Could India be the next China for the luxury sector?
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COULD INDIA BE THE NEXT CHINA FOR THE LUXURY SECTOR?
It has long been argued that India could be the next big market for the luxury space, much as China is now. Barclays don't think India will be a significant market in the short-term, but they have identified opportunities in the region.
India's robust growth has been driving optimism for the sector, but as of today, the country only generates circa 2% of luxury sales, Barclays says.
"While we think that the Indian market could grow at a CAGR of >15% until 2030 thanks to new space and a rising middle class, we don't think this will be enough to turn India into a significant market for luxury in the short term," they write.
"Various challenges such as the high level of income disparity, limited retail space and relatively lower appetite for luxury goods are potential headwinds."
But there are opportunities, according to Barclays, citing a rapidly growing economy, an increasing middle-class and rising per capita nominal GDP.
So could India be the next China?
"The brands in our space don't seem to think so," Barclays writes.
"A key exception to this is the cosmetics category, which has a different distribution model, via speciality beauty stores such as Sephora and a number of local retailers owned by India conglomerates."
Concluding, Barclays says luxury stakeholders indicated a strong level of popularity for the watch sector, which is a positive read-acoss for Swatch, while jewellery could be harder to penetrate considering the strong local market.
But, Barclays says brands like Richemont-owned Cartier and LVMH's Bulgari could still take market share.
L'Oreal is Barclays' preferred name to get exposure in luxury beauty, while big names, such as Kering's Gucci and Louis Vuitton, were flagged as popular brands in India.
(Samuel Indyk)
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