Indian consumers to spend more on luxury this festival season

As the festival season gathers pace, Indian consumer confidence is on an upswing, with 56 per cent consumers indicating their readiness to spend on celebratory items. Additionally, 49 per cent believe they can effectively handle significant unexpected expenses in the near future, stated a study by Deloitte.

Meanwhile, 75 per cent of consumers report improved financial situation over the past year, stated the said firm’s research (part of the Global State of the Consumer Tracker, now rebranded as Consumer Signals).

This newfound confidence is driving an interest in luxury brands, exotic travel, and new vehicles, it added.

Rising prices of food and grocery products, and durables have also failed to dampen shopping plans of Indian consumers. As many as 55 per cent are keen on investing in popular brands for consumer durables, while 57 per cent are ready to splurge on premium ingredients for food and groceries.

In the short term, consumer spending is set to rise, particularly in clothing, personal care (12 per cent), recreation, entertainment, and leisure (14 per cent).

The tracker has a sample of 1,000 adults each across 24 countries.

Additionally, 77 per cent of Indian consumers expressed no concern about upcoming payments, hinting at a robust festive season. Looking ahead, 60 per cent expect improved finances in the next year, and 59 per cent envision living their best lives within the next five years.

“India's booming economy is encouraging consumers to embrace premium and luxury spending. This shift extends across consumer durables, travel, and hospitality, with Tier 2 and 3 markets also showing significant growth,” said Rajeev Singh, partner and consumer industry leader at Deloitte Asia Pacific.

Singh adds that “discretionary spending is poised to increase, benefiting sectors like retail, automotive, and travel and hospitality.”

Indian consumers are not only making luxury purchases, but are also planning exciting travel adventures, with a 74 per cent surge in domestic flight bookings and 58 per cent surge international flight bookings in August as compared to July. The demand for luxury hotels also rose by 5 per cent in August compared to July.

Moreover, 63 per cent of consumers plan to buy a new vehicle in the next six months, for reasons like high maintenance costs of current vehicles, a desire for something different, and a preference for fuel-efficient options.

The original article was published in Business Standard on 22 September 2023