A

BRIEF REPORT

ON

LIFESTYLE PRODUCTS IN INDIA

August, 2013













A brief report on Lifestyle Products in India

Private & Confidential Page 2 of 7
1 LIFESTYLE PRODUCTS SECTOR IN INDIA

1.1 Background
Twenty years ago, urban Indias lifestyles and buying trends were no way similar to what we see
today. With limited choices, consumers had few brands to choose from. In 1991 India threw its
doors open to international trade, and the situation changed dramatically and so did consumerism in
India. Today, consumers are spoilt for choice and fully acknowledge that they rule the market.
Manufacturers cater to their whims and give the consumer complete control of market trends.
Despite India having a low per capita income, it still remains a lucrative market, even for trendy,
lifestyle products. One reason is Indias large population. A sizable section of the countrys citizens
forms the working population. As foreign trade grew, it opened up numerous jobs opportunities and
gave the bulk of the working population significant spending power. The mantra of this section of
society is working hard and spending luxuriously and are responsible for the current boom in
consumerism.
In general, Indian consumers have a high degree of value orientation and thus brands need to
strategically price their products to gain a foothold in India. Also the Indian consumer tends to
associate himself with products that communicate the message of family values, traditions, care and
affection. These nuances set India apart from other developing nations. Companies are forced to
considerably tailor their products to suit the local market and meet the requirements of
consumerism in India. Lifestyle changes occur due to following reasons:
a. Major change in income, that is if the consumer has more money to spend therefore their life
style started to change.
b. Life style changes take place because of different age group
c. Life styles can be environment driven new generation sweeps comes in and find that new things
begin to happen, new technology comes, and new ways of doing things happens as we are
seeing with the telecom world and the impact of media on us.
1.2 Present Scenario of Consumer Lifestyle
India has over one billion people. Being a vast country, here people inhabit four climatic zones,
form the temperate north to the tropical south, from the parched west to the inundated east, speak
one or more of 15 official languages, follow several religious and personal beliefs, differ enormously
in their food habits and social customs and live together under varying states of human
development, from highly affluent to the utterly destitute. Around three fourths of Indias
population live in rural areas and contribute one third of the national income.
The high rate of industrialization, growth of service sector and better employment opportunities
have increased consumers disposable income, developed new lifestyles and awareness and a drastic
A brief report on Lifestyle Products in India

Private & Confidential Page 3 of 7
change can be seen in their buying behavior. The Indian consumer now days want to live in present
and prefers a life full of luxury & comfort and are not much price sensitive. They are highly aware
about the product, price, quality and options available with them. Indian consumers believe that
branded products are more reliable. The brand which identifies and support family values are more
popular and accepted easily by them. Introduction of credit culture has made the Indian consumers
to purchase products on credit and pay tomorrow.
Since markets are changing rapidly, they create immense. Life- style, simply reflect on what you do,
what your opinions are and what your interests are In typical marketing language they are activities,
interests and opinions. The Indian consumer market, which is primarily dominated by young
generation, is becoming increasingly sophisticated and brand conscious. A typical upper middle class
young consumer is beginning to look beyond the utility aspect of a product to seek intangibles like
brand and lifestyle statement associated with the product. This modern consumer wants his
purchases to reflect his lifestyle or at least the one he aspires for. As a result of this brand
consciousness, the food and beverage segment of the FMCG sector is already witnessing a
significant shift in demand from loose to branded products .The Indian affluent class has always had
a penchant for premium branded goods and this fetish will continue.
Indias luxury market currently stands at 8.21 billion USD and is expected to touch 14.75 billion in
2015. Looking back into the past, the market was reported at 5.8 billion USD in 2011. These facts
and numbers shows that India is a fast growing luxury consumer market and is definitely the country
that fashion and luxury brands should look at, for expansion and future development. International
brands that have been drawn to India by its large willing and able to spend consumer base and the
rapidly growing economy have benefitted in attaining quick acceptance in the Indian market and
given their high desirability meter, most international brands have positioned themselves at the
premium-end of the market, even if that is not the case in the home markets. In addition, Indian
companies manufacturers or retailers have been more than ready to act as platforms for
launching these brands in the market and today there are over 200 international fashion brands in
the Indian market for clothing, foot wear and accessories alone, and their numbers are still growing.
1.3 Luxury Products

The luxury products market in India is expanding its ambit from the conspicuous-consumption
consumers of the early years to the truly affluent households that wish to stand apart from the
crowd. In the rapid growth of the luxury market, the consumers are accepting and adopting global
trends much faster than anticipated. Digital and social media have made it possible for companies to
connect with the once hard-to-reach Indian consumer.

1.3.1 Categories of luxury products
Among different sectors, luxury jewellery, electronics, cars, and fine dining have grown beyond
expectations, while apparel, accessories, wines, and spirits have continued their strong growth.

A brief report on Lifestyle Products in India

Private & Confidential Page 4 of 7
1.3.2 Market size for each segment
Jewellery and watches are the largest luxury industry segments with 47% of the total market
followed by apparel and accessories with 14% of the total luxury market. The luxury electronics and
car segments have seen a growth of above 35%, while fine dining has seen a whopping 40% growth
in this period. All of these segments have seen higher growth than expected in the last year. Apparel
and accessories, watches and personal care have also seen robust growth, between 24-30%.
1.3.3 Major brands of luxury products available in India
Product Brand
Jewellery Maria Cristina Buccellati
Watches Omegas, Rolexes, Tissots and Mont Blancs
Apparel Louis Vuitton, Giorgio Armani, Hermes
Automobile Rolls Royce, Bentley, Mercedes, BMW, Audi and Porsche















A brief report on Lifestyle Products in India

Private & Confidential Page 5 of 7
2 NEW MARKET PLAYERS
Indian luxury brands are no longer a myth. Luxury brands, which are always cautious in their
approach before entering any market, usually adopt the route of distributors and franchisees since
they do not want their investments to get stuck because of strict investment norms. Brands like
Burberry, Dior and Ed Hardy have adopted this approach. Italian apparel and shoe brand Geox
Group, which is among the top brands in Italy and a seller of premium and life-style casual footwear
products globally, has also approached Indian company G&B Footcorp to start distribution of
products in India. Today, G&B is responsible for the Indian presence of Sisley and Dell as well.
Similarly, the $10-billion Japanese fashion retailer Uniqlo is also sells trendy and casual merchandise
at competitive prices, with ambitions to become the world's top fashion retailer toppling Zara and
H&M.
Many international brands are venturing different strategies to enter into the market. Instead of
setting up shop in luxury malls, as has been the trend over the past few years, Hermes has ventured
into market with standalone stores in iconic buildings in Mumbai and Pune. Another interesting
development was the number of private equity deals that have transpired in the luxury space over
the past 12 months, such as L Capital acquiring a stake in Genesis Luxury and Franklin Templeton
acquiring a stake in Kimaya. Keeping in mind by 2015 there will be an expected market size of USD
14.72 billion (USD 5.38 billion products, USD 1.45 billion services and USD 7.9 billion assets).
India consumed luxury goods worth USD 1.5 billion. The escalation can be attributed to the
evolving number of wealthy shoppers in India and nearly 70% of Indias wealth is concentrated in
the five metros. Over time, the market has grown to be so strong that it even escaped the brunt of
recession as only a fraction of luxury products saw a minor dip in the sales. The riches for which the
switch from a luxury item to a
second-fiddle would not be a
consideration helped wade the
industry over money crunch period.
According to the Kearney report
most luxury product categories
witnessed over 15 per cent growth
over the past few years (including
recession years). The performance
of categories like Electronics, Wines
and Spirits, Apparel and Jewellery
was impressive.

Growth rate of the luxury industry i s superi or to that of the entire retail market



A brief report on Lifestyle Products in India

Private & Confidential Page 6 of 7
3 MARKET GROWTH
Key Growth Drivers
Indias consumer class is estimated to grow nearly twelve-fold (from 50 million at present) to
583 million by 2025, with more than 23 million people likely to be listed among the worlds
wealthiest citizens.
An increase in the young working population especially women and growing opportunities in
the service sector act as biggest growth drivers for the luxury retail sector in India. 60 per cent
of Indias population is below the age of 30.
Growing incomes coupled with optimism about the future. A recent report by The Nielsen
Company puts India on top of the consumer confidence index.
Easier consumer credit & loans - With the emergence of concepts such as quick and easy loans,
easy monthly installments (EMI), loan through credit cards and loan over phone, it has become
easy for Indian consumers to purchase expensive products.
Real estate development in the country, for example, the construction of mega malls and
shopping malls, is augmenting the growth of the organized retail business.
On-going liberalization of retail sector. Already, 51% FDI allowed in the luxury sector in India
by the government.
The 150,000-plus HNIs (high net worth individuals) with a net worth of $600 billion-3.1
million households earning more than Rs.1 million in the top 10 cities (Mumbai, Delhi NCR,
Bangalore, Kolkata, Pune, Chandigarh, Hyderabad, Ludhiana, Chennai and Ahmedabad), and a
Gini coefficient of 39.9 per cent. (Gini coefficient indicates whether income inequality within
countries and rising income inequality within countries leads to a change in spending patterns,
creating good business opportunities at opposite ends of the economic spectrum).
Foreign investment in luxury retail comes with strings attached-100 per cent FDI in both single
and multi-brand retail requires 30 per cent of local sourcing, a clause which luxury players find
difficult to comply with-and there just isn't enough quality retail real estate available. These
issues have been known since the outset. Industry growth of 23 per cent, while good, is
expected, given the small base. Many larger consumer industries do grow in mid-double digits.
















A brief report on Lifestyle Products in India

Private & Confidential Page 7 of 7
4. FUTURE PROSPECTS
Thirty percent of Indias population lives in cities, which is predicted to rise to 40% by 2030. Indian
consumers have shown increased demand for premium products and services and that the luxury
market is expected to grow by 21% by 2015. Bollywood and celebrity endorsements are changing
the grooming habits of urban men with more of them paying attention to personal grooming as a
result of the mass influence that two mediums have. Even outside cities, although less affluent than
their urban counterparts, rural India is being described as a new goldmine with it being worth an
estimated $425 billion. Despite being less well off than their urban counterparts, rural consumers are
increasing their consumption due to their increasing aspirations towards a better lifestyle.
The growth in India between 2015 and 2020 will become even larger as more people come into the
consumption curve. Nine million households will be targets for luxury or near luxury consumption.
Almost 22 per cent of Indian consumers try foreign products and brands. With the Indian luxury
market estimated to touch $30 billion mark by 2015 and the country aiming to become the worlds
fifth largest consumer market by 2025, this conference surely struck the right chord in its target
premium segment of a rapidly growing economy.