Jaeger Le Coutre, a super-premium watch brand, has only 10 stores across the world. One of them, it emerges, is in New Delhi. “This should suffice to say that India has arrived as a luxury destination,” says Gurinder Sahni, CEO of the Jaeger Le Coutre boutique in India. For all the equity of the Jaeger Le Coutre brand, the company’s store at The Oberoi hotel in New Delhi, one of the city’s five-star hotels, is a bit unpretentious.
The store is visibly small, around 500sq. ft. It stocks 40-50 pieces from the exclusive batch of 50,000 that the luxury marketer produces every year. The prices range from Rs1,80,000 to Rs40 lakh.
“These products are for discerning consumers,” says Sahni. “And India has quite a few of them,” he adds. Sahni is also busy these days putting together an exclusive showroom for Harry Winston, again one of the world’s top-end diamond jewellery and watch brands (it releases only 3,000 pieces in a year). In India, these are likely to be priced between Rs5 lakh and Rs5 crore a piece and Sahni is confident of selling a “handful” of these to his Indian patrons, once his outlet is up and open for business.
Ironic as it may seem, India, a country that is home to around 700 million people living on less than $2 a day, does have a healthy population of well-heeled consumers who, according to most marketers, are no different in their taste and style from the world’s most affluent consumers. That could explain why most of the world’s best-known luxury-brand marketers have either entered the market or are in the process of doing so.
There is not enough information available on the size and consumption patterns of India’s rich and uber-rich, but there is no denying the fact that their population is way too small as a proportion of the country’s total population of 1.1 billion. Luxury marketers are not too comfortable sharing details of their sales volume or revenue; nor are they willing to share details about the people they sell their products to. And most market research companies have not focused exclusively on this group of consumers or marketers. Result? Not much is known about either the market for luxury products or the profile of consumers who buy these.
“We see all sorts of figures regarding the value of the Indian luxury market and, personally, I tend not to rely on them too much. How do you define this so-called luxury market to start with?” asks Alain Viot, chief executive, Lladró Commercial, a company that makes fine, hand-crafted porcelain art figurines. Most companies in the space argue that some recent attempts at deciphering this market have not worked simply because researchers tend to confuse luxury with top-end premium brands. “Most numbers being talked about in the market are incorrect because the experts here tend to link premium lifestyle goods with luxury brands,” says Tikka Shatrujit Singh, advisor to the chairman, Louis Vuitton. “The real luxury market is neither non-existent like some experts would like us to believe, nor is it too big,” he adds.
One of the most-talked about reports on the luxury market in India by The Knowledge Company (TKC), an associate of Technopak, a retail consultancy, says that in 2006, there were 1.6 million households in India, which boast annual earnings of $100,000 and above. The company, which found the number is growing by 14% every year, says people belonging to these households are ideal customers for luxury brands. The report also says that people in this group spend around $9,000 a year on luxury or very premium goods and services and on the basis of this math, it pegs the potential of the market at $14.4 billion. Luxury marketers, however, say this figure is “hugely optimistic”.
TKC, however, clarifies that its analysis only indicates the potential of the Indian luxury or very premium goods and services market. “Our luxury report is about the potential of the market. The numbers we have mentioned only indicate the ability of 1.6 million households to spend on things beyond their basic necessities,” says Saloni Nangia, associate vice president, Technopak. The report does mention that most of these consumers still do not buy luxury brands such as Cartier or Gucci. “The priorities of Indian consumers, at least as of now, are very different from their global counterparts. For most of them, a good house and good education for children is the first priority. Then, they tend to spend on travel, high-end automobiles and other lifestyle products, than on premium perfumes or luxury handbags,” says Neelesh Hundekari, principal, AT Kearney, a consulting firm.
Debates about the size and the depth of the market apart, most top-end luxury brands are confident of India’s potential. “We do believe that there is ample space for many players as the market for exclusive products in India is growing in width and depth,” says Lladro’s Viot. The company last year formed a joint venture with SPA Agencies to strengthen its presence in India. SPA’s managing director Amar Agrawal says on certain products, Indian consumers are spending more than their global counterparts. “Last year, the average spend on a Lladro product in India was Rs1,00,000 as against the global average of Rs20,000,” he says. Louis Vuitton’s Singh says the company, which has two stores in India, is planning to set up three more this year. “In fact, if the infrastructural problems are taken care of, we would like to open a store in most big cities in the country and that’s simply because we are seeing the luxury market growing by leaps and bounds,” he adds.
Le Coutre’s Sahni also claims to have sold watches worth Rs2 lakh to Rs40 lakh to Indian consumers and he is confident that consumers will flock to buy the Harry Winston collection as well. “In India, there is a considerable number of affluent consumers who may not be in white-collar jobs or may not have studied in the best of the business schools; they belong to traditional moneyed business-class families,” says Sahni. “These consumers may not understand the science or the thought behind premium brands, but they do appreciate their value,” he adds.
In fact, TKC’s report presents a rather conservative image of the Indian luxury consumer. According to the report, in the most affluent households, the chief wage earner is most likely to be a male in his mid-30s, managing his own business and living in a joint family; 65% women in such households are likely to be housewives.
Luxury-brand marketers are also in the country because, irrespective of the numbers, they are confident that India’s true potential as a luxury market will emerge in the next five to six years. They argue that a fast-growing economy, rising incomes, increased exposure to global consumption practices and a younger population are factors that are conducive for the growth of luxury culture in the country.