Luxury is a form of freedom: the opportunity to choose and make the most of one’s choices
Francoise Montenay, president, Chanel SAS.
Her first ‘original’, a Louis Vuitton bag, truly represented that freedom, laughs 31-year-old Maithili Singh, a Mumbai-based media executive, who fondly remembers the time when she and her friends combed through the crowded streets of Bangkok’s Phat Pong market looking for that perfect find—a good quality fake that would fit her budget and sate her desire to own one of the world’s most-coveted luxury brands.
That was then. Today, the self-confessed brand-addict owns a few shelves of sunglasses, bags and shoes from some of the best-known luxury brands in the world—Christian Dior, Louis Vuitton, Chanel, Prada and DKNY. Each of Singh’s ‘investments’ is in the range of Rs8,000 to Rs50,000, a lot of money to lock into a bag or a pair of stilettos. “Credit cards have just made that much easier. So, I pay off the bill in instalments and control frivolous spending,” says Singh. “After all, this is what I want. So why shouldn’t I have it?” she asks.
That’s a question others like Singh are asking. A growing number of luxury brands, making a beeline for India, are hoping more young professionals like Maithili ask it and, in turn, fuel their growth in a market that is gaining a global reputation as the next big opportunity after China, the undisputed darling of luxury brands across the globe.
Unlike its neighbour to the north, however, India will pose a far bigger challenge for these brands. “For those who understand the market and are patient, the opportunities are phenomenal,” says Ravi Thakran, group director, South Asia, Moet Hennessy Louis Vuitton (LVMH) Group. While the discerning Indian consumer is extremely aware and has the same expectations from luxury brands as those in mature markets, the true challenge for brands is to understand buying patterns across diverse consumer segments and an equally diverse country. For one, the consumption of luxury goods will not just be restricted to people who live in large cities such as Mumbai, Bangalore and Delhi.
“Unlike China, where much of the luxury consumption is driven by major cities such as Beijing, the consumption of luxury goods in India is spread across the board,” says Mohan Murjani, chairman, Murjani Group, who is bringing brands such as Gucci, La Perla and Build-A-Bear to India. So, whether its Chandigarh, Ludhiana or Mysore, there are consumers willing to spend big bucks on luxury brands.
According to a study titled Inside Affluent Spaces (IAS), conducted by credit-card firm American Express, the understated sophistication and quest for the best is usually evident in more developed markets. “In most evolving markets such as India, where mass luxury is a relatively new phenomenon, the symbols of luxury are far more overt,” says Amit Dutt, head of marketing, consumer cards, American Express. And Indians are no strangers to the big and really well-known luxury brands. Gucci, Christian Dior, Georgio Armani and Versace featured prominently on A-list brands coveted by Indians, in an online study conducted by research firm ACNielsen in 2006.
In India, the IAS study found that the affluent were focused on the badge value of brands as these were considered the right “symbols of affluence”. In other countries, according to the study, affluence wasn’t defined just by total wealth and material possession, but also by intangible values. In Singapore, the value of owning these brands was woven around exclusive experiences that would provide ‘talk value’, while in Hong Kong, it was driven by the acquisition of individual and personal luxury ‘expertise’ that bestowed ‘connoisseurship’ and not just ownership on the consumer, thereby creating a new kind of social currency.
India, which proved to be one of the largest and most-profitable markets for luxury brands such as Cartier and Rolls Royce in the 1900s, thanks to several princely kingdoms, is once again on the radar of companies that market luxury brands. According to a recent survey by Forbes, the number of billionaires in the country has increased, but the luxury brands aren’t just looking at these individuals and their families. There is a lot of new money in India, much of it coming from salaries that continue to rise the fastest in the region, maybe in the world. People in possession of this money want to indulge their taste for luxury by buying everything from accessories to automobiles, albeit, at varying price points. “The new moneyed—young executives, entrepreneurs and BPO employees—unlike their parents, are uninhibited about spending on luxury goods, as long as it’s value for money,” says Thakran. “The first-time buyer may start with something as small as a key chain or a wallet and then slowly, yet steadily, will buy more and more into the brand,” adds Murjani.
Kalyani Chawla, the brand ambassador for Christian Dior in India, says, “India is a very nascent market, but it is growing fast and cannot really be compared to any other market as the mindset (of consumers) is very different. People are becoming extremely brand-conscious and I feel aspirational buying by the middle segment will be the ultimate clincher.” Dior, which opened its first Indian store in 2006, is already looking to expand in New Delhi, Mumbai and southern India by the end of 2007.
Sanjay Kapoor, MD, Genesis Colours, the company behind premium-brand Satya Paul, believes that while the Indian luxury market is still small compared with the rest of the world, a new splurging class is making its presence felt.
“As a social phenomenon, Indians have been traditionally splurging at weddings and now that behaviour is getting translated into high spends for all occasions. Socialites have also emerged as the biggest spenders on luxury goods for the snob value such products offer. This is specially true in markets up north,” he says.
Then, there is Bollywood. What HBO’s popular series, Sex in the City, featuring actor Sarah Jessica Parker, did for shoe-brand Manolo Blahnik, Bollywood is doing or gearing up to do for several luxury brands. The watch companies have been at the forefront of this trend: Shah Rukh Khan endorses Tag Heuer watches; Abhishek Bachchan, Omega; and Aishwarya Rai, Longiness. “The idea is to maintain international quality and style synonymous with the luxury brand, while adding an Indian element which could go a long way to making that consumer connect,” says Thakran, referring to the group’s decision rope in Shah Rukh Khan to endorse Tag Heuer watches in India, instead of using Brad Pitt, who is its global brand ambassador.
Thakran estimates that the number of luxury brands in India is poised to rise from about 30 international luxury brands today, to more than 100 in a very short time. But till that happens, Maithili says she’s going to make do with what’s on offer. And she’s not talking about the fakes. “I can tell one from a mile away,” she says with a smirk.