LUXURY SHOPPERS Turn West

A majority of the luxury labels have set-up shop in India to serve people’s desire for luxury around them. However, people still prefer to pick up their luxury purchases from international locations. There are several reasons that fuel this decision — some relevant and otherwise.

People believe that India does not cater to the latest that is happening across the globe. Their belief is supported by the fact that latest collections do not make way in India and are only available a season or two later. This scenario is in for a change now with luxury labels considering India as a lucrative market and offering the same collections as they are in other international locations. On the other factors that contribute to this scenario, Harminder Sahni, Managing Director, Wazir Advisors says, “A major reason is that people believe that Indian stores may not have the complete and latest ranges available. Secondly they perceive prices to be higher. Thirdly, regular luxury buyers want to shop across many brands and a lot of brands are still not available in India. So it makes sense for them to shop in London, Paris, etc. where all brands are present at one place.”

Nonetheless, Vishakha Doshi, Director Marketing and Communication Entrack International Private Ltd (exclusive distributors in India for Montblanc) opines, “I think it’s a wrong notion that Indians prefer to buy luxury products abroad. Ten years back when there were no luxury brands (in India), Indians did not have a choice but to shop abroad. However, with an influx of luxury brands in India, Indians are willing to buy their favourite brands here as well. Brands have collections which are updated and the same is available internationally.”

Consumers are the same everywhere. For them luxury is all about the experience. That experience comes alive with the service that is offered to the patrons at a luxury store. Vispi Patel, Group representative, Louis Vuitton Moet Hennessy (LVMH) says, “Consumer is evolving and the economies are transforming faster. Customers in India are no different from luxury consumers the world over.” Adding to this Mehul Choksi, CMD, Gitanjali Group, says, “The consumer wants the same package here as abroad—merchandise (range, freshness), convenience (location), price and experience (ambience, service)—with an extra expectation of service given that this is India where labour is cheap.”

Luxury Service Concerns

But when there is talk of labour being cheap, it is also required that we understand that to cater to luxury the service needs to be impeccable. To ensure best service, training is imperative as is higher salaries. However, there is still a wide gap in staff training and reducing that gap will be a step towards sustaining customers in India.

Comparing luxury customer service in India and overseas, Jean Claude Roustant, at the launch of the Luxury Customer Experience Management Program, says, “The customer service in Indian luxury stores is really very poor. My example will be very simple:  luxury customers expect to be recognised when entering a boutique; they want the staff to be professional and recognise them because those people are also professionals in their job. Their wealth is based on hard work and they expect the staff to acknowledge this and ease their purchase, thereby showing that they are genuinely interested in them. This high-level service can only be achieved if the store management is very efficient and the sales ambassador develops a passion for their trade and for the service. There needs to be a sea change in the way personnel are picked and trained for these jobs; in fact most of the brands that are now arriving on the Indian shores want to hire only people who have the requisite training and education in luxury.”

Tax and Duty Pains

The tax and duty structure in India, on one hand, restricts international luxury labels during imports and raise other barriers to free movement along the way. On the other hand, heavy duties increase the price of a product and the price tag becomes heavier than what it is in the global market. A customer, therefore, prefers to shop in a better environment and at a better price elsewhere.

Infrastructure Constraints

The Indian marketplace does not offer a lot of retail space which is exclusively dedicated to luxury. With just a handful of such space available, brands as well as shoppers feel disconnected.  Agreeing to this Doshi says, “India lacks infrastructure and the right kind of provisions for luxury brands. There are no malls, department stores or high-end streets catering to high-end brands as compared to abroad.  While metros, such as Mumbai, Delhi, Bangalore, are coming up with luxury malls, the brands in other cities stick with five-star hotels. Five-star hotels provide the ambience but do not cater to the same crowds as luxury brands. India is yet to gets its own 5th Avenue or Macy’s.”

Roustant reiterates, “Opening Luxury stores in five-star luxury hotels is never the answer as it will always have limited footfalls and there will never be walk in traffic. However I now believe that there are some super new locations — Delhi, Mumbai, Bangalore and Chennai — where they are opening World Class Luxury Malls. This will really help since the Government has opened up the FDI sector and many brands from Europe are keen to open up the Indian market.”

The market calls for some corrections — it requires brands to collectively make the effort to increase luxury buying on Indian shores. Piero Braga, Senior Vice President Wholesale and Franchising EMEAI, Retail Middle East & India at Gucci, says, “For a luxury label to be successful, one needs to approach the learning curve the right way. India’s buying strength lies in its young population within the rising upper middle–class — and their aspirations.”

Though India, one of the most poised luxury destinations in the world, has a hunger for luxury, it is unable to offer an apt conducive environment for luxury operators and buyers. Once the luxury service gap is narrowed, the market will surely see an upswing in the buying sentiment.