India’s early millennials, those between the ages of 44 and 34, are roughly 220 million strong. Given this group’s educational profile, rising incomes in the tech and knowledge work sectors, the booming start-up sector, and the increasing prevalence of double-income households, the estimate is that at least 5% of the early millennial age cohort live in households with annual incomes above INR 6 million, which in purchasing power parity (PPP) terms–INR 25 to a USD–is equivalent to a USD 2,40,000 yearly income.
Indian millennials, like their global counterparts, exhibit a lower inclination towards saving than earlier generations. This trait and increasing affluence position the 11 million affluent Indian millennials as a growth market for luxury and bridge-to-luxury products and services.
Millennials place experiential richness above material wealth. This shift has significant implications for the luxury market. While luxury brands have traditionally marketed themselves based on exclusivity and prestige, these factors hold less sway with millennials.
Studies worldwide have revealed four factors enabling brands to market luxury and bridge-to-luxury products to millennials successfully.
The first of these factors is that millennials value experience over possession.
Further, millennials prefer customization and personalization.
Millennials prefer brands with authenticity and brand purpose.
And finally, they gravitate towards digitally integrated brands that engage them seamlessly from online to offline.
Many global luxury brands have tailored their marketing to millennials in the rich world. Burberry’s is a digital innovator pioneering interactive campaigns integrated across their showrooms and online spaces. Gucci builds on the authenticity dimension by leveraging social issues and cultural narratives in its campaign and content marketing. Rolex delivers customization, offering personalized engravings on its watches. Louis Vuitton has added an experiential dimension to the brand with pop-up experiences and collaborations with artists.
There is a massive gap between the nominal and PPP values of USD (the dollar is overvalued vis-av-vis the Indian rupee by nearly 3.5 times), which leads to global luxury brands losing out on the domestic Indian market.
Further, the space for “luxury” as defined by millennials—products and services that offer rich, customized, and personalized experiences seamlessly across online and offline spaces—is expanding the remit of luxury offerings beyond the traditional areas of fashion and accessories, decor, cars, hotels and high-end liquor- to a whole host of categories.
In today’s India, brands from financial services to bespoke travel to fitness can aspire to tap into the market defined by affluent millennials with luxury and bridge-to-luxury offerings.
The fact that global biggies find it challenging to match price expectations in India is an opportunity for Indian brands to leverage domestic demand to, in time, build global markets.
Across all potential categories, the most essential way to build a luxury or bridge-to-luxury brand is to create a relationship with the client. In other words, as I wrote in my MxM India column dated March 17th 2022, titled ‘Like Saas is BaaS the Future’, creating a new brand paradigm with the Brand-as-a-Service (BaaS) model. In the case of marketing luxury products to millennials, a BaaS model will be crucial to the success because BaaS will deliver on three of the four factors listed above directly:
- It delivers a subscription-like experiential relationship with the brand – think of a subscription service to a luxury car brand where one can change models as frequently as one wants
- BaaS implies a continuing relationship that makes delivering customization and personalisation easier.
- And integrating communication and interaction across online and offline channels
The fourth factor of authenticity and brand purpose will determine the more successful BaaS brand in the luxury market.
In conclusion, Indian marketers should see a luxury product and service market emerging among affluent Indian millennials as an excellent opportunity to build businesses and brands that can eventually go global.