Everywhere products, brands and hoardings are claiming to be offering luxury. Founder and CEO, Luxury Connect and Luxury Connect Business School, Abhay Gupta, answers some pertinent questions about the future of luxury retail in India.
Luxury in India: A myth or a neo-reality?
Everywhere products, brands and hoardings are claiming they offer luxury to uber luxury. Pick up any media, be it newspapers, magazines, TV advertisements, or social media platforms, and you will be bombarded with offerings of luxury cars, luxury homes, luxury villas, luxury clothes – the list of goods and services in the luxury segment is practically endless.
At this point, there are some questions that arise in the mind: Is luxury a myth or a neo-reality? How can we define the real world of luxury? What differentiates true luxury from pseudo luxury? Is luxury here to stay? How well have luxury brands fared in India? Are more brands looking at coming to India? How optimistic are investors in entering this glamorous yet mystical world of luxury? Are Indian consumers embracing these luxury brands? And, lastly, whether Indian brands have matured to face competition from these brands?
While the above questions define the current quasi-confused state of luxury scenario in India, the fact also remains that for the last several years, the overall size of the luxury consumption market has grown at a consistent pace of around 20 per cent year on year. The size is estimated to touch US$ 14.75 billion by 2016 Luxury segments are expanding beyond the key cities of Mumbai, Delhi, etc. to the tier-II cities of Hyderabad, Pune, Nagpur, Chandigarh, etc.
So who is the incredible Indian luxury consumer who is fueling this growth? In a majorly ‘aam aadmi’ country, who is indulging in this extravaganza? In my long career in this space, I have come across several unique, and some not-so-unique, incredible Indian Diaspora who shop luxury.
The khandani raees born with a silver spoon in their mouth
This small percentage of Indians perhaps contribute the maximum value to the sale of luxury. For them, luxury goods, brands, products, and services are a way of life. The elite, original, sophisticated, upper class spill over from the erstwhile nawabs , kings, rajahs and maharajas, despite the privy purse restrictions, have continued their traditional conspicuous consumption all through the post-independence decades and have never been dependent on the new wave of luxury goods into India.
The New Maharaja
Created post the industrialisation phase of the sixties, the new industrialists, the noveau rich, the new upstart are the staunch consumers of luxury goods. Their next generation having studied abroad has acquired sophistication reserved earlier for the khandaani raees strictly!
The partition-affected SME entrepreneur
This enterprising community invaded the trading world with a vengeance, working long hours and making money through fair means or foul. This segment always felt ‘enjoyment’ was not for them, until their new generation helped them come out of the closet. They spend in cash, abhor sophisticated sales people, are crude yet gentle and value money because they earned it the hard way. This class perhaps considers jewellery as the only safe investment in luxury goods! Yet, their offspring connive to
splurge on luxury vehicles as a show-off!
The returning NRI
The reverse brain drain brings back a whole bunch of technocrats and their ABCD offspring! They seek the western way of life, which they left behind – some still use fake accent to appear superior to local Indians and at times end up being made mockery of!
The educated professional
The management graduate with heavy disposable income – the DINK (double income no kids) category, or the HENRY (high income not rich yet) category shops for luxury items like there is no tomorrow. They mostly opt for easy finance options, eat out most days of the week, entertain, chill out, and hang out in groups in large numbers.
They always sense the need to dress well, drink well, and socialise well. Luxury automobiles to latest mobile phones to season wardrobes – they do not mind spending a fortune on items of luxury.
Short for the ‘young urban upwardly mobile’ this category comprises the youth, who is well taken care of (in terms of basic amenities) by their parents. This generation spends only on themselves. Hence, luxury consumption is on top of their agenda. Expensive mobile phones and flashy cars are a way to distinguish this segment from the rest.
The Bargain Hunters
This class is visible during end-of season-sales (EOSS). They come out in large numbers, walk around showrooms wondering why the goods are so expensive even during the sale period, buy small items but eventually graduate to higher level purchases as their career progression supports them.
The future of luxury retail
With such a diversified variety of customer base, how does one sustain luxury retail in India? With the e-commerce boom becoming a cause of concern for malls and traditional retail, how is luxury planning to respond to and evolve in India?
The digital dilemma: Worldwide, luxury retailers have shied away from the digital medium. However, many brands seem to have realised that they cannot ignore it anymore and they are now creating web-based interactive platforms to disseminate information about their products, designs and their inspirations. Digital engagement is changing the brand perception from ‘dictating’ the market to ‘learning’ from the market. No longer can luxury brands isolate themselves and claim to restrict to sell to a select few.
The physical store and experience: Is Omnichannel the solution? With a fragmented market size, it is not practical to sustain a physical store in every part of the country. Even in and entering the country. Luxury brands have learnt from past mistakes and are taking control of operations to ensure better brand experience in a controlled environment. From fashion to cars to hospitality, the focus is shifting from ‘just product’ to ‘product
with experience’. This requires special training of talent and mind-sets, and extra care in brand management and brand projections.
The growth drivers: Fashion, apparels, accessories, footwear, eyewear, and bijou jewellery are sectors which have continued to charm the urban as well as not-so so urban consumer. A new phenomenon of ‘Urbanisation of the Mind’ has been reported from the smallest of towns of India – thanks to the macro-economic reach of digital media. Owing to the extensive coverage by television channels and socio-economic escalation patterns, the youth eyes and covets products even before these are physically available to them. Travel, tourism, health and wellness, beauty, skin care, etc. are fuelling growth as the luxury service industry ups its ante. Products and assets have seen a new demand in unheard sectors of branded residences; luxurious automobiles, swanky sports cars; yachts; private jets and helicopters, etc., while the traditional jewellery and watches have seen new demands from new consumer sectors.
The ‘Make in India’ campaign is also expected to give rise to the Indian luxury creators in not only fashion but products like home, art, gourmet, gadgets, appliances, etc. All in all, with the rising disposable income, change in spending pattern of the youth and globalised lifestyle culture, the consumption pattern is surely moving north – towards a more sophisticated and refined taste for
good things in life. The new global Indian youth is on a natural high – they will not settle for sub-standard goods, services and products anymore. For them, the reality mantra is ‘work hard and party harder.