The Indian luxury sector, like any global counterpart, has gone through major ups and downs in recent times owing to the pandemic-induced setbacks. Equally true is the fact that like other sectors, India's luxury sector has been anticipating major developments given the wide-scale online adoption and use of emergent technologies like AI/ML, including Metaverse. 

However, the luxury sector is still facing some major challenges, the biggest one being that of 'demand'. This is indeed true given the fact if the economy starts to crash, the luxury sector is among the first sectors to take the hit. 

Sanjesh Thakur, Partner, Deloitte India stated, “People have not shopped much during the pandemic - the luxury took a lot of beating. If you don't have a foreseeable future, the demand takes pity. The sector faces the challenge of demand generation."

However, experts do believe that the demand for luxury products is going to bounce back as the income levels rise as the uncertainty around income is disappearing.

Besides demand, the luxury sector faces two other major challenges - consumers trading down their spending and the insistence on buying resale products. 

“Today consumers are trading down, not trading up. If we spent Rs. 2 lakhs on a watch, I want the same watch at a lower value. Also, the younger consumer, if you see, are not really very loyal to a particular brand. They are very keen on the resale market. Even if they are wealthy, they are okay with used luxury products. So today the big challenge is the consumers are trading down and somewhere in the overall growth,” Thakur further added. 

Some Positives

Despite the apparent challenges, the performances of the luxury brands have not been all bad. The brands have been working to improve their e-commerce platforms, adding more sustainable elements to their products and services, among others. 

“The major highlights and successes of the brand in the luxury segment in recent times have been creating a digital platform where the consumer can easily buy luxurious products online. Besides this, we have provided the option of a chat button on our website. The consumers can avail help and have suggestions as to what will suit them the best and what will be a perfect outfit per their requirements. So the significant highlight so far has been our website which is receiving a good response from our customers,” said Ravi Gupta, Creative - Head, Gargee Designer's. 

Namrata Lodha, Founder & Head Designer, Myaraa said, “Digitalization and sustainability in the luxury goods industry are driving the success. For our brand, enhanced website experience and international collaborations were some of the major highlights for the brand. Our web experience is driven by improvements in e-commerce, exclusive collections, and more design options that fueled the growth of our brand. It gave our customers an elegant experience for the online and offline purchase and matching hats with their outfit and style theme.”

Prakshi Sharma, Creative Head & Designer, Prakshi Fine Jewellery said, “India doesn’t have minimal, contemporary fine jewelry designer brands. Most of the population works with jewelers and relies on international labels. We’re the first player in the segment and still have no direct competition in the country which we really take pride in. In addition, being appreciated for our designs, quality and identified with a particular design sensibility is a constant highlight.” 

Vaibhav Laddha, Head of Prava said, “With one-of-a-kind annual collections and ‘Freedom Circle’, which is a 10-year buy-back program, Prava aims to enable luxury living that is responsible for the planet. This 10-year buyback program is one of the brand’s key differentiators and is aimed at revolutionizing the luxury furniture retail market. Prava offers this program to its customers under which Prava pays the customers to get their old furniture back. Thus enabling customers to not only purchase a product but also giving them the freedom to give it back and continue to buy our new designs.”

Pankhuri, Founder and CEO of luxury home decor brand Writings on the Wall said, "The adoption of the metaverse is a win-win proposition for all the stakeholders involved in the ecosystem of the luxury retail segment. For companies, the adoption is resulting in a massive increase in profitability and customer engagements while for buyers, the platform offers a more immersive and connected experience to help them choose and buy better. Consumers can explore different models as well as the features of products on metaverse better than any other model or format commercially available in the market. All these characteristics make metaverse an ideal platform for luxury retail brands and hence, it comes as no surprise that adoption of metaverse among Indian luxury retail brands is on the rise."

What Can the Sector Do to Get Back On track

If the macroscopic factors are not in favor, there is very little the luxury sector can do to thrive in the market. However, given the current situation where the demand is slowly on the rise, a luxury brand can focus upon certain factors to get an upper hand if done correctly. 

Thakur stated, “If the economy is in doldrums, as a company you cannot do much. Keeping aside the external environment, on the demand side, they can have more personalized targeting. You can actually look at a more personalized experience to accelerate demand.” 

“If I am a luxury consumer, I have not been engaged with the brand that much maybe in the last 24 months. We can start engaging with the consumers who deserve to be treated in a particular way. More sort of customized offerings for them. You will at least be able to create a lot of demand. If you have my data, you can have a more customized experience. They are trying to bring the customer experience as close to reality. Is this a trend going to happen in India? In other words, if I am a luxury would I want to have brands that are on metaverse. The answer is yes. Certainly, India will eventually grow into a large luxury market. You need a strong 5G infrastructure to support,” Thakur further stated. 

Role of Metaverse

Very recently, we are witnessing international global brands such as Gucci, Dolce & Gabbana already making millions selling on Metaverse. It is expected that other luxury brands to follow suit. Domestic brands as well luxury brands have begun to veer towards the Metaverse for immersive customer experiences and increased profitability. The Metaverse, a hybrid of AR, VR, and MR, has several advantages over traditional business formats, in fact, analysts at Morgan Stanley say the global market for virtual luxury goods could be as large as $50 billion by 2030.

Vijeta Soni, Co-Founder, and CEO, Sciative Solutions “Not only are these digitally connected universes time-saving and convenient, but they also assist luxury brands in expanding their customer base without making large investments in promotion, branding, and selling, amongst other things. To increase brand revenue, the Metaverse is now being used to provide faster product discovery, better personalization, and a more immersive experience than physical stores. Furthermore, Metaverse's distinct competence in enhancing engagement and visualization makes it a favorite among both global and domestic luxury retail brands. The adoption of the Metaverse has become an urgency for all of the stakeholders involved in the luxury retail ecosystem.”

“The platform's adoption is leading to a tremendous rise in profitability and consumer engagement for companies, while it provides a more connected experience for customers to help them choose and buy better. Consumers can better explore multiple models and product features on the Metaverse than they can on any other commercially available model or format. All of these traits make it a perfect platform for luxury retail firms, therefore it's no surprise that the Metaverse becoming more popular among Indian luxury retailers as well,” Soni further stated.