India's luxury beauty market presents massive growth potential amid unique challenges, finds report by Kearney and LUXASIA
SINGAPORE, Sept. 30, 2024 /PRNewswire/ -- Building on insights and industry interest arising from their inaugural whitepaper last year, global management consulting firm Kearney and LUXASIA, the leading omnichannel brand-builder in Asia Pacific, have released a second whitepaper titled "India's massive untapped growth opportunity in luxury beauty". This report explores the immense growth potential, complexities, and challenges of the luxury beauty market in India, along with key commercial areas for market success.
Already a billion-dollar market, the Indian luxury beauty market is expected to reach USD 1.6 billion by 2028 and quadruple to USD 4.0 billion by 2035. With an expected CAGR of 14%, India is one of the fastest-growing markets in both Asia and the world. This growth is driven by the country's overall economic development, a burgeoning middle-class, and increasingly sophisticated luxury-conscious consumers eager to trade-up.
While relatively small compared to its population, the luxury beauty market in India is poised to follow the high-growth trajectory that China enjoyed over the past 15 years. Therefore, it is crucial for brands to enter now to establish their name, win the loyalty of Indian consumers, and ride the impending growth wave. This potential has not gone unnoticed, as numerous international brands have entered India in recent years to capture early-mover advantages.
However, market entry is fraught with challenges. India is a complex market – a "land of many Indias". Unlike other Asian countries, India's vast geography and ethnic diversity create divergent consumer preferences across the country. To succeed, brands must develop a range of region-specific (even city-specific) strategies rather than relying on a generic or single-market strategy. Additionally, brands need to navigate operational and regulatory complexities such as product registration and importation while optimizing their supply chain setups.
For India specifically, the three strategic pillars must be addressed: product-offering customisation, targeted regional marketing strategies, and omnichannel distribution optimisation through strategic partnerships. The last point is crucial for unlocking value quickly, such as leveraging a nationwide sales team, including training, deploying, and managing a dedicated network of beauty consultants across various omnichannel environments.
Karan Dhall, Partner at Kearney's Consumer Industry and Retail Practice, shares, "India's luxury beauty market is at a pivotal moment, poised for exponential growth. There has never been a more opportune time to invest in this sector. Brands that strategically navigate its complexities will not only establish a strong foothold but also cultivate lasting relationships with a new generation of luxury consumers."
Shashank Goel, Principal at Kearney, emphasizes, "As we witness increasing consumer sophistication and a robust economic landscape, it's evident that the time to invest in India's luxury beauty market is now. Success will hinge on a nuanced understanding of local preferences and the ability to customize offerings to meet diverse regional demands. Ultimately, brands that understand the pulse of Indian consumers will be the ones to thrive in this dynamic environment."
Satyaki Banerjee, Group COO, LUXASIA, who is also the overall commercial leader for numerous markets including India says, "Despite the complexity and heterogeneity intrinsic to India, it is an extremely vibrant and attractive market for luxury beauty. Growth is expected to come with a sharp inflection point and not gradually over time. Brands need to be present in-market prior to these sudden spikes. It is imperative that brands play the 'long game' and invest into an understanding of Indian consumers, as well as the dynamic omnichannel ecosystem in the market. This effort needs to start today. Given the evolving market structure, complexity and information asymmetry, gains are most effectively multiplied by collaborating with the right partner on this journey."
Dr Wolfgang Baier, Group CEO, LUXASIA affirms, "The time to enter in India is now. However, given the market risks and potentially costly learning curve, brands need expert support to ensure a growing market presence. Having delivered solid growth for numerous brands in India so far, LUXASIA stands ready to lend our expertise and partner with international luxury beauty brands for long-term success in this promising market."
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