The division of ‘luxury’ in consumer goods has been compared with terms like ‘bespoke’, ‘handmade’ and ‘customized’ or ‘curated’. A luxury consumer is always on the top most position on the bell curve reflecting his or her potential to consume a product which demands a sense of taste and experience.
Luxury retail industry in India is flourishing and has expanded from fashion and jewelry to various other categories – personal, household, office and travel and hospitality.
When we look at luxury reports in India, we feel the profitability of the market lies in the hands of the retail brands as well as consumers equally. The more quality and options the former offers and the greater knowledge and disposable income a community acquires, the growth of the market inclines towards a positive direction.
Unfortunately, due to inconsistency in demographic division and fragmentation of market audience across the cities, a huge potential of the audience remains unexplored till date in Indian market.
Boom is just one side of the coin. The flip side showcases elements which bring in a slower process such as infrastructure challenges within the country, regulatory policies and counterfeit products especially with the evolution of e-commerce in luxury in the last few years. Of course, there are the customer preferences which do hinder the pricing strategy, keeping all brands at bay in the Indian market attributing to the above obstructions.
A larger requirement in the sector is for skilled manpower. We may have the experiences and the customer, but unless the conveyor – manpower – can make the two meet and deliver, there is little to how the brand can leave the audience engaged and bring in consumption.
India as a country has developed beyond leaps and bounds in the manpower industry. Creating resources which are trained in creating and executing luxury experiences is still on the cards for the growth of the industry and consumer satisfaction index.
Over the last few years, our audience have gained the ‘zero tolerance’ characteristic from foreign market. Their shopping preferences are no longer dependent on the size and fit of their dress or similar choice of product, they expect an experience at the boutiques.
At Palladium, where we host most of the luxury brands under one roof, the ambience of the destination, services provided and the staff are all aligned to match these standards and preferences. While the audience continues to be divided among the aspirers and acquirers, the larger audience continues to be an international traveler with good reach across the globe for offerings and services.
The aspirers are termed as HENRY (High Earning Not Rich Yet) and are aligned to turn into acquirers in a longer period. This ensures profitability for the luxury retail brands at Palladium.
Indian customers are accustomed to the traditional luxury comprising of jewelry, fashion and experiences. However, luxury cannot be listed as a set of objects.
Skewed Regional Statistics
Luxury is becoming progressive in its offerings and services but stays traditional in the pricing. The Indian market for luxury is optimistically skewed within various regions. The rich and loyalists are very widely spread. From the traditional Bengali communities in east to the culturally vibrant Gujarati communities, the wealth is disproportionately allocated and distributed within demographics.
Nonetheless, the growth in the last half a decade showcases the drivers for acquiring new loyalties. Prioritizing key markets, consistency in services and product and patience have delivered a strong foundation for the industry.
The current market is consistently growing across the country. The most popular format of entry for international brands are through franchise and join venture, while direct investment with FDI norms is slowly gaining pace. Moreover, with shortage of places to host these brands, and infrastructure growth restricted by high price points, lower demand and traditional Government norms; there are a very few places within the country which provides for a friendly environment for luxury category. There is further concentration of feasible destinations within the cities.
Luxury Retailers in India
When we welcomed Burberry, Canali and Hugo Boss as our first luxury retailers into Palladium, the market was very promising yet young for profitability. It is today that we host more than 50 best luxury brands in the country under one roof, comprising of more than 15 exclusive boutiques across brands in the city. The company has seen tremendous growth and success over the last half a year and we have moved towards a new financial year making way for Coach and Muji in our palate.
Not only is High Street Phoenix designed to be luxurious, the mall is also the only one in South Mumbai catering to the tastes of the affluent communities settled from Cuffe Parade right up to Bandra. Obviously, we are not restricted to these geographies only. We have seen people from all over the country getting a taste of luxury at High Street Phoenix and Palladium.
From the point of view of Judith Leiber Couture, which has a boutique at Palladium, their customers are repeat clients or collectors with a discerning eye towards their choice of spends. The sales, thus, is not reflected in quantities. The trading density at Palladium is reflective of some key patterns of such audience. Starting from the higher side of the graph with luxury products in electronic, moving towards high consumption for brands like Michael Kors which offer high end luxury accessories to close the other end with tasteful fashion and choice in F&B.
Today, we have two luxury malls in the country, DLF Emporio in Delhi and Palladium in Mumbai, which have showcased that luxury brands can thrive successfully in India. Phoenix Market City in Chennai, another mall by The Phoenix Mills Limited, is about to launch another Palladium in their city. The sales at these brand outlets speak for themselves. At Palladium, the platform we give them is much better than having them commission standalone stores for themselves where they would not receive that much traction.
Given the pre-requisites for luxury retailers, both national and international, who are in a spree to foray or expand their footprint in India, there is hurry to expand their brand presence by starting their stores in high-end malls and high streets and sometimes opening their flagship stores in high-end residential neighborhoods.
However, luxury malls in India are not threatened by the alternate avenues. The possible shoppers that the 5-Star hotels cater to, are foreigners who out of all comprise a marginal size of shoppers, who reside in such hotels, who resort to last-minute impulse buys. Fortunately, with St. Regis in the premise, this audience base is well mobilized towards Palladium.
Strong segmentation and consistency should be the first tactic to adopt by new entrants.