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Inflation may touch 10% by end MarchInflation up at 0.83% on higher food pricesHoarding drives food inflation by 16.32%Inflation a matter of concern: FM

: about 14% in such households.

Luxury market

The market opportunity for luxury is pegged at 9% (Rs 6500 crore, $1.6 billion); and is growing at 20-25% annually, according to Teknopak’s survey. Who is the target consumer? “It is not the Page 3 personalities or the most photographed in newspapers and magazines,” says Singhal.

“Most of these consumers are discreet and prefer to buy their first edition goods from the company directly. They don’t wait to shop in India’s emerging luxury stores or boutiques but in Europe where the stores have a direct hotline with the topline consumer.”

So who is the real luxury label shopper? The survey indicated CEO’s and other senior professionals in their 30s; entrepreneurs in myriad new businesses, like technology, manufacturing, services; returning ‘prodigal’ children; franchisees; small and medium retailers and other. They are located not in the top metros but in Tier II and III cities in Chandigarh, Ludhiana, Gurgaon, Lucknow, Varanasi, Kanpur, et al; said the survey. “It is definitely not the maharajas of yore,” said Singhal. “They are living off their assets.”

Will high rentals affect luxury labels? Most of them retail from five star hotels to top retail outlets in metros. “The brands understand that this is the market development phase for them. Luxury brands have usually entered markets when they are about to start growing — as they need to be present in a market to develop the market further. They understand that there is a gestation period before the business becomes viable — therefore they are ready to invest in creating the right image for developing the market.” India’s luxury mall, Palladium, with an investment of Rs 100 crore is slated to open in Mumbai in 2009. The brainchild of Atul Ruia of Phoenix Mills, Palladium is designed to ‘meet consumer aspirations for super exclusive and coveted luxury brands’. Says Ruia, “With a market capitalisation of over $1.5 billion, we have combined our experience in retail and mall management to initiate this project.”

It is not that luxury brands as a category are not ‘unaffected’ by inflation. Said NV Sivakumar, India Leader for Consumer and Industrial Products and Services, PricewaterhouseCoopers, “Some foreign labels that operate in the premium space may be experiencing some variations in sales, since their target consumers may be somewhat impacted by inflationary issues.”

Challenges