What’s that outfit worth? Decoding the premiumisation wave in Indian retail

Discover how premiumisation is reshaping Indian retail with influences from pop culture and the growing demand for luxury. Learn about homegrown brands making their holds for this wave in India.

When Srijan R Shetty, founder of Fuze Finance, began investing in shoes, he bought himself a Jordan 1 Highs and didn't look back since. Peer into the news today or simply open Instagram, you will find numerous examples of people like Srijan who are now shifting their focus on investing in luxury apparel.

And that’s not just another coincidence. India's affluent class is only getting richer by the day, spending at a breakneck speed unlike those that came before them—thus ushering in a new era of premiumisation that’s complex yet unique to the Indian consumer class, particularly those with the spending capacity. With the number of credit card users in the country surpassing debit as per the latest RBI data, it is likely that this consumer class will now begin defining the mid-premium and premium categories in retail more strongly.

Even within our own spaces here at WeWork India, we often see people sporting a fresh pair of New Balance sneakers or a pair of the latest Jordans, to give a pop to their existing outfits. At WeWork Labs, we thought it might be a good idea to break down how the premiumisation wave is underway in Indian retail.

The role of Pop Culture

“Premiumisation is not just a trend, it’s a lifestyle,” says Anandita Bhuyan, the Founder of Moodboard Analytics—a company that helps brands decode their consumer base. Bhuyan, who has been breaking down trends in fashion for fashion platforms in the country, says that the rise of interest in premiumisation aligns closely with the rise of greater access to pop culture and trends across the world.

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This access to the pop cultural zeitgeist for Indians has a few key markers. For one, the rise of consumption through OTT platforms among Indians users has a large impact on how Indians are redefining their aspirations. This fundamental redefining of the aspirations is universal across the country and doesn’t remain limited to just urban dwellers. According to a report by PWC, this trend is unfolding in the Tier II, Tier III and Tier IV towns of India as well, with shoppers exclusively buying online to meet these demands.

For brands, the rise of OTT is too hard to ignore. With users spending more time on digital platforms, a significant portion of advertising budgets are being reallocated to digital mediums—rising from 21% in 2010 to an expected 36% by 2020. This insatiable demand for digital content is now driving content marketing industries to an all-time high with the industry expecting to reach a valuation of $600 billion by 2024, driven by increased digital consumption and the need for personalized content strategies.

All this points to say that the net effect the digital content has on the shopping influences of Indians is too significant to ignore. An EY study found that of the 1,000 Indian consumers they surveyed, around 60% of them found recommendations made by a social media influencer noteworthy and made purchasing decisions based on those choices.

This has also led to several unique trends in searches on retail platforms. As Anandita Bhuyan notes, within the Indian womenswear category for instance, there was an uptick in searches for a style of kurta which was being described as the “Alia cut”.

Source: Meesho app

A parallel influence can also be found within the Indian menswear category where brands like Rare Rabbit found significant traction in the wake of more men wanting to experiment with their style by seeking inspiration from social media besides the content they consume through OTT platforms. Just this year, the brand doubled its profit to Rs 75 crore.

But, perhaps, the greatest boon that the premiumisation wave brought with it was the ability for Indian brands to find their niche within the space.

Homegrown, desi, urban brands finding their spotlight

If one has to spotlight the premiumisation wave that’s happening in the country, it would be remiss to talk about the influence it has had on Indian homegrown labels. When Indian artists like Diljit Dosanjh sell out tours globally, becoming the world’s first Punjabi artist to have a sold-out show anywhere outside India—what that artist wears becomes a cultural zeitgeist too.

Diljit was seen sporting an ensemble by a New Delhi-based Almost Gods at one of his concerts. Now, the brand has become a sensation for all things Indian streetwear. Today, its founder, Dhruv Khurana has become a strong figure in the Indian fashion scene, with buyers vying for a piece for the label any chance they get.

Source: Gully Labs

It is in this gap that many other brands are also attempting to capitalise and make their mark. Arjun Singh, the founder of Gully Labs, saw that there was a gap for a strong brand in the retail space that had bold storytelling and a unique perspective. “We didn’t have any product focused-, sneaker brands in India. India has Uniqlo, IKEA, now but which brand have we exported… I wanted to create something that had an Indian touch and flavour which we could export to the world,” he tells WeWork Labs. To Singh’s own surprise, he gets customers that are not just Indian buyers but also those that are from outside India. But that being said, Indian premium labels or streetwear is yet to make its biggest splash yet. “I feel like the scene has just started… but as the ownership of our own identity grows independently and as income grows we’ll see greater adoption,” he adds.

What do the market forces say?

Despite other considerations, it is clear that the trend of premiumisation is likely to persist. This is supported by various factors, including projections that indicate the number of super-rich households in India will increase fivefold to 9.1 million by 2030-31, and further rise to 32.7 million by 2046-47.

With this growing class of potential affluent buyers who are increasingly becoming more globalised in their tastes and aspirations, it is important for startups that are operating in the space to keep up with the requirements too.

The WeWork Labs take

For the most part, startups are doing their bit to keep pace with global trends. For instance, Nithin Kamath-backed Mainstreet Marketplace has kicked off a luxury thrift vertical—Certified Thrift—after noticing that it is a trend popular among consumers in the West. Beer brand Bira too, borrows a lot of its brand influences from Belgian beer counterparts while still maintaining its essence in Indian culture and languages.

That being said, India is yet to see a definitive player emerge in the segment. This is because bigger retail giants like Reliance and Tata are at the forefront of this retail race, acquiring major brands like Kate Spade, Versace, New Balance and more, it seems like the competition to build a startup that operates in the luxury retail segment might shrink.

Although universally, it seems like in order for a brand to be considered successful it would need to have a great story to tell, connect with Indian sensibilities and aspirations.

See you in the next WeWork Labs blog!

(Cover image and reference images used are from Unsplash)