A brand’s guide to luxury retailing in India

When a luxury retailer wants to do business in India the brand has to understand that this is not China and thus cannot be clustered as emerging markets for these brands. The two markets are intrinsically different.

We are the old markets for luxury, unlike China. In 1926, the Maharaja of Patiala gave Cartier its largest commission till date the remodelling of his crown jewels, which included the 234.69 carat De Beers diamond. The result was the Patiala necklace weighing 962.25 carats with 2930 diamonds. In 1928, the Maharaja of Jammu and Kashmir placed 30 orders in six months for trunks from luggage maker Louis Vuitton. Not to mention that a certain Nizam had procured 50 Harley Davidsons for his postmen to deliver his messages.

However, things have changed, the texture of the market has changed, and more so, luxury has become democratized. There has been a rise of the Great Middle Class and they have been the primary drivers. In India, it is still a play on volume and not on ticket size.

A.Challenges in luxury retailing and how to fight them:

1.The only big challenge so far to rapid expansion of luxury retail in India is the availability of the right real estate spaces to house international luxury brands. Apart from the few malls in the major metros such as DLF Emporio in New Delhi, The Palladium in Mumbai and The UB City in Bangalore and the recent opening of Quest in Kolkata, there have not been any other developments.

There is a need for many more such retail options in other cities too as there is a far wider target audience residing in smaller towns and cities which have the propensity to buy luxury goods. The reason China is 15 years ahead of us in terms of expansion of luxury stores is purely because they have developed their infrastructure that supports this expansion.

2.Luxury retailing cannot be confined to five star hotels as it is now widening the base to tap into a bigger pool in this country.

3.Besides real estate, there is another issue and it is deeper one: the perception of luxury. What people expect from luxury in India is very different from abroad. In the West, a bespoke suit is luxury, however, it isn’t here and customers ask, So, what else are you offering? In India luxury retailing is very service-oriented, in the West it is product-oriented.

However, customers are also ready to forgo service if they are offered a discount instead. India is still a price-sensitive market.

4.Adaptation is the mantra: Every luxury retailer worth their salt is up for local adaptation to make their slice in the luxury pie bigger. It gives so much comfort to walk into a Llardo boutique and see Rama Sita, Ganesha or Lakshmi created so beautifully with porcelain or to see Hermes coming up with a Saree.

B.Understanding the minds of luxury consumers

1.The Experientialists: This genre typically values new and exciting experiences more than buying products or brands. They spend on the experiences.

2.The Connoisseurs: This genre is passionate in certain areas of interest and makes it a point to be well informed and knowledgeable about it. These categories could be art, scotch, wine, watches, writing instruments, cigars, horses, and the likes.

3.The Flaunters: They are the force that drives luxury in India. They tend to value brand name over all other factors. Purchase of a brand is a signal of their status in their society and so visibility of the brand name is important. It is also important for the brand to be aspirational, otherwise, what's the big deal? Badge seekers at the stage where the brand name itself is the biggest status indicator is seen mostly with the newly rich or new money class, especially among their young members.

4.The Aesthetes: To this genre, the brand is much less important than the design. Aesthetes are luxury consumers purely because they have arrived at a state of income due to which they can indulge in their love for design among luxury brands or products.

They will shell out a bomb because the object of desire is hand stitched and not because of the label. They pride themselves for having an eye that picks out the unique and bold in design.

Built in rationality and conservatism still dominates our minds so one toe may be dipped in luxury, the other may be in a pool of value for money. Yes, it happens only in India.

C.Everything is relative

1.In luxury branding one size fits all just doesn’t work. It is a space for bespoke, for customization, for making every customer feel special and justify the brand premium in pricing.

2.The greatest challenge that a luxury brand faces is in mixing the right portion of snob-value. It can’t be so much that you alienate others but it can’t be so less that the clients don’t feel the exclusivity. The magic potion lies in the right portion. It is both the presence and the absence of snob quotient, both co-existing, side by side.

3.You need to have the low-hanging accessories like sun glasses or perfumes or key chains or coin purses or scarves or what have you. They will not only lure a genre of clients who are heavy spenders in premium brand space and are yet to turn big spenders in luxury space as they are not sure the return on investment or RoI as we call it in the corporate parlance. For them, these low-hanging fruits are only value-for-label. So they just pay for the logo and are happy as they spend it within their budget and not frivolous but smart. They think of these spends as it is a deal man to own an LV for such a price, the product may be a key chain or a coin purse but who cares. Logo rules!

4.With time, a certain segment of this class realizes the efficacy of the entire experience of luxury shopping, it is just not the product, it is the experience that you pay the premium for. Again to some it is worth the buck, to others it isn’t.

D.Brand Ego: The great driving force (read strategy)

1.It is all about being special or exclusive, to be someone who is not ordinary. Of being able to dazzle or “luxe”. Of being able to stand out in the crowd. This razzle-dazzle industry thrives on ego.

2.To idea that a marketer sells is that this luxury brand is exclusive and it will make you exclusive as well, you will belong to an elite club that you will be able to flaunt such as a Lamborghini Club. “Money can’t buy happiness. But, somehow, it is more comfortable to cry in a Lamborghini than on a bicycle”, Lamborghini Gallardo slogan quite captures the ethos.

3.The arrogance that a brand exudes, mostly using prohibitive pricing to crowd out clients, will make it aspirational. So the users will get an elevated feeling that he is part of an exclusive club. When Rolex says “Live for greatness” it is not talking about the product, or the patented perpetual movement, or the oyster casing, or the brilliant design, it is a life that the watch brand is giving you. It is making you part of a legacy of great people, of JFK or of Martin Luther King Jr stature. Rolex has always been a very masculine brand. The male ego that Rolex has been able to develop and nurture over decades has proved instrumental for the company’s success and it is still revelling in that glory. So Rolex is selling a legacy, a life of greatness, a masculine ego that craves for being distinguished.

E.The Great Indian Middle Class: The strongest driver

All the major luxury brands owe their existence this one class of buyers. The secret behind the survival of high-brow luxury brands is the play in volumes:

Shopping malls in order to lure the middle class towards luxury and to give them its taste are mixing luxury, super premium and premium in the same shopping mall. The Palladium in Mumbai or The Quest in Kolkata has a mix of all three segments: all under the same roof. You can’t afford to restrict luxury retailing for five stars and exclude this group as they are your lifeline.

It is this aspiration that has led to the exponential rise of the market of knock offs and first copies.

To sell or not to sell (to the masses)? That is the big question that all retailers of luxury brands face.

Most of them have been able to strike a balance. The key lies in pricing. But the entire process has a few elaborate steps:

1. Identify the products that are your signature and add a signature premium to their prices. They are not for Great Indian Middle Class or GIMC to buy, but they are their aspirations. These products will always be displayed on the boutiques, mostly their pictures, as signature products are always out of stock and a fresh stock is always on its way from Germany or France. They make the GIMC keep coming back.

2. Identify the products that you want the New Maharajas to buy. Special edition pieces, hand crafted. These should be there for display so that they can feel it and then take it home. These have a premium attached to them due to their exclusivity.

3. And then there are products that are masstige, they are to whet the appetite of the GIMC, so that they can flaunt that they own a logo of the brand they always aspired to buy.

The most interesting part about point 3 is that these companies never advertise to this class, so there is no brand dilution. This class, however, advertises and brands these products to the other target audience in the same class, all for free. So the companies generate strong brand pull with this segment, most importantly, the aspiration lives on and grows.

F.Democratization of luxury: The rise and rise of the masstige

1.Today, even the luxury of Royalty is available for a price. How does it matter if you are not born in a Jaipur palace, today Royal Weddings have become commonplace. Perhaps the opening up of palaces for hotels is the biggest step towards democratization of exclusivity of royalty. You will be treated like a king, if you have the moolah. Life is just that simple.

2.Now let us look at the rise of the so-called masses. These new customers -- luxury-rich but asset -- poor are both an opportunity and a threat to the traditional luxury-goods producers. As consumers, they are more demanding, more selective, and show less brand loyalty than the high net worth individuals who were the archetypal consumers of the old luxury. They are willing to pay high prices, but they expect commensurate quality; old luxury was never so fussed.

And they want the hottest, trendiest designs, which increasingly have to be marketed in creative (and expensive) ways including product placements on TV sitcoms.

They are the hottest clients for all luxury retailers and needs to be wooed with royalty and exclusivity.

Let your quest for luxury continue.


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