Luxury retail has had a long historical presence in India with the erstwhile Maharajas being well known patrons of luxury. With time, the changing market for luxury brands in India calls for a renewed understanding of the luxury consumer of today and how target group driving the existence of luxury brands in Indian market.
Luxury brands have been making an entry in Indian retail scenario with high expectations, but finding themselves unable to sustain and succeed in the Indian market, they result in an eventual exit. This may give one the impression that India is not a market for luxury brands or at the very least, it is not an easy market.
However, contrary to popular perceptions, according to a KPMG-Assocham study, the Indian luxury market grew at 30% in 2013 and will hit $18 billion by 2017. Therefore, there is a case to look beyond the grey skies. The truth is that during hard times and recessions, it is the luxury brands that are able to sustain and even grow themselves.
This brings us to the question of which brands have succeeded in the Indian market, which have had to return home, which are feeling wiser and heading for their second innings. Also, what are the factors that determine the fate of these brands.
Royalty are no longer the lodestar of Indian luxury. Replacing or rubbing shoulders with them in the luxury market today, is a whole new set of luxury aspiring consumers. Automobiles, jewellery and watches are luxury segments that have traditionally been strong in India, while others emerging segments are apparel (though fine silks have always been present) and accessories (shoes, handbags).
Luxury auto segment is one of the most visible symbol that allows people to announce that they have arrived. Yet, amidst this success, Ferrari and Maserati had to shut shop initially and have now re-launched themselves in India. There are the stories of the Indian partners not having kept their end of the deal, of delivery delays, shoddy after sales service, and of an overall experience that was not quite ‘luxury’. Clearly, there are many moving parts to keep track of, to ensure that the experience lives up to the brand, before the brand can hope for success.
Brands, including luxury brands, need to decode the Indian eco-system and the Indian consumer (with all his expectations and idiosyncrasies) before they can hope to make him part from his hard-earned money. There are some commons across brands and categories that need to be addressed - such as the availability of luxury retail space with the ambience to match, in order to avoid jostling with the high street brands and outlets.
As the best marketers of luxury brands know, the crux of luxury branding is the aura created around the brand. Closely linked to this, is the creation of a finely-crafted experience for the consumer, using cues such as heritage, history, power, storytelling, the right ambience for purchase, and so on.
The absence of a luxury environment is what is often mentioned with DLF Emporio mall, Delhi, the UB City mall, Bangalore and Palladium mall, Mumbai, being cited as the oases. However, the same has been finely crafted in India, as evidenced by the famous five Star hotel chains and Luxury Spas such as Taj and Oberoi hotel chains, spas such as Ananda Spa - Rishikesh, the Oberoi Amarvilas Spa - Agra and Quan Spa - Mumbai.
Luxury brands must also know the customer, inside out. For instance, who is the enthusiast of the Ferraris, Maseratis, and of the Porches in India. Further the demographics, income level and spending habits of target audience is of utmost importance.
Another point to ponder upon is how such brands will use digital media to enhance and extend the luxury experience. Luxury is already being eased into our consciousness through television programming that celebrates all things luxury. Extending this to the digital sphere are luxury blogs with their international reach. Can these and other digital media be leveraged while making them relevant to the Indian context and consumer?
Then, there are strategies that successful luxury brands across categories are adopting, such as offering products for the Indian/emerging market with a price tag that borders on Premium rather than clearly shouting ‘Luxury’ often termed as bridge-to-luxury. This drives up sales volumes and introduces a wider consumer base to the idea of luxury. This approach seems to beginning out well in different categories from auto to apparel and accessories. Luxury brands of watches are available in a range of prices. Ethos outlets in India will have a Rolex which is at the top end of luxury watches along with Baume & Mercier, Bulgari, Cartier and Rado. But all these brands list a range of price points from below 2 lakhs to upwards of 8 lakhs (for a Rolex, one has to request a quote).
Such a move, also allows them to counter the move by websites such as Darveys which offer a range of luxury products such as handbags from Salvatore Ferragamo and Fendi, apparel from the likes of Burberry and Armani, footwear and handbags from Gucci etc., all at a discount/ on sale.
Therefore, there always has been and still is, a thriving market for luxury goods in India. However, this market is complex and needs to be decoded and luxury needs to be customized for the Indian customer. Brands need to find both traditional and new age media to communicate and resonate with their customers.
The article has been authored by Monika Thakur, Senior Manager-Business Planning, Vertebrand Management Consulting Pvt. Ltd.