Over two decades ago, when my grandfather passed away, I had my first tryst with luxury. I inherited his closest possession, an Omega manual-wind mechanical wristwatch. I was in standard II and knew not the world of difference between the Omega and the Mickey Mouse Casio quartz I had worn till then.
To my horror the next day, the Omega died. I panicked, thinking I must have spoiled it. Father was not worried one bit. He laughed and told me to wind it, and showed me how. Presto, the Omega sprang back to life.
The lesson learnt was that there were certain watches that needed daily coaxing, a piece of wisdom that had bypassed me, being part of the quartz generation. Till then I had known that all one needed to keep a watch going was a battery change once in a while.
That day I consigned the Mickey Mouse quartz to the shoebox in my cupboard that held my worldly possessions. Winding the Omega was a daily chore that called for a certain discipline. I reveled in it.
I imagined myself to be an ideal customer for luxury retailers because I extended the daily coaxing that I offered to my grandfathers watch to all my priced possessions. Unfortunately, my friend, a luxury retailer with an international brand broke the news that they appreciate my treatment toward these goods but I am not even close to being an ideal customer. For us, she said, an ideal customer is one who will tell us I have 30 lakhs to spend, you suggest me a luxury timepiece brand which is not common with a difficult name and very glamorous, everyone should be jealous at the wedding. I asked her why so, See in that case I am able to sell the brand that gives me the biggest margin. Simple. That's an ideal customer for us.
Unfortunately, life is not that easy always for luxury retailers. So I decided to probe a little deeper. I spoke to Sanjay Kapoor, MD of Genesis Luxury and he said 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.
We need 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, Sanjay added.
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 isnt 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, said a country head of an international watch brand.
However, customers are also ready to forgo service if they are offered a discount instead. India is still a price-sensitive market, he added.
Unlike Delhi or Mumbai, Kolkata is a slightly different market as the consumer is more conservative in spending and is more price-conscious. Yet they are well traveled and shop for brands overseas. Brands need to focus on changing this mindset of shopping overseas by communicating to the audiences that luxury is no longer more expensive in India and is in fact lesser priced than in Hong Kong and Singapore, Sanjay said.
He added that another aspect which is important to keep in mind and what makes Kolkata an opportunity for luxury brands is that is it also a feeder market to the North Eastern states where the consumer is extremely brand conscious and spends on the latest brands, being very well informed on international fashion trends. They would reach out to this specific target audience too.
For a better understanding of customer behaviour, let's try to trace the story of luxury in India from the early 20th century. Branded luxury is not new to India. There was a time in the 1920s, when 20% of Rolls Royce's global sales were from India. In 1926, the Maharaja of Patiala gave Cartier its largest commission till date the remodeling 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, according to a report by Wharton (University of Pennsylvania) the scenario turned 180 degrees post Independence and anything remotely opulent was frowned upon as India flirted with socialism. However, in the past decade there was a shift when the new Maharajas industrialists, entrepreneurs, professionals, and the rural rich started blatantly adoring all things luxurious. In the report Vispi Patel of LVMH (Louis Vuitton Moet Hennessey) said something very interesting, The new, young, upper middle class who will spend rather than save will be new-generation, first time customers for luxury products. They will fuel growth.
In a recent news report Gildo Zegna, the companys chief executive and the grandson of its founder, said, Asia has an incredible thirst for fashion and quality; the region is very important for Zegna. But the trick to succeeding, Mr. Zegna said, is to know your local customers and adapt to them.
So 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.
It is not a bed of roses: the mindsets, the expectations and the infrastructural bottlenecks are very unique to India and new for global luxury players. They dont have a reference country, the model of which they can replicate in India. But they are ready to brave every challenge because it is hard to resist the temptation of Indian luxury market pie. And they best way to deal with temptation is to yield. Indias traditional luxury market is valued at about $6 billion and is growing at 15-20% a year. Of this, personal luxury goods segment is valued at $1.5 billion.
Let the quest for luxury continue.