MUMBAI: India's luxury market is set to boom with the emergence of a class of customer that new research has dubbed the "closet consumer".
A report from the Confederation of Indian Industry and market researchers IMRB International, titled The Changing Face of Luxury in India, said that the luxury market had been growing at around 15% a year over the past three years and was currently worth $7.58bn, or between 1% and 2% of the global total.
It expected this to expand more quickly in the future, however, as economic growth had created a new tier of wealthy people who were starting to spend on luxury.
There was, the report suggested, a 'middle class' mindset in India among those who had become newly rich and this was creating an inner conflict that shaped the closet consumer, a cost-conscious shopper seeking value even when buying luxury products.
"Typically these are people who have not been born wealthy and luxury is not a way of life yet – they are just experimenting with luxury," Sushmita Balasubramaniam, vice president of IMRB's Retail Business Unit, told the Financial Times
"They won't pick up a Louis Vuitton [bag] because it's Louis Vuitton," he added. "They examine it and [to buy they] have to see value."
The report further segmented the closet consumer into four types – connoisseurs, experientialists, aesthetes and flaunters – each driven by their distinct motivations.
A notable aspect of the luxury market was the changing emphasis in spending. Where this had previously been focused on assets such as real estate or cars, that was changing as a greater range of luxury products became available.
Between 2008 and 2014 the proportion of spending on luxury assets was expected to fall from 51% to 39% while that on luxury products would rise from 29% to 45%. Spending on luxury services remained constant on 16%.
Watches proved the most popular purchases for the closet consumer, with 58% buying these. This category was followed by women's apparel (46%), shoes (44%) and perfumes (42%).
Then came wines and spirits (40%), handbags (36%) and sunglasses (32%). The remaining leading product categories included personal care (28%), men's shirts (24%), electronics (22%), men's suits (20%) and jewellery (12%).
Despite the closet consumer's search for value, the Times of India noted
that luxury was not an alien concept to the country and that Indians had never seen a dichotomy between spirituality and materialism: in the Hindu tradition, Vishnu the preserver is intertwined with Lakshmi, the goddess of wealth.
Data sourced from Times of India, Financial Times; additional content by Warc staff