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There is no clear definition of either luxury
products or luxury consumers. In fact, the various
expressions used when describing the luxury
market only add to the confusion. Broadly, in the
Western world, luxury consumers are defined as
the top 2-5% of earners or the 10% of income.
The Bureau of Labor Statistics (BLS) classifies the
111 million households of the United States into
equal-sized quintiles based upon household
income. The lower cut-off for households in the
upper quintile, about $75,000, provides a reliable
definition of the luxury market²households with
income within the upper quintile of the BLS's
model. The average income for those households
in the upper quintile is $1,21,367.

In the Indian context, there are three defining


levels of incomes at which consumption of luxury
products and services take place. At Indicus, we
define these levels as
* Luxury consumers ± HHld income > Rs 1 million
pa
* High end luxury consumers ± HHld income > Rs
2 million pa
* Super luxury consumers ± HHld income > Rs 5
million pa
Notice that although in exchange rate terms, Rs 1
million is only $25,000, in terms of value of good
and services it can buy, it is closer to $80,000-
90,000. Thus when a household crosses the
threshold of Rs 1 million, it is in consumption
terms already equivalent to the upper quintile of
the US households.
'ur research indicates that there are about 4 million
households (21 million people) in urban India that can be
classified as luxury consumers. 'f these, 1.4 million
households (7.3 million people) are high-end luxury
product/services consumers And, 1,65,000 households
(9,17,000 people) are super luxury product/services
consumers. The numbers of rural luxury product consumers are
estimated to be less than 10% of the urban numbers.

While India is still emerging in terms of number of luxury


consumers, there are no more than a handful of countries on
the planet that have more luxury consumers. In five years, India
will scale past many of the G8 nations. It is the fastest growing
market in terms of number of consumers, and by 2020, only
China, the US and Japan will have more consumers in the
high-end luxury and super-luxury categories than India.

India is at an inflexion point and the demand for luxury products


is set to grow at near about 20% pa plus (in value terms) for an
extended period of time lasting a couple of decades. During the
next five years, this growth is expected to be at 25% pa.

The current market size for luxury products/services is


estimated to be of the order of $2.5 billion.

The growth patterns suggest that now is perhaps the most


opportune time for marketers of a whole cluster of goods and
services under the 'luxury' umbrella.
While there are several characteristics of luxury consumers
that are common across countries and cultures, there are a
distinct set of attributes that define the bulk of the luxury
consumers in most emerging economies, including China
and India²the 'nouveau riche syndrome'.

It must be remembered that India is an economy where


large-scale wealth creation is a relatively new phenomenon
and people in large numbers are climbing up the income
ladder. A very typical behaviour pattern (which has also been
observed in emerging Asia, including China) is the need to
announce 'the arrival' and consume conspicuously. This is
music to the ears of luxury product marketers. The large
numbers graduating to high income levels and the sustained
growth rates indicate that the market is not going to dry up
any time soon. Further, considering the fact that India has a
base of 18% of the world¶s population, one can imagine that
within a couple of decades it will outstrip most other markets
in size by a considerable margin.

Yet, in some ways, there are unique dimensions to this


phenomenon not seen anywhere else in the world²the
grand weddings, supercharged festivals, and the like. The
impact is already being seen across several categories of
products and services²housing, travel, education, high-end
automobiles, entertainment electronics, home lifestyle
improvement products, men's and women's clothing,
women's jewellery, women's accessories, watches, gourmet
food and wines.