Will the upcoming Dior show in Mumbai change the luxury fashion market in India? Experts are cautiously optimistic

While luxury fashion in the country has evolved by leaps and bounds, it is not without its set of challenges

The recent buzz around the Dior fashion show slated for 30th March at Mumbai’s iconic Gateway of India is once again shining the spotlight on India’s luxury market. While it’s not the first time the country is seeing a major fashion brand from the West showcasing its line on our shores–Pierre Cardin, Yves Saint Laurent and Valentino have all mounted monumental shows in the past–India has functioned more as a “back office” supplier for embroidery and embellishments rather than a key consumer market for these brands’ offerings. It’s no secret that the nation has long been a source of inspiration, with Dior’s own creative directors making umpteen trips here over the decades. Most recently, Maria Grazia Chiuri of Dior has been vocal about her collaboration with Karishma Swali’s Chanakya School of Craft, which is laudable.

A favourable scenario 

Yet, does this most recent foray by a major international label signal an inflection point for global luxury and its potential for growth in India? As one of the world’s fastest-growing economies, it would appear so. The rise in the number of high-net-worth individuals in the country, increased digital penetration, the proliferation of malls, and domestic conglomerates entering the luxury retail space are positive indicators. Later this year, the storied French department store Galeries Lafayette will open a 90,000-square-foot space in Mumbai with Aditya Birla Fashion and Retail. Major international brands like Cartier and Balenciaga are establishing standalone stores. Sabyasachi, the master of Indian luxury, is opening a massive flagship space at Mumbai’s iconic Horniman Circle shortly.

With political uncertainty shrouding the world in terms of the Russia-Ukraine war and growing wariness vis-a-vis China, it seems only logical that global brands refocus their lens on India. Abheek Singhi, senior partner at Boston Consulting Group, who heads the firm’s consumer and retail practice in Asia, says, “If I look at it from the (consumer) demand side, from the perspective of number of households having a disposable income of income greater than 20 or 50 lakhs, that has reached some kind of a tipping point.”

A slow rise

But does growing household income result in burgeoning sales of branded luxury goods? Singhi explains that the magical ‘S’ curve–that once incomes hit a certain point, demand suddenly escalates–is not something to which he subscribes. “In most luxury categories, what one finds is that secular growth keeps happening rather than a sharp inflection point,” he explains. “In India, the concept of the ‘S’ curve is difficult to manifest. Events like this [Dior’s] fashion show are going to only mildly accelerate growth.”

The luxury fashion market has certainly evolved since Louis Vuitton opened its first store in New Delhi 20 years ago. Today, luxury’s potential for growth is massive, considering that market research firm Euromonitor values the Indian luxury market at US$6 billion in 2023, relatively small when one considers China’s US$53 billion and South Korea at almost US$17 billion. 

The larger picture

Industry expert and journalist Sujata Assomull is cautiously optimistic about the scope for growth. She says that while “the Dior show is a great signal,” she hopes to see more momentum in the coming year. Assomull points out that India has been viewed as the next big thing in luxury since the start of the 2000s, but the industry never delivered meaningful revenue. That may now change. “It looks like what we thought would happen 15 years ago is about to happen in India. There are so many millionaires and billionaires in the country, and the diaspora are consistent spenders. Take the whole story together. Sabyasachi opened a store in New York, Anita Dongre in New York and Dubai, Manish Malhotra is also opening a store in Dubai, and we have designers like Rahul Mishra and Gaurav Gupta showing their work on international runways. Not only are we more open to Western luxury, we are taking Indian luxury to the West.”

Abhay Gupta, founder and CEO of Luxury Connect business school compares the Dior show in India to Fendi’s seminal 2007 show at the Great Wall of China. “That was a time when global luxury brands started looking at China very seriously,” he says. “Will the Dior show act as a major thrust for other luxury brands to consider India? I see those brands already considering India in a big way after the COVID-19 pandemic–they are already at our doorstep.”

Cecilia Morelli, co-founder of Le Mill, a concept store that pioneered multi-brand luxury fashion in India, says that the pandemic changed the way people shop. “Indian consumers, like their Middle Eastern and Chinese counterparts, got used to shopping online and now are supplementing that shopping rather than travelling and doing all of it abroad.” Indeed, multi-brand stores like The Collective, which retail over a hundred global brands, are witnessing explosive growth driven by deep consumer engagement, according to Amit Pande, its brand head.

Changing dynamics

The Internet and Mobile Association of India (IAMAI) predicts that India will have 900 million Internet users by 2025. Couple that with the expansion of digital payment systems and growth of social media platforms like Instagram over the past few years, and India is now home to an increasingly digital-savvy consumer comfortable with online purchases. The younger demographic, particularly Gen Y and Z, have embraced online shopping, but experts say a physical retail presence is an important touch point for the luxury buyer. 

There are certainly shifts in attitudes towards ready-to-wear fashion. Morelli has witnessed this change first-hand, noting that changes she sees in the Indian consumer are “more playfulness, more willingness to experiment, a massively expanded knowledge of brands than when we started a decade ago, when those brands were relatively unknown.”

Pande agrees, adding, “There were times when the logo was everything. But today, consumers have evolved in terms of their taste. They appreciate fine design, fabrication and the cultural connection of our products and brands.” He cites the popularity of brands like Etro, Kenzo and Dsquared2 as examples. Pande also notes that tier-2 and tier-3 cities contribute to about 50 per cent of their online sales, which comprise a quarter of the total sales. “Consumers in tier-2 and tier-3 cities keep abreast of trends through Instagram, they regularly travel overseas and, in many cases, you could argue they lead better lives than their tier-1 counterparts.”

Weddings, the largest luxury market space in terms of spend, today have brides sporting gowns and dresses, unthinkable a decade ago. Red-carpet events and occasion wear now have both men and women donning luxury brands from the West. The Italian menswear label Canali does very well with its bandhgalas; Ermenegildo Zegna has invested in Raghavendra Rathore. As for women, Western occasion wear is definitely a growing category. “The dress is now playing a bigger role,” explains Assomull. “Today, at a wedding, there is always a function where you can wear a dress. It is as acceptable to wear a dress as it is a sari for these functions. That wasn’t the case five years ago.”

The overall economic environment is also more hospitable to luxury today than it was previously. “Earlier, we had challenges linked to duty structure, FDI norms, ease of doing business, and policy issues,” Luxury Connect’s Gupta says. “That has become relatively easier, with the world looking at India positively today.” Gupta, Singhi and Pande believe that amongst the biggest challenges facing international luxury brands looking to enter India today is real estate. Cities have a paucity of space, lack a high street, and only a handful of malls prestigious enough to house luxury brands exist. Domestic players like Reliance Brands Limited–who have tied up with over 60 brands, including Giorgo Armani, Balenciaga, Burberry and Tiffany, as well as Indian labels like Ritu Kumar, Rahul Mishra, Manish Malhotra and Abu Jani-Sandeep Khosla, are helping through marquee spaces like the Jio World Drive mall in Mumbai’s Bandra-Kurla Complex. But a much bigger footprint is needed across the country. India is also a market that requires customisation, relationship building and significant consumer engagement than many other markets. International luxury brands that don’t pay attention to the nuances of the subcontinent will find it tougher to navigate, because a one-size-fits-all approach will not work in a nation full of complexities. Keeping that in mind, let’s not pop the champagne just yet.

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