India, the world’s most populous country, is on track to become luxury’s next frontier, according to a recent report from Barclays.
Despite its small base — India only accounts for around 2 percent of global luxury sales — Barclays estimates the market will quickly grow at an annual rate of 15 to 25 percent for the next seven years to reach between 23 billion euros and 38 billion euros, driven by a rising middle class.
More from WWD
-
How Jordan Brand Streetwear Designer Aleali May Plans to Disrupt Sustainable Fine Jewelry
-
Chinese Shoppers Drive Luxury Sales in Japan Despite Macro Concerns
Due to the country’s solid manufacturing and service sector growth, India’s gross domestic product is expected to expand by 7.5 percent in 2024, according to the World Bank.
However, various challenges still exist, such as income disparity, limited retail space, and a relatively lower appetite for luxury goods.
“Could India be the next China? Luxury brands, outside cosmetics, don’t seem to think so for now,” wrote the Barclays report. “Comments from brands have been very bearish so far, with LVMH CEO [Bernard Arnault] stating in 2023 that India is not a country where they can have a network of luxury shops due to too high a level of income disparity and too low a level of GDP per capita,” the report noted.
Despite a bearish outlook on China’s luxury growth momentum, Barclays said that country’s domestic luxury market is expected to expand from zero to 5 percent after a February market visit.
After a site visit to India in late November, Barclays noted that Indian shoppers tend to hold a more conservative view on luxury buys. “As a result, they may have a clear preference for watches and jewelry over soft luxury goods, as handbags are rarely seen as a long-term purchase,” the report said.
According to Barclays, Mumbai, New Delhi and Bengaluru are home to around half of India’s affluent population and boast 90 percent of the country’s luxury retail infrastructure.
New Delhi, India’s capital, is where the country’s old money lives and is home to Louis Vuitton‘s first store in the nation, which opened in 2003.
Mumbai is home to Jio World Plaza, India’s largest luxury shopping mall. Officially opened in November, the mall spans 750,000 square feet and is already home to key brands like Louis Vuitton, Dior, Gucci and Cartier.
The project was conceived by Isha Ambani, the daughter of Mukesh Ambani, India’s richest man. The operator of the mall is Reliance Industries Ltd., which is said to be on board to help fund a potentially $3 billion buyout of Neiman Marcus Group.