.Link:
0 5 10 15 20 25 Luxury assest Luxury retail Luxury Service Growth(in %) Growth(in %)
Luxury Retail market 1.What is it 2.What it is composed of 3.Growth of luxury retail market.
• Apparel and accessories; pens; home decor; watches; wines & spirits; jewellery; services like spas, concierge service, travel & tourism, fine dining and hotels; and assets like yachts, fine art, automobiles.
Compound Annual Growth rate Luxury Retail market ApparelGems and JweleryCosmetic Footwear Handbag Compound Annual growth rate of each sector of Luxury retail market Compound Annual growth rate of each sector of Luxury retail market
Luxury Apparel market
Trends in Apparel Market • High degree of ‘Indianisation’ and ‘localisation’ • ‘Indianisation’ and ‘localisation’ are increasingly becoming differentiators of success with new consumers in new markets. Luxury brands no longer deal with just the elite and well-traveled urbane customer. New segments with varied profiles may now constitute potential targets for luxury brands; examples include segments such as farmers selling their lands to developers and entrepreneurs experiencing windfall gains. • Brands are responding by introducing local, Indian elements to their products - lifestyle brands are signing up with Indian designers, hiring relationship managers who speak local languages and tweaking offerings for Indian festivities, weddings, to name a few. • While several luxury players have launched wedding ranges in India, many are increasingly targeting Indian weddings with custommade products.
Luxury apparel MARKET • Cumulative Annual growth rate -12.65 % over the period 2012-2016. • …referenes- • Global brands in Indian Market- • Jimmy Choo • Bottega Veneta changed hands from the Murjanis to Genesis Colors and Springfield in order to sustain growth.
Indian brands launching International brands- • Shoppers Stop, which had launched foreign brands like MAC, Mothercare and Austin Reed among dozen of global brands, and now plans to add about half-a-dozen international labels soon. • S Kumars group, which tied up with Italian brand Oviesse this year, is in talks with other international brands. Nitin Kasliwal, managing director of S Kumars Nationwide (SKNL).
…..contd • "Indian retailers, tying up with international brands, are giving them an insight of the Indian market and taking the responsibility of marketing on franchisee basis, which is being preferred by the overseas brands," says Rahul Mehta, president of Clothing Manufacturers Association. • One of the key factors contributing to this market growth is the increasing urbanization in India. The Apparel market in India has also been witnessing increasing online retail sales. However, the increase in the number of counterfeit apparels could pose a challenge to the growth of this market.
Indian Luxury Footwear Market
Growth of Indian Footwear Market • A February 2012 Assocham report said that the Indian footwear industry is growing at a compound annual growth rate (CAGR) of about 15% and is likely to reach approximately Rs 38,700 crore by 2015 from the current level of around Rs 23,600 crore • References :http://www.bestofluxury.com/luxury- news/rise-of-luxury-shoe-brands-like-jimmy-choo- roger-vivier-and-others-in-indian-fashion/64
Luxury Footwear Market • . The reasons are plain vanilla: growing fashion consciousness, increased disposable income among India's urban middle class (45% of overall footwear market), low production cost, blah blah. But the real story is the rise of the humble shoe in the fashion food chain. • Brands- • Bottega, Veneta,Lanvin, Stella McCartney, Jean, Paul Gaultier and Moschino, Carlton Shoes, • International shoe brands
Reasons for growing Footwear market • The Assocham survey noted that buyers upgrade their shoe collection every two months and usually spend about Rs 6,000-8,000 every four months on branded footwear. Business consultancy Tecnova India — it assisted Christian Louboutin enter India by surveying the market for them — found out that while women purchase 1 branded pair of footwear per month, men purchase a pair per quarter.
…contd • Women are buying shoes depending on the style factor and unique design sensibilities. • For men, comfort and necessity are the driving factors. • The opening up of luxury malls in major cities has seen top international brands marketing luxury loafers and footwear, launching their outlets.
…contd • International brands are setting up fancy showrooms in India, wooing the affluent Indian consumer, domestic producers quietly churn out footwear that are sold around the globe by top brands. • Example-Leading international shoe brands including Reebok, Nike, Adidas, Puma and Fila have been sourcing many of their products from Indian companies for years. M&B Footwear, a leading manufacturer and also distributor of international brands – including Lee Cooper, Rider, and recently, Merrell – is one such firm that produces footwear for international brands.
Luxury Cosmetics Market
Success Story in Indian Cosmetic market • Manufacturing success with luxury ayurveda: Forest Essentials • Forest Essentials (FE) was established with an aim to promote traditional cosmetics in a modern way. While various other ayurvedic products were available when it was launched, • there was a need for ensuring quality by sourcing ingredients in an appropriate manner • FE’s model based on ayurveda and the absence of any Indian brand in this ‘prestige space’ acted as a catalyst for its entry in the country. The company started by offering soaps and oils with high-end global packaging, which instantly struck a chord with consumers.
Key players in Luxury Market • India’s luxury potential has attracted • several luxury players such as Damiani • and, Royce over the last few years, and • several others such as Godiva Chocolates • and Faberge Jewellery plan to enter the • Indian market. Additionally, brands such • as Geox Group and Villeroy & Boch, which • exited India previously, are now showing • renewed interest in the country’s luxury • market3.
Luxury Handbag Industry in India
Luxury Handbag Industry in India • Rise in the personal disposable income, increase in the number of working women, widening exposure through internet, development of retailing and specialty stores and growing acceptance of handbags as a lifestyle product have contributed significantly to handbag industry in India. • The handbag market is expected to grow at a CAGR of 17.1% from FY’2013-FY’2018. References: http://www.news.kenresearch.com/post/85110895488/india-luxury- handbag-market-research-report
..contd • It is majorly dominated by unorganized segment contributing . Da Milano is the largest contributor in the overall industry as well as in the organized handbag market in India • Online handbag sales have showcased an increasing trend by growing at a CAGR of 43.1% from FY’2008-FY’2013. An increase in the growth of e-commerce with the facilities of online shopping is also expected to contribute significantly to the growth of organized market in the coming five years.
Luxury Jwelery Market
Gems and Jewelry Market • Introduction • Gems and Jewellery sector forms an integral part of the Indian economy as it forms a major component of the export-led growth. • The industry has been growing at a good pace over the last few years and contributed for 14 per cent of the revenues in India’s total merchandise exports in 2011-12. • Jewellery is a luxury component and the Indian luxury market is growing at a compounded annual growth rate (CAGR) of 25 to 30 per cent per annum. Jewellery, the largest segment of the luxury market, accounts for about 50 per cent of the total luxury products sold in the country. REFERENCES:www.ibef.org/archives/detail/b3ZlcnZpZXcmMzExMDgmNDM4, www.ibef.org/industry/gems-jewellery-india.aspx
…contd • India is considered to be the hub and one of the most competitive jewellery markets in the world owing to its lower costs of production and availability of highly skilled labour. • Industry Dynamics • The gems and jewellery industry majorly includes sourcing, processing, manufacturing and selling of precious metals and gemstones such as gold platinum, silver, diamond, ruby, sapphire, among others. • The highly fragmented sector comprises of more than 500,000 gems and jewellery players across the country, with the majority being small players. Though organised retail accounts for about 4-6 per cent of the entire market, Indian is increasingly getting acclaimed as an international sourcing destination for high-quality designer jewellery.
…contd • Global companies such as Walmart and JC Penney source jewellery from India. • Some of the major brands in the Indian jewellery segment are Gili, Tanishq, Carbon, Oyzterbay and Trendsmith while companies like Reliance Retail, Damas Jewellery, Gitanjali Gems Ltd., Swarovski, Diamond Trading Company, Vardhaman Developers, Dubai-based Joy Alukkas, Viswa and Devji Diamonds and Gold Souk India are major players in the Indian gems and jewellery retail sector.
• "Gems and Jewelry Market in India 2012-2016" has predicted a compound annual growth rate of 14.93% for gems ans jewelry market in the country. The report has also stated that India will turn out to be the key driver of the global jewelry market in 2014. • According to the report, the key factor contributing to the market growth is the increasing demand for gold jewelry by Indian consumers. The Gems and Jewelry market in India has been witnessing the entry of jewelry retail outlets in large numbers. However, the rising gold prices could pose a challenge to the growth of this market. • The report further states that the highly fragmented and unorganized nature of the country’s jewelry market poses great challenge. The industry is dominated by more than half-million small players. A good number of these smaller players do not adhere to gold purity standards.
..contd • One of the recent trends being witnessed in the market is the increasing purchase of jewelry through online stores. The online jewelry stores are managed by organized players. Currently, the online jewelry stores are in a nascent stage of growth. In 2012, they accounted for less than 10 percent of overall sales of branded jewelry. The consumers in urban areas are willing to purchase jewelry online as it is easy, safe, and convenient. Internet shopping in India, especially in urban areas, is expected to rise drastically. • Currently, India is the world’s largest market for jewelry. The demand for jewelry made of gold is expected to remain robust in 2014, the report states. The country will continue to remain as one of the largest consumers of gold jewelry, where majority of gold jewelry purchases are either towards aesthetic purposes or as investment option.
GOLD Market in INDIA • Gold and diamond are two major components of the gems and jewellery sector. India is the largest consumer of gold, accounting for over 20 per cent of the total world gold consumption and contributes 80 % in total gems and jwelery amrket. • A substantial portion of the gold jewellery produced in India is consumed in the domestic market only. • World Gold Council (WGC) has formed a separate private company in India to take up activities on a larger scale in the Indian market including entering into commercial set-up with banks and gold industry players in the coming years. The corporate structure will legally help WGC remove the disadvantages of operating as a liaison office. • Currently, the Reserve Bank of India (RBI) prohibits any liaison office from entering into any commercial activity in the country and it could only promote the existence of parent entity and not any individual products of any Indian entity.
Diamond Market in INDIA • Diamonds • India is the world’s largest hub for cutting and polishing of diamonds wherein the cutting and polishing industry is well supported by Government policies and the banking sector with around 50 banks facilitating nearly US$ 3 billion of credit to the Indian diamond industry. • The country is looked upon as the world capital for diamond polishing and processing as its artisans are skilled in working upon small-sized diamonds. At present, India exports 95 per cent of the world’s diamonds, according to data released by the Gems and Jewellery Export promotion Council (GJEPC). A predominant portion of the rough, un-cut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewellery.
Companies investing in INDIA in Diamond Industry • Leading jeweller Tiffany & Co is planning to invest Rs 100 crore (US$ 15.78 million) in order to set up a diamond processing unit in Maharashtra. The facility, to be located inside the Special Economic Zone (SEZ) at the Multi- modal International Cargo Hub and Airport at Nagpur (MIHAN), would be the first major investment in the country. • The Maharashtra Airport Development Company (MADC), a special purpose company of the Maharashtra Government, is the project developer. • World’s largest diamond miner De Beers, has for the first time, introduced rough diamonds in the forward contract for its ‘Auction Sales’ (earlier Diamdel) customers. Though the clauses are yet to worked out, the new contract of rough diamond purchase is expected to give an opportunity to customers to determine the volume of goods they intend to purchase.
Exports • Exports of gold jewellery from India stood at US$ 441.4 million while the total gems and jewellery exports amounted to US$ 2.49 billion in July 2013, the GJEPC reported. Silver jewellery exports increased by 184 per cent to US$ 109.69 million. • Gems and Jewellery accounted for 17 per cent of the total exports from India in 2012-13.
Government Initiatives • The Government of India (GoI) plans to promote the gems and jewellery sector in a big way through its New Foreign Trade Policy (2009-2014). Some of the important components of the policy are discussed below:4 • The number of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days • Duty incidence on gold jewellery exports has been neutralised while duty drawback on such exports is now allowed. • Duty free re-import entitlement for rejected jewellery shall be 2 per cent of free on board (FOB) value of exports
…..contd • The value limit of personal carriage has been increased from US$ 2 million to US$ 5 million in case of participation in overseas exhibitions. The limit in case of personal carriage as samples for export promotion tours has also been increased from US$ 0.1 million to US$ 1 million • The Government of India has allowed 100 per cent foreign direct investment (FDI) in gems and jewellery sector through the automatic route • In order to encourage more investments in the sector, gems and jewellery SEZs have been set up. The names of operational SEZs in the sector are SEEPZ Special Economic Zone, Mumbai; Manikanchan SEZ, West Bengal; Jaipur SEZ; and Hyderabad Gems SEZ Ltd. Further, formal approval has been given to 13 SEZs in the sector — three have got in-principal approval and seven have been notified, as per the SEZ Board of Approval statistics.
•Growth drivers of Luxury Retail Industry
1.Increasing no of billionaries • India continued to hold its position in the global billionaire list with a contribution of 55 billionaires, accounting for a total networth of USD194 billion in 2013 as compared to just nine billionaries in 2004.
2. Urban India Average Household income
3. An ever - increasing and ever- evolving base of consumers • The growth of the Indian luxury market is driven by an ever-increasing base of ultra high-net worth households (HNHs), which is likely to grow at a CAGR of 27 per cent through 2017-18. • Rising income levels and aspirations have led to a growing segment of potential luxury brands.
4. Increase of High Net worth individuals. 0 50000 100000 150000 200000 250000 300000 350000 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 No of HNH No of HNH CAGR=27 %
5. Growing Focus beyond Metro and Tier 1 cities. • Home to nearly half of the country’s ultra HNHs, India’s non-metro regions offer lucrative growth opportunities for luxury segment players.
…contd • Players are overcoming the challenge of Infrastructure through innovative models and local tie-ups in order to optimise investments and minimise risks. • Around 70 per cent of luxury handbag player Judith Leiber‘s customers now come from tier-II and tier-III cities without depending on storebased expansion. • Its local partners showcase select products to potential consumers through exhibitions
6.Prefernce of Indian consumers to shop in India
7. Government regulations • The Indian Government has allowed 100% foreign direct investment in single-brand retailing and 51% in multi-brand retailing, which is likely to see more foreign luxury brands enter the country, with new players opening up their first outlets in major cities such as Mumbai or New Delhi.
Top Luxury Retail Market Cities • 1. Delhi/NCR • 2.Mumbai • 3. Bangalore • 4.Chennai • 5.Kolkata • 6.Hyderabad • 7.Pune
•Challenges faced by Luxury Retail Market.
1. Idiosyncratic Market • India is truly an idiosyncratic market for a vast array of social, economical, cultural, and political reasons. Even such global giants as Coca-Cola and GM did not meet with success when they entered this market, due largely to a lack of understanding about Indian emotions, habits, and lifestyles.
2.Luxury infrastructure still a constraint • The luxury goods category is still fragmented and only a few international players have entered India. However, these luxury players are already facing problems in terms of a lack of luxury infrastructure in India, as luxury shopping centres are restricted to major cities and only a small number of players have entered the country. As more luxury players enter India, limited infrastructure could be a major constraint. The luxury players that are present are already targeting high-end shopping streets in major cities to overcome a lack of luxury shopping centres.
3. Luxury goods restricted to major cities of India • Most of the larger brands are present in metro cities. • But there is huge opportunity avaialable in tier 2 and tier 3 city market, where brands can extend their market and manage their portfolio accoriding to spending limit and consumer tastes.
4. Cost-conscious mindset of buyer • Closet consumers-People who look at the cost and value even when shopping for luxury products. • The inner conflict between a middle class mindset and the globally rich income level, between conspicuous consumption and a level of luxury which is a reward for hard work shapes what we call the closet consumer,"
Internet retailing emerges as a sales channel • Global luxury brand operators are targeting internet retailing as a future emerging channel for their brands. Rising rentals and operating costs are major factors, while the need for well-trained staff to cater to high net worth individuals is another factor that makes internet retailing more attractive for players. Luxury goods players can also offer discounts and promotional campaigns limited to internet retailing channels to promote purchases.
Sahara entering into Luxury market. • Sahara Group, the embattled Lucknow-based conglomerate, plans to launch an Indian luxury chain to sell 'Made • in India' luxury goods in international markets such as the US and the UK. “The focus is to create the first Indian premium • luxury brand, which will expose the global consumer to India as never seen before,” said Chandni Roy, who is • spearheading the initiative to open luxury lifestyle stores across the globe (Rathore, 2013).
Conclusion • India is one of the growing market for Luxury retail in India that recently accounts for only 1-2 % of total luxury retail market of world. • It is a big opportunity for brands to target this untapped market with supportive changing taste for Luxury brand as well as rising income.
• References: • Lifestyle products- http://www.reuters.com/article/2014/01/16/i ndia-retail-idUSL5N0KQ3M220140116 • http://www.cbpmag.com/emerging-markets- the-global-luxury-market-growth/ • KPMG-ASSOCHAM 2014 report.

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Industry research on high end retail sector

  • 1.
    Luxury market • TheIndian luxury market grew at a healthy rate of 30 per cent in 2013 to reach USD8.5 billion in 2013. It is likely to continue growing at a healthy pace to reach USD14 billion by 2016. • The sector includes luxury products such as apparel, accessories, home decor, pens, watches, wines and spirits, and jewelry; services such as fine dining, concierge services, travel, hotels and spas; as well as assets such as fine art, yachts, and automobiles. • Growth was driven by lifestyle segments such as fine dining, gadgets, hotels, jewelry, personal care and wines; growing at 30 to 35 per cent as the luxury consumer refused to compromise on the ‘luxe' life.
  • 2.
    Growth of LuxuryMarket 0 2 4 6 8 10 12 14 16 2012- 13 2013- 14 2014- 15 2015- 16 2016- 17 Column2 Column1 Market size(in billion) Column3 30% 64%
  • 3.
    LUXURY Through dataand Interpretations.(year 212-13)
  • 4.
    Huge potential inIndian Market • Luxury is still in its nascent stages as only 8- 10% of the Indian population in metros is exposed to such brands.Link:
  • 6.
    0 5 1015 20 25 Luxury assest Luxury retail Luxury Service Growth(in %) Growth(in %)
  • 7.
    Luxury Retail market 1.Whatis it 2.What it is composed of 3.Growth of luxury retail market.
  • 8.
    • Apparel andaccessories; pens; home decor; watches; wines & spirits; jewellery; services like spas, concierge service, travel & tourism, fine dining and hotels; and assets like yachts, fine art, automobiles.
  • 9.
    Compound Annual Growthrate Luxury Retail market ApparelGems and JweleryCosmetic Footwear Handbag Compound Annual growth rate of each sector of Luxury retail market Compound Annual growth rate of each sector of Luxury retail market
  • 10.
  • 11.
    Trends in ApparelMarket • High degree of ‘Indianisation’ and ‘localisation’ • ‘Indianisation’ and ‘localisation’ are increasingly becoming differentiators of success with new consumers in new markets. Luxury brands no longer deal with just the elite and well-traveled urbane customer. New segments with varied profiles may now constitute potential targets for luxury brands; examples include segments such as farmers selling their lands to developers and entrepreneurs experiencing windfall gains. • Brands are responding by introducing local, Indian elements to their products - lifestyle brands are signing up with Indian designers, hiring relationship managers who speak local languages and tweaking offerings for Indian festivities, weddings, to name a few. • While several luxury players have launched wedding ranges in India, many are increasingly targeting Indian weddings with custommade products.
  • 12.
    Luxury apparel MARKET •Cumulative Annual growth rate -12.65 % over the period 2012-2016. • …referenes- • Global brands in Indian Market- • Jimmy Choo • Bottega Veneta changed hands from the Murjanis to Genesis Colors and Springfield in order to sustain growth.
  • 13.
    Indian brands launchingInternational brands- • Shoppers Stop, which had launched foreign brands like MAC, Mothercare and Austin Reed among dozen of global brands, and now plans to add about half-a-dozen international labels soon. • S Kumars group, which tied up with Italian brand Oviesse this year, is in talks with other international brands. Nitin Kasliwal, managing director of S Kumars Nationwide (SKNL).
  • 14.
    …..contd • "Indian retailers,tying up with international brands, are giving them an insight of the Indian market and taking the responsibility of marketing on franchisee basis, which is being preferred by the overseas brands," says Rahul Mehta, president of Clothing Manufacturers Association. • One of the key factors contributing to this market growth is the increasing urbanization in India. The Apparel market in India has also been witnessing increasing online retail sales. However, the increase in the number of counterfeit apparels could pose a challenge to the growth of this market.
  • 15.
  • 16.
    Growth of IndianFootwear Market • A February 2012 Assocham report said that the Indian footwear industry is growing at a compound annual growth rate (CAGR) of about 15% and is likely to reach approximately Rs 38,700 crore by 2015 from the current level of around Rs 23,600 crore • References :http://www.bestofluxury.com/luxury- news/rise-of-luxury-shoe-brands-like-jimmy-choo- roger-vivier-and-others-in-indian-fashion/64
  • 17.
    Luxury Footwear Market •. The reasons are plain vanilla: growing fashion consciousness, increased disposable income among India's urban middle class (45% of overall footwear market), low production cost, blah blah. But the real story is the rise of the humble shoe in the fashion food chain. • Brands- • Bottega, Veneta,Lanvin, Stella McCartney, Jean, Paul Gaultier and Moschino, Carlton Shoes, • International shoe brands
  • 18.
    Reasons for growingFootwear market • The Assocham survey noted that buyers upgrade their shoe collection every two months and usually spend about Rs 6,000-8,000 every four months on branded footwear. Business consultancy Tecnova India — it assisted Christian Louboutin enter India by surveying the market for them — found out that while women purchase 1 branded pair of footwear per month, men purchase a pair per quarter.
  • 19.
    …contd • Women arebuying shoes depending on the style factor and unique design sensibilities. • For men, comfort and necessity are the driving factors. • The opening up of luxury malls in major cities has seen top international brands marketing luxury loafers and footwear, launching their outlets.
  • 20.
    …contd • International brandsare setting up fancy showrooms in India, wooing the affluent Indian consumer, domestic producers quietly churn out footwear that are sold around the globe by top brands. • Example-Leading international shoe brands including Reebok, Nike, Adidas, Puma and Fila have been sourcing many of their products from Indian companies for years. M&B Footwear, a leading manufacturer and also distributor of international brands – including Lee Cooper, Rider, and recently, Merrell – is one such firm that produces footwear for international brands.
  • 21.
  • 22.
    Success Story inIndian Cosmetic market • Manufacturing success with luxury ayurveda: Forest Essentials • Forest Essentials (FE) was established with an aim to promote traditional cosmetics in a modern way. While various other ayurvedic products were available when it was launched, • there was a need for ensuring quality by sourcing ingredients in an appropriate manner • FE’s model based on ayurveda and the absence of any Indian brand in this ‘prestige space’ acted as a catalyst for its entry in the country. The company started by offering soaps and oils with high-end global packaging, which instantly struck a chord with consumers.
  • 23.
    Key players inLuxury Market • India’s luxury potential has attracted • several luxury players such as Damiani • and, Royce over the last few years, and • several others such as Godiva Chocolates • and Faberge Jewellery plan to enter the • Indian market. Additionally, brands such • as Geox Group and Villeroy & Boch, which • exited India previously, are now showing • renewed interest in the country’s luxury • market3.
  • 24.
  • 25.
    Luxury Handbag Industryin India • Rise in the personal disposable income, increase in the number of working women, widening exposure through internet, development of retailing and specialty stores and growing acceptance of handbags as a lifestyle product have contributed significantly to handbag industry in India. • The handbag market is expected to grow at a CAGR of 17.1% from FY’2013-FY’2018. References: http://www.news.kenresearch.com/post/85110895488/india-luxury- handbag-market-research-report
  • 26.
    ..contd • It ismajorly dominated by unorganized segment contributing . Da Milano is the largest contributor in the overall industry as well as in the organized handbag market in India • Online handbag sales have showcased an increasing trend by growing at a CAGR of 43.1% from FY’2008-FY’2013. An increase in the growth of e-commerce with the facilities of online shopping is also expected to contribute significantly to the growth of organized market in the coming five years.
  • 27.
  • 28.
    Gems and JewelryMarket • Introduction • Gems and Jewellery sector forms an integral part of the Indian economy as it forms a major component of the export-led growth. • The industry has been growing at a good pace over the last few years and contributed for 14 per cent of the revenues in India’s total merchandise exports in 2011-12. • Jewellery is a luxury component and the Indian luxury market is growing at a compounded annual growth rate (CAGR) of 25 to 30 per cent per annum. Jewellery, the largest segment of the luxury market, accounts for about 50 per cent of the total luxury products sold in the country. REFERENCES:www.ibef.org/archives/detail/b3ZlcnZpZXcmMzExMDgmNDM4, www.ibef.org/industry/gems-jewellery-india.aspx
  • 29.
    …contd • India isconsidered to be the hub and one of the most competitive jewellery markets in the world owing to its lower costs of production and availability of highly skilled labour. • Industry Dynamics • The gems and jewellery industry majorly includes sourcing, processing, manufacturing and selling of precious metals and gemstones such as gold platinum, silver, diamond, ruby, sapphire, among others. • The highly fragmented sector comprises of more than 500,000 gems and jewellery players across the country, with the majority being small players. Though organised retail accounts for about 4-6 per cent of the entire market, Indian is increasingly getting acclaimed as an international sourcing destination for high-quality designer jewellery.
  • 30.
    …contd • Global companiessuch as Walmart and JC Penney source jewellery from India. • Some of the major brands in the Indian jewellery segment are Gili, Tanishq, Carbon, Oyzterbay and Trendsmith while companies like Reliance Retail, Damas Jewellery, Gitanjali Gems Ltd., Swarovski, Diamond Trading Company, Vardhaman Developers, Dubai-based Joy Alukkas, Viswa and Devji Diamonds and Gold Souk India are major players in the Indian gems and jewellery retail sector.
  • 31.
    • "Gems andJewelry Market in India 2012-2016" has predicted a compound annual growth rate of 14.93% for gems ans jewelry market in the country. The report has also stated that India will turn out to be the key driver of the global jewelry market in 2014. • According to the report, the key factor contributing to the market growth is the increasing demand for gold jewelry by Indian consumers. The Gems and Jewelry market in India has been witnessing the entry of jewelry retail outlets in large numbers. However, the rising gold prices could pose a challenge to the growth of this market. • The report further states that the highly fragmented and unorganized nature of the country’s jewelry market poses great challenge. The industry is dominated by more than half-million small players. A good number of these smaller players do not adhere to gold purity standards.
  • 32.
    ..contd • One ofthe recent trends being witnessed in the market is the increasing purchase of jewelry through online stores. The online jewelry stores are managed by organized players. Currently, the online jewelry stores are in a nascent stage of growth. In 2012, they accounted for less than 10 percent of overall sales of branded jewelry. The consumers in urban areas are willing to purchase jewelry online as it is easy, safe, and convenient. Internet shopping in India, especially in urban areas, is expected to rise drastically. • Currently, India is the world’s largest market for jewelry. The demand for jewelry made of gold is expected to remain robust in 2014, the report states. The country will continue to remain as one of the largest consumers of gold jewelry, where majority of gold jewelry purchases are either towards aesthetic purposes or as investment option.
  • 33.
    GOLD Market inINDIA • Gold and diamond are two major components of the gems and jewellery sector. India is the largest consumer of gold, accounting for over 20 per cent of the total world gold consumption and contributes 80 % in total gems and jwelery amrket. • A substantial portion of the gold jewellery produced in India is consumed in the domestic market only. • World Gold Council (WGC) has formed a separate private company in India to take up activities on a larger scale in the Indian market including entering into commercial set-up with banks and gold industry players in the coming years. The corporate structure will legally help WGC remove the disadvantages of operating as a liaison office. • Currently, the Reserve Bank of India (RBI) prohibits any liaison office from entering into any commercial activity in the country and it could only promote the existence of parent entity and not any individual products of any Indian entity.
  • 34.
    Diamond Market inINDIA • Diamonds • India is the world’s largest hub for cutting and polishing of diamonds wherein the cutting and polishing industry is well supported by Government policies and the banking sector with around 50 banks facilitating nearly US$ 3 billion of credit to the Indian diamond industry. • The country is looked upon as the world capital for diamond polishing and processing as its artisans are skilled in working upon small-sized diamonds. At present, India exports 95 per cent of the world’s diamonds, according to data released by the Gems and Jewellery Export promotion Council (GJEPC). A predominant portion of the rough, un-cut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewellery.
  • 35.
    Companies investing inINDIA in Diamond Industry • Leading jeweller Tiffany & Co is planning to invest Rs 100 crore (US$ 15.78 million) in order to set up a diamond processing unit in Maharashtra. The facility, to be located inside the Special Economic Zone (SEZ) at the Multi- modal International Cargo Hub and Airport at Nagpur (MIHAN), would be the first major investment in the country. • The Maharashtra Airport Development Company (MADC), a special purpose company of the Maharashtra Government, is the project developer. • World’s largest diamond miner De Beers, has for the first time, introduced rough diamonds in the forward contract for its ‘Auction Sales’ (earlier Diamdel) customers. Though the clauses are yet to worked out, the new contract of rough diamond purchase is expected to give an opportunity to customers to determine the volume of goods they intend to purchase.
  • 36.
    Exports • Exports ofgold jewellery from India stood at US$ 441.4 million while the total gems and jewellery exports amounted to US$ 2.49 billion in July 2013, the GJEPC reported. Silver jewellery exports increased by 184 per cent to US$ 109.69 million. • Gems and Jewellery accounted for 17 per cent of the total exports from India in 2012-13.
  • 37.
    Government Initiatives • TheGovernment of India (GoI) plans to promote the gems and jewellery sector in a big way through its New Foreign Trade Policy (2009-2014). Some of the important components of the policy are discussed below:4 • The number of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days • Duty incidence on gold jewellery exports has been neutralised while duty drawback on such exports is now allowed. • Duty free re-import entitlement for rejected jewellery shall be 2 per cent of free on board (FOB) value of exports
  • 38.
    …..contd • The valuelimit of personal carriage has been increased from US$ 2 million to US$ 5 million in case of participation in overseas exhibitions. The limit in case of personal carriage as samples for export promotion tours has also been increased from US$ 0.1 million to US$ 1 million • The Government of India has allowed 100 per cent foreign direct investment (FDI) in gems and jewellery sector through the automatic route • In order to encourage more investments in the sector, gems and jewellery SEZs have been set up. The names of operational SEZs in the sector are SEEPZ Special Economic Zone, Mumbai; Manikanchan SEZ, West Bengal; Jaipur SEZ; and Hyderabad Gems SEZ Ltd. Further, formal approval has been given to 13 SEZs in the sector — three have got in-principal approval and seven have been notified, as per the SEZ Board of Approval statistics.
  • 39.
  • 40.
    1.Increasing no ofbillionaries • India continued to hold its position in the global billionaire list with a contribution of 55 billionaires, accounting for a total networth of USD194 billion in 2013 as compared to just nine billionaries in 2004.
  • 41.
    2. Urban IndiaAverage Household income
  • 42.
    3. An ever- increasing and ever- evolving base of consumers • The growth of the Indian luxury market is driven by an ever-increasing base of ultra high-net worth households (HNHs), which is likely to grow at a CAGR of 27 per cent through 2017-18. • Rising income levels and aspirations have led to a growing segment of potential luxury brands.
  • 43.
    4. Increase ofHigh Net worth individuals. 0 50000 100000 150000 200000 250000 300000 350000 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 No of HNH No of HNH CAGR=27 %
  • 44.
    5. Growing Focusbeyond Metro and Tier 1 cities. • Home to nearly half of the country’s ultra HNHs, India’s non-metro regions offer lucrative growth opportunities for luxury segment players.
  • 45.
    …contd • Players areovercoming the challenge of Infrastructure through innovative models and local tie-ups in order to optimise investments and minimise risks. • Around 70 per cent of luxury handbag player Judith Leiber‘s customers now come from tier-II and tier-III cities without depending on storebased expansion. • Its local partners showcase select products to potential consumers through exhibitions
  • 46.
    6.Prefernce of Indianconsumers to shop in India
  • 47.
    7. Government regulations •The Indian Government has allowed 100% foreign direct investment in single-brand retailing and 51% in multi-brand retailing, which is likely to see more foreign luxury brands enter the country, with new players opening up their first outlets in major cities such as Mumbai or New Delhi.
  • 48.
    Top Luxury RetailMarket Cities • 1. Delhi/NCR • 2.Mumbai • 3. Bangalore • 4.Chennai • 5.Kolkata • 6.Hyderabad • 7.Pune
  • 49.
  • 50.
    1. Idiosyncratic Market •India is truly an idiosyncratic market for a vast array of social, economical, cultural, and political reasons. Even such global giants as Coca-Cola and GM did not meet with success when they entered this market, due largely to a lack of understanding about Indian emotions, habits, and lifestyles.
  • 51.
    2.Luxury infrastructure stilla constraint • The luxury goods category is still fragmented and only a few international players have entered India. However, these luxury players are already facing problems in terms of a lack of luxury infrastructure in India, as luxury shopping centres are restricted to major cities and only a small number of players have entered the country. As more luxury players enter India, limited infrastructure could be a major constraint. The luxury players that are present are already targeting high-end shopping streets in major cities to overcome a lack of luxury shopping centres.
  • 52.
    3. Luxury goodsrestricted to major cities of India • Most of the larger brands are present in metro cities. • But there is huge opportunity avaialable in tier 2 and tier 3 city market, where brands can extend their market and manage their portfolio accoriding to spending limit and consumer tastes.
  • 53.
    4. Cost-conscious mindsetof buyer • Closet consumers-People who look at the cost and value even when shopping for luxury products. • The inner conflict between a middle class mindset and the globally rich income level, between conspicuous consumption and a level of luxury which is a reward for hard work shapes what we call the closet consumer,"
  • 54.
    Internet retailing emergesas a sales channel • Global luxury brand operators are targeting internet retailing as a future emerging channel for their brands. Rising rentals and operating costs are major factors, while the need for well-trained staff to cater to high net worth individuals is another factor that makes internet retailing more attractive for players. Luxury goods players can also offer discounts and promotional campaigns limited to internet retailing channels to promote purchases.
  • 55.
    Sahara entering intoLuxury market. • Sahara Group, the embattled Lucknow-based conglomerate, plans to launch an Indian luxury chain to sell 'Made • in India' luxury goods in international markets such as the US and the UK. “The focus is to create the first Indian premium • luxury brand, which will expose the global consumer to India as never seen before,” said Chandni Roy, who is • spearheading the initiative to open luxury lifestyle stores across the globe (Rathore, 2013).
  • 56.
    Conclusion • India isone of the growing market for Luxury retail in India that recently accounts for only 1-2 % of total luxury retail market of world. • It is a big opportunity for brands to target this untapped market with supportive changing taste for Luxury brand as well as rising income.
  • 57.
    • References: • Lifestyleproducts- http://www.reuters.com/article/2014/01/16/i ndia-retail-idUSL5N0KQ3M220140116 • http://www.cbpmag.com/emerging-markets- the-global-luxury-market-growth/ • KPMG-ASSOCHAM 2014 report.