India is without a doubt the most attractive luxury destination across the globe. The opportunities and avenues for growth are many just that the pace is a little slow. To be successful, a brands needs to be patient as it is an investing mating market with slower returns but a lot of acceptance.
Luxury products in India today stand at $2.85 billion while luxury assets are estimated to be pegged at $4.31 billion. The industry is said to be growing at 20 per cent per annum. Moving ahead it is estimated to be worth $14.71 billion by 2015. For a consumer, the transition from the aspirational tag to that of a real customer can call of a time span to five to 20 years. People are now up to trying their hand at luxury labels and pick them up when on sale and further graduate to be a regular. Vispi Patel, Group representative, LVMH says, “Consumer is evolving and the economies are transforming faster. Customers in India are no different from luxury consumers the world over.” Pradeep Hirani, Chairman, Kimaya Fashions adds, “One needs patience with luxury, it needs to be handled with a velvet glove.”
Talking about the growth potential, Piero Braga, Senior Vice President Wholesale and Franchising EMEAI, Retail Middle East & India at Gucci says, “India is a priority market for Gucci. Its growth rate is the highest and ranks even above China. The focus is on investing and to be successful one needs to approach the learning curve the right way. Its strength lies in the young population, rising upper middle class, nature of consumers and the aspirational value.”
A lot of the luxury brands have taken to customisation to strike a chord with the targeted clientele. However, does this help of does it famish a brand’s international appeal? People today want to adorn westernised trends but luxury brand owners don’t believe in this theory. They believe it adds value to their brand in the Indian market. According to the IndianLuxury Top Management Survey 2012 by Assocham and Yes Bank states that 60 per cent of the CEO”s said that their strategy for the Indian market was to develop and customize new products and services specially suited to Indian tastes. Patel tells, “Customisation really helps. Limited edition collections are always a hit. The appeal of the brand however does not change with a few localised collections.” To this Braga adds, “Limited additions are a strong push that a brand gets. Nevertheless, if misinterpreted it could be dangerous for a brand’s image.” Stating an example, Roasie Alhuwalia, Director, Martketing, Canali India tells, “One of the most successful strategies that some international luxury brands have adopted for the Indian market is ‘product customisation’. This has endeared these brands to the Indian consumers. The Canali Nawab Jacket is a tribute to the Indian heritage and culture which has been a huge success. It is an Indian design made by Canali to perfect Italian tailoring standards.”
Expanding market horizons
The consumer base for luxury in India is limited at one to two per cent of the market. This is also undergoing change with the rise of the upper middle class and the demand from the smaller towns. People from tier II and tier III towns travel to the metropolitan cities to indulge in luxury products. Hirani reiterates, “The ROI in tier II and Tier III cities is higher than the metros. The returns garnered from these towns are much higher.”
LVMH carries out Trunk shows and events to reach out to potential customers in these towns. At present, they are carrying out business through distribution in these towns. On the other hand, Gucci believes in setting up its own operations in these cities after locating the apt real estate.
Online route: The road ahead
Online retail has picked up immensely in India. Does it hold the potential for selling luxury too? Well, it does but not so much as yet. A few years down the line, online retail will be the preferred shopping mode for luxury as well. Hirani says, “The click model is the future of the industry. With the apt infusion of technology, this platform will be of great relevance to a customer.” Nonetheless, setting up operations in the virtual world is not an easy task. Braga says,” It is not an easy task for international labels to set up an e-store. The approach to e-retail in mature markets differs to that in upcoming markets. It’s a long process. Once a buyer knows a brand well and has been associated with it for a long time, will be the one who will shop at the e-store.” Adding, Marco Riggio,Director, L'Oréal Luxe India says, “The online route and the brick and mortar stores will compliment each other rather than functioning independently. Once a customer is engaged and is offered a better experience than that he experience in a store, he will take to online shopping.”
The luxury market has a lot of facets but still has a long way to go. The potential is immense and all brands need to is to work their way around swiftly and patiently.