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Business News/ Mint-lounge / Features/  Old habits for new money
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Old habits for new money

Little has changed about the luxury consumer in India in the last 10 years

The Canali store at the DLF Emporio in Delhi. Photo: Priyanka Parashar/MintPremium
The Canali store at the DLF Emporio in Delhi. Photo: Priyanka Parashar/Mint

What does the luxury consumer in India want? Well, there’s no simple answer to this one.

Over the last few years, we have seen the global and Indian markets boast about the arrival of the new-money luxury consumer in India—one who is impatient to announce his status and wears his brands on his sleeve. A large section of Indian luxury consumers still belong to this category; they are young buyers with a hunger for markers of status and sophistication.

Their consumption patterns and choices are distinctive. They flaunt colourful diamonds rather than traditional gold jewellery; are keen to “trade up" their brand of watches, handbags, even alcohol; flaunt designer labels such as Sabyasachi and Anita Dongre; and have moved swiftly from the big fat “Indian" wedding to the big fat “destination" wedding.

Luxury weddings have been a distinct part of the ultra-high-networth individual’s lifestyle, and destination weddings are now hugely popular amongst this set, with India also being a preferred destination, according to a Kotak Wealth Management’s report published last year. Popular overseas destinations include Thailand, France and Spain.

India’s luxury goods market is expected to be valued at $7 billion (around 46,620 crore) by 2017, according to a report by market research firm Euromonitor. The value of luxury goods sold in India in 2011 was $2.18 billion.

As consumerism grows in India, there will be many genres of this new consumer emerging, says Darshan Mehta, chief executive of Reliance Brands Pvt. Ltd, which retails top fashion labels such as Italian luxury brand Ermenegildo Zegna, American brand Brooks Brothers, luxury brand Thomas Pink and luxury sportswear brand Paul and Shark, in India. “To the large swathe of them, luxury still connotes badges and logos (whether it is on bags, shoes or cars). This group also equates luxury with rarity. Limited editions work very well with them. To these consumers, luxury is a price that you pay to have a product or service that is out of reach of most others, if not all, in their community. This is typically the new-money customer. Also, the word luxury is loosely used and not in a strict sense, as is understood internationally. For instance, to many of these customers, a pair of Armani jeans or a Michael Kors bag would be luxury," explains Mehta.

Anju Modi, who has become associated with the idea of popular luxury created from Indian heritage, and who designed the costumes for Deepika Padukone and Ranveer Singh in the movie Bajirao Mastani, says comfort is an important characteristic for Indian consumers buying luxury fashion.

Increasingly, consumers are looking to change their bags and accessories constantly and flaunt their new acquisitions. This has resulted in a higher churn in luxury products—everything gets outdated faster.

Neelesh Hundekari, partner, consumer industries and retail at consulting firm AT Kearney, points out that luxury experience categories such as liquor, travel and wellness are the ones growing rapidly, which shows that the Indian consumer is willing to spend on having a good time.

Meanwhile, accessories that flaunt the brand name but don’t break the bank—leather accessories (handbags, wallets, belts), watches, shoes, pens—are now well accepted as indicators of luxury in India.

As Mehta says, “Unlike other parts of the world, watches and jewellery and alcohol are two categories where the high ‘trading up’ is happening. Fashion—bags, shoes, clothing and accessories—has now seen some traction of trading up."

But price points still remain at the heart of the buying process, says Suresh Subrahmanyan, marketing head at Ganjam, a south Indian heritage jewellery brand, though this is changing. “There is a growing awareness among the discerning consumer of the value of brand reliability and promise, delivered over many years. We see a trend of a certain type of consumer willing to pay more to acquire a certain brand, both for its consistent promise and for the badge status that it delivers. A distinctive change is how the young consumers turn to luxury brands as a means of self-expression and self-realization," says Subrahmanyan.

“Five years ago, we were catering to a much smaller audience; today we have multiple people walking into the boutiques every day as branded diamond jewellery has become a must-have in every woman’s wardrobe," says jewellery designer Nirav Modi. His boutiques are spread across New York, Hong Kong, New Delhi and Mumbai—he will open an outlet in London later this year— and actor Kate Winslet wore his jewellery to the Academy Awards this year.

What’s more, many more Indians are buying their Jimmy Choos and Roberto Cavallis online, often because they can get a neat bargain on high-end exclusivity. In the last couple of years, several premium and luxury fashion e-tailers, such as Luxepolis.com, Rocknshop.com, Elitify.com and Darveys.com, have begun selling Western labels such as LVMH, Dior, Gucci, Emporio Armani, Hermès, Chanel, Salvatore Ferragamo, Bulgari and many more.

Indians are expected to spend $84 billion (around 55,860 crore) on online stores this year, compared to $7 billion in 2010, according to a 2012 report published by the Boston Consulting Group.

Fashion entrepreneur Pernia Qureshi, founder of online fashion portal Pernia’s Pop-Up Shop, says Indian consumers now have the means to show off their luxury purchases. “Prices are online, tags and labels are visible. If you want to be a consumer of luxury, now you can show it. Flaunt it. All the luxury brands are available online."

In India, however, fashion comes from the reel and not the ramp, says Mehta. The brand choices and sartorial preferences of Bollywood stars (now even cricket personalities and their wives) are a big fashion accelerator.

Through all this, however, luxury spending continues to be part of discretionary spending. Health insurance, retirement plans, education still come first. “These items go out of the wallet first. Indians continue to be among the top in the world in terms of savings. It is out of the discretionary spending part of the wallet that luxury buying comes out. Very often, this is the part of the wallet that has escaped tax scrutiny (spending that is not taxable)," explains Mehta.

Qureshi adds that parts of north India indulge in luxury consumption more than the rest of the country. “It depends on the culture; the south, for instance, is much simpler. They would spend much more on everything else than on luxury items. Even if you compare Delhi and Mumbai, a trunk show will do very well in Delhi as opposed to Mumbai," she says.

A small section of consumers, however, are global citizens—cosmopolitan, in sync with what is happening in the fashion capitals of the world. “A very small number of old-money customers in India equate luxury with craftsmanship, heritage and, very often, ‘brand values’," says Mehta.

For instance, Anju Modi and her friends would rather indulge in a bespoke vacation and spend quality time with their families and loved ones. “Travel has become a priority," says Modi.

In a nutshell, luxury is a state of mind. But consumerism has no reverse gear. As Mehta says: “It corrupts and is habit forming. Indian consumers are trading up and assimilating Western lifestyles very fast. A small but fast- growing group at the very top is also acquiring an individual sense of style. Do remember that in a world dominated by the selfie trend, one belongs to a group but always wants to stand out within it."

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Published: 25 Mar 2016, 10:29 AM IST
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