Typically India is the most populous country in the world today and, its retail industry is driven by its value-conscious consumers, but the positive surprise is an outlier trend taking root in India lately is premiumization which is present and future.
The socio-economic landscape is convincingly backed up by transforming India's middle class expanding significantly and, predictably with greater consumer aspirations leading to robust demand creations for high-quality, luxurious, and aspirational products with indulgence and high involvement as we get into buying to experience space marketing; only is stemming out of transitioing consumer from mere consuming to binge buying rewiring/challenging the conventional rule book and playbook of retail all across sectorally viz. fashion and apparel to electronics and automobiles, unleashing a whole new wave of economic activities and setting new paradigms.
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What one has very prominently started to experience is the growing phenomenon of "Premiumization" technically speaking the process of upgrading products or services to a higher level of quality, luxury, or exclusivity so to say predominantly driven by consumers' latent desire for premium/better quality product and craving for unique experiences for products and services that reflect their personalized style, changing lifestyle and growing aspirations of the GenZ/Gen alpha which is the sanguine observation of most of the recent research studies.
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Studies
A recent 2024 study released by Wright Research underpins the sweet spot selling range for instance premium-value vehicle sales, typically priced above Rs 10 lakh, witnessing a remarkable spurt, outpacing and leapfrogging overall vehicle volume growth.
Again in unison comes the 'Equentis' report outlining in no uncertain terms underlying aspirational growth in demand for high-quality goods and services, speaking volumes of new normal of premiumization shaping future Indian retail to alleviate the pains of domestic market weighed in by the global slowdown/geopolitics adding to the economy's resilience and evangelism.
Furthermore, Bain & Company recently released one report that revealed, Indian luxury market is to grow by a projected CAGR of 10 percent through the coming five years and, expected to hit $5 billion by 2025.
'The Boston Consulting Group (BCG)' anticipates the premium segment in India to grow 3x three at a faster clip v/s mass market. Likewise, 'NielsenIQ's research' also reflects the sanguine trend of premium products doing heavylifting of growth sectorally.
A CRISIL report also predicts something like 8-10 percent growth in the apparel retail sector in FY25, well achieved by premiumization syndrome experienced across apparel segments spanning from the menswear category, where the demand for bespoke tailoring, luxury brands, and high-quality fabrics is exponentially on the rise. Whilst, likewise in the womenswear category too is witnessing a sharp rise in the buyers' desire to own designer labels, premium ethnic/traditional wear, and luxury stylization.
Similarly, Kidswear too is following suit where primarily the parents are the decision-makers, and, growing proxy awareness amid kids of the day is supportive.
Growth levers
The emerging mega trend of premiumization is well backed by the growth theme of increasing fashion and brand consciousness, a spurt in disposable income, aspirational youthful India, the rising catalytic impact of Social media (SMs), celeb influencers cult, and concern of social status-consciousness within global digital natives, and keenness regards to gaining insights on the potential impact assessment of the given product as in how much impact it leaves on the environment while making her lifestyle choices in the given value system and these phenomenon are contagious driving this conscious to trickle from India to BHARAT gradually.
Frontloading; Premiumization is front and centre for any marketer sectorally creating a headroom for growth for opportunistic brands looking to tap into these opportunities which are only getting bigger by the day in the new India.