Why Indian tourists are set to transform global travel retail
The world may witness a surge of Indian tourists over the next decade. They are poised to become a big source for the global travel retail industry.
India is on track to become an important worldwide source market for leisure travel, owing to its expanding economic prosperity and rapid growth. McKinsey & Co data shows it is the world’s fifth-largest economy, with a population of more than 1.4 billion people, surpassing China’s.
“Indian travellers will not be the primary source for the global travel retail industry, but their contribution is growing rapidly,” Christian Westphal, co-founder at Silverspoon Consultancy, told Inside Retail.
The world’s new critical market segment
For many reasons, Indian travellers are playing an increasingly important role in the travel retail business. India’s middle class is quickly developing, with rising disposable incomes. More Indians can afford international travel, and the middle class is likely to continue expanding dramatically, increasing the number of prospective customers in the travel retail sector.
McKinsey’s “From India to the World” report states that India is one of Asia’s important outbound tourism markets, with a rapid growth rate and robust post-pandemic recovery. It has the potential to increase from 13 million trips in 2022 to over 80 million by 2040.
“Indian travellers are showing a trend toward higher spending, particularly in sectors like luxury goods, fashion, cosmetics and electronics, which are all strong categories in travel retail,” Westphal said.
He added that the young population and travel preferences are also important factors driving the development. Indian visitors favour luxury and duty-free shopping because it allows them to save money on high-end products. In addition, government programs and relaxed travel laws, as well as increased air connectivity, encourage more Indians to visit abroad.
Luxury shopping destinations popular among Indian travellers include Dubai, Singapore, London, Paris and Hong Kong. These cities are well known for their premium shopping experiences, which attract Indian travellers looking for high-end products at reasonable prices.
Comparison to Chinese spending
China presently ranks first among countries for the most foreign tourists and the greatest willingness to spend. India, in contrast, spends moderately. The comparison of Chinese and Indian tourists indicates commonalities in their expanding effect on global tourism, but also contrasts, particularly in spending habits and market maturity.
“While both groups are becoming major sources for the global travel retail industry, Indian travellers are not yet spending as much as their Chinese counterparts,” Westphal added.
Spending on high-end goods, particularly luxury apparel, gadgets and cosmetics, is well recognised among Chinese tourists. Their preference is for luxury shopping hotspots, such as Hong Kong, Paris and Milan, and they frequently purchase high-end, exclusive brands when travelling overseas. India’s travellers are spending more overall, but they are still lagging behind the Chinese.
Indian travellers do spend more on luxury fashion, jewellery, electronics and perfumes, but more moderately than Chinese tourists. They are price-conscious and prefer bargains, deals or tax savings in duty-free zones.
How to attract Indian spenders
Destinations wanting to attract Indian leisure travellers should consider targeted marketing, a wider selection of affordable options, and culturally relevant products. Westphal appears to concur with this approach, as he believes that, from a retail standpoint, they are also major criteria in attracting more customers from the fifth-largest economy.
“Several global brands and travel retail players have taken steps to cater to Indian customers, but the efforts are not yet as widespread or sophisticated as those targeting Chinese travellers, who have been the dominant focus for many years.”
Westphal has suggested a few approaches to attract Indian tourists more efficiently; for example, there are numerous opportunities for retailers to advertise during Indian festivals and events that are a part of Indian culture.
Brands should engage with Indian customers on a deeper cultural level. India’s culture of destination weddings and luxury travel provides an opportunity for businesses to offer services and packages geared to Indian newlyweds or high-net-worth families wishing to throw grandiose celebrations abroad.
Furthermore, some firms are attempting to create items that appeal to Indian tastes, such as gold jewellery, wedding collections, and beauty products that complement Indian skin tones and preferences. Supporting payment methods such as Paytm is a way to make transactions easier for Indian travellers, so also may attract more of them.
Finally, Westphal stated that many global luxury brands lack substantial awareness or a retail presence in India, which implies that Indian travellers may be less familiar with or loyal to these brands than they are to local or regional names.
“Over the long term, however, the Indian market has the potential to become one of the most influential, especially if companies effectively tailor their strategies to capture this emerging segment and if economic and infrastructural conditions in India continue to improve,” Westphal explained.
This story first appeared in the November 2024 issue of Inside Retail Asia magazine.
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