The burgeoning luxury retail space: What is behind the stupendous growth of India's luxury retail?

Soon, other cities followed: In Bengaluru, flamboyant businessman Vijay Mallya set up UB City mall along with the Prestige Group; a few years later, The Palladium was set up in financial capital Mumbai by The Phoenix Mills Ltd, which is led by Atul and Gayatri Ruia. The icing on the cake was when in 2023, Mukesh Ambani-led Reliance Industries threw open the doors to its Jio World Plaza at Mumbai’s Bandra Kurla Complex. The 750,000 sq. ft mall has several prestigious brands such as Gucci, Saint Laurent, Villeroy & Boch, Louis Vuitton, Cartier, IWC Schaffhausen, Hermès, and Tiffany & Co., among others. Once all the brands have moved in, Jio World Plaza—that is a part of the Jio World Centre spread across 18.5 acres—will position itself not just as the largest luxury retail destination with world-class facilities but will also house the highest number of luxury brands in India.

“Long ago everyone thought the luxury boom is going to happen in India… but that actually is beginning to happen now,” says Gayatri Ruia, Development Director of Phoenix Palladium. Brands were restricted to hotel arcades until the Emporio was launched in 2008, says a spokesperson of Reliance Brands Ltd (RBL), that is a part of the Isha Ambani-led Reliance Retail. “Now there has been a complete change when it comes to the availability of space with the Jio World Plaza’s opening and other luxury malls coming up in Chandigarh, Kolkata and Bengaluru,” says the RBL spokesperson. When it all started, India probably had about 20 billionaires and now it has crossed the 200-mark, with dollar millionaires going up in thousands, adds the spokesperson.

The Indian luxury retail market has experienced significant growth in recent years, driven by the country’s rapidly expanding economy and increasing disposable incomes. According to the ‘Global Wealth Report 2024’ by investment banking and financial services firm UBS, India had 868,671 dollar millionaires in 2023; the number is expected to go up by 22% to 1,061,463 by 2028, making it one of the fastest-growing markets for high-net-worth individuals (HNIs) globally. A recent research report called ‘Intelligent Investment: India’s Luxury Real Estate Where Opulence Meets Opportunity’ by real estate services firm CBRE also states that the surge in the number of HNIs and ultra-high net-worth individuals (UHNIs) is rapidly reshaping the landscape of India’s luxury market. “Post Covid, even several Tier II cities in the country have witnessed an increase in the number of wealthy people and the aggregate number of these individuals put together will create substantial demand for high end consumer products,” says Anshuman Magazine, CBRE Chairman & CEO for India, South East Asia, Middle East & Africa.

Global management consulting firm Bain & Company, in a report, also underscores the immense growth potential of India’s luxury market, projecting that it could expand 3.5 times its current size by 2030, with an anticipated influx of 35-40 million mid- and high-income consumers by that year. In 2030, the size of the luxury market will be $85-90 billion, it predicts.

This expanding pool of affluent consumers, coupled with the rising young population of the country with higher incomes who are exposed to social media, are increasingly attracting foreign luxury brands looking to tap into a market characterised by a burgeoning appetite for luxury goods and experiences. “Even though we don’t have the exact number of luxury consumers, I suspect that there are 5 million-odd habitual buyers, who buy at least three high value products in a span of two years; about 15 million sporadic buyers, who buy once in a while; and about 30 million aspirational buyers who have the buying power, but [are] not yet sure of the price value equation, totalling about 50 million,” says the RBL spokesperson. “And what used to be a season-minus collection at several of the luxury stores at that time has been replaced with simultaneous global launches. Add to that the almost similar price tags and the buying power that comes in the form of very high incomes, unicorns and share values and Esops that come with what I call the new cohort of Gold Collar professionals.”

According to Gagan Randev, Executive Director at Sotheby’s International Realty, India’s market potential is on the rise with the increase in earnings, with luxury real estate also booming. “There has been a noticeable difference in the way incomes and aspirations have changed especially post pandemic... the demand for luxury products has increased,” he says, adding that disposable incomes and aspirations are also on the rise in Tier II and III cities.

Experts say the very definition of luxury has changed over the years from the time people used to see Tommy Hilfiger and Coach as luxury brands to understanding the price-value equation—the heritage of the brand to what goes into making a luxury product to why luxury products cost so much. “In addition to the heritage and craftsmanship, these brands also enhance the personality and confidence levels among the customers socially,” says the RBL spokesperson.

When it comes to luxury retail representation in India, RBL leads with 94 brands including Tiffany & Co., Balenciaga, Bottega Veneta, Ferragamo, Giorgio Armani, Ermenegildo Zegna, Armani/Caffè, Tumi, Burberry, Canali, Tod’s, and Villeroy & Boch, among others. RBL also has under its umbrella Indian couture brands such as Manish Malhotra, Ritu Kumar, Abu Jani Sandeep Khosla and Rahul Mishra.

The evolution of a luxury market depends on four ‘A’s—affordability, aesthetic refinement, awareness, and accessibility, says the RBL spokesperson. “Affordability comes from the creation of wealth, but that alone isn’t enough. Aesthetic refinement is the ability to differentiate between a premium, super premium and luxury product and being able to identify and understand what is luxury. Then comes the awareness part through social media, fashion weeks and travelling. And finally, the accessibility. When all these factors play in tandem with each other, the market evolves.”

As for prices, industry experts say that talking about India’s high tariffs is a fallacy. “It is true that tariffs were high with multiple taxes with no input credits before the introduction of GST,” says the RBL spokesperson. “Today India is one of the cheapest countries to do business in. You get input credits on the GST for everything, other than of course the basic customs duties. Because of this there hardly are any price disparities between India and other countries.”

However, the Indian market could do well with more space tailor-made for luxury retail, say experts. As things stand, there are several brands looking to enter the country but owing to the lack of infrastructure, their launches have been delayed. Many are waiting for the development of retail space which could take another couple of years to complete. “The retail space has to be accessible and the right infrastructure has to be made available in areas with matching profiles of luxury brands in order to expand the brands’ presence in a market,” says Sathyajit Radhakrishnan, CEO (International Brands) of Aditya Birla Fashion Retail Ltd (ABFRL). ABFRL has under its umbrella luxury brands such as Ralph Lauren, Hackett London, and Ted Baker, among others, in addition to its international multi-brand stores, The Collective; it also has Indian designer brands such as Sabyasachi, Tarun Tahiliani, House of Masaba, Shantnu & Nikhil. Soon ABFRL will be opening the doors of the French multi-brand store Galeries Lafayette in India, first in Mumbai and then in New Delhi. “There are many international luxury and bridge-to-luxury and super premium brands interested in entering the Indian market. But for the moment, we do face the challenge of availability of space here. There are indications of expansion of luxury retail space, but the availability of real estate will take a few years as construction will take time to complete,” says Radhakrishnan.

Here is a growing demand for retail space. “Had the malls with their retail space [for luxury brands] been ready today, it would have been totally leased out by now as many of us are interested in expanding our brand portfolios. Unfortunately, there is no space to accommodate them at the moment, so we are holding off our plans of bringing more brands until some indications of real estate developments are seen,” says Ritesh Kumar of DS Luxury Retail, which has under its umbrella luxury brands such as Tom Ford, Brioni, Berluti, Aquazzura, and Brunello Cucinelli. “With the ever-increasing awareness and buying power, we definitely could do with more luxury retail space, especially in Delhi and Mumbai,” he says.

According to Pushpa Bector, Senior Executive Director & Business Head of DLF Retail, there are many brands wanting to set up shop in India that are in touch with them. “On the one hand, there are several new brands that are in talks with us to launch for the first time in India and on the other there are many tenants who want to expand their existing retail area. Either way we need to have more space made available for those who require it, and we hope to expand the area of DLF Emporio in the near future,” says Bector, adding that both foreign luxury brands and Indian designer brands are interested in having their retail outlets with DLF. Sensing the demand, the company has charted its expansion plans. At the moment DLF Emporio has about 300,000 sq. ft of space, and its second luxury mall in Delhi, The Chanakya, about 188,000 sq. ft. “We currently have about 140 brands with us and with the expansion we hope to add another 100,” says Bector.

Phoenix, too, is in expansion mode. It is building a 1 million sq. ft luxury mall called Grand Victoria in Kolkata and the 1.2 million sq. ft Phoenix Mall of Asia in Bengaluru. According to Ruia of Phoenix, the total retail space of The Palladium in Mumbai will be increased from the existing 850,000 sq. ft to 1.6 million sq. ft. “The leasing pattern of our new malls will be dynamic with the evolving landscape of retail. Even though we propose to host luxury brands in due course of time, these malls will have bridge-to-luxury brands along with high-end watches and jewellery, bespoke experiences and F&B outlets,” she says.

In the meantime, Bharti Real Estate is gearing up to launch ‘The Mall At Worldmark’ in 2027. It will be a 3 milion sq. ft property at Delhi’s Aerocity, with certain sections dedicated to luxury brands.

"With rising income and higher aspirations among the youth who are digitally exposed to luxury brands, I foresee plenty of action happening in this field. The influence of social media amongst the youth is tremendous and the same brings in aspirations in the minds of many young, earning members of the youth,” says CBRE’s Magazine.

And the future seems bright. The CBRE report mentions that “millennials and GenZ collectively hold a significant share in the market for luxury retail. Notably the spending power of GenZ and even the younger Gen Alpha is projected to grow nearly three times faster than the other generations until 2030. This trend highlights a more precocious attitude towards luxury with GenZ consumer becoming conscious of luxury products much earlier than millennials (at the age of 15 vs 18-20 earlier). Gen Alpha will exhibit similar behaviour in their approach to luxury consumption, the report anticipates.

Then comes the influence of social media. Over the years, all luxury brands have started seeking the help of influencers to get their product and heritage across the world. Since luxury is not merely the craftsmanship or price tags, the very fact that it can make a social statement thereby also creating a social acceptance has also paved the way for the increase in demand.

While the country is seeing an expansion of purchasing power and retail space, European luxury associations are keenly watching these developments. According to Armando Branchini, Honorary Executive Director of Milan-based Fondazione Altagamma, the association of Italian luxury brands, the increase in retail space will be welcomed by the European luxury community. “To successfully do business of luxury we need reliable partners, and we have that in Reliance Brands, Aditya Birla Fashion Retail Ltd and individuals such as Ashok and Reena Wadhwa who have brought in Gucci, Saint Laurent, etc.,” says Branchini. “Then comes the infrastructure. Once that develops it becomes even more pleasurable to do business in India.”

Branchini says India is being looked at as a very promising market, especially with the slowing of the Chinese economy. That is echoed by the association of French luxury brands, Comité Colbert. “Many of our French luxury maisons are now considering India with interest, despite obstacles that remain like the lack of infrastructure or the level of import duties,” says its President & CEO Bénédicte Epinay.

Malls dedicated to luxury brands are especially important in India as there is very little possibility of developing high streets such as Monte Napoleone in Milan, Fifth Avenue in New York, Avenue Montaigne in Paris or Sloane Street in London due to factors like weather and space. “With each mall being launched or expanded more cohorts of consumers, who otherwise indulged elsewhere, or bought other brands, are bound to become consumers for the brands that come with these new malls. And malls on their side, be it the DLF, Phoenix or Nexus-Blackstone, plan to open newer retail facilities where the concentration of wealth is seen and wherever they go, we will also go along and launch our brands there,” says the RBL spokesperson.

That means good news for the luxury shopper in India. The battle of the luxury malls is just getting started.

@VNScribe