How big is the region and how important is India?
India, right now, contributes about 27-28% of the turnover from the Asia-South region. I believe there is potential for it to become 40%. We want to make that happen. In that sense, India is becoming a more important market.
The Asia-South region contributes to about 13-14% of our total turnover. It also remains one of the relatively less tapped regions and, at the same time, a very complex one due to the distribution structures and the nature of the markets, which are not transparent and have undeveloped fashion systems.
What I have also noticed is that despite being termed as one region, the markets are individual entities. What works in Thailand, for example, will not work in India or New Zealand or Dubai. It is not like the US or Europe or even mainland China, which are more homogenous markets that allow for one regional strategy.
What is the way forward for Swarovski?
There are a couple of things that need to be done. In recent times, companies have come up in China, Korea and other countries that sell cheaper crystals and that in a way has hurt our business. A certain section of business users who are not so focused on quality and just want to add some bling will use anything. How do we develop a new value proposition for those people and bring them back to the fold?
Next we want to continue to push ourselves more as a high-end value service provider. It’s something that we have done a lot in India in the last couple of years. We look at spaces like couture, weddings and interiors where we work with other brands. Then it becomes more than the crystal and that’s why that business is important. And it is a business that we are not doing very well in other markets so, we will use some of our learnings from India there.
Next there are the markets of the future…places like Indonesia and Malaysia. Jakarta is today what Delhi was 10 years ago. Pakistan is another country with a lot of potential but it is a difficult country to do business in. Iran is another big market, which actually became more attractive since the lifting of sanctions.
Where does the luxury industry stand today? In India and across the world?
There is a change in the luxury market. See, there will always be demand for goods that are meticulously crafted, have a heritage, are made with best quality materials and positioned well, and which have a story to tell. That won’t change. At the same time, the world is going through a tough time in terms of people willing to spend. So the luxury industry is not booming, except for certain companies here and there. But having said that, it is a cycle and the industry will recover.
People today are thinking whether they need to spend a certain amount on a certain product. The logo trend, where they’d pay a premium for a certain brand for brand value, is slowly going. People have become more assured of themselves. Today they will buy a product if they need it and not just for the logo.
Then there is the design question. Go minimal or over the top. There are some brands that are doing simpler, minimal designs. But that’s a curve ball.
Not to forget the digital marketing revolution and the perception based on that. Now you can choose not to be in the digital space but then people are going to write about you anyway. People will flaunt a Chanel bag on Facebook even if Chanel doesn’t have an online presence. So Chanel might as well do a show and put the collection on Instagram. Offline is being used to generate content for online.
Keeping in mind all that, I think that the luxury industry is in a state of flux. It has become the new normal. The Chinese slowdown has a lot to do with it and that’s where I think India is increasingly becoming important. But the luxury industry, overall, is still struggling in India.
Is Swarovski really luxury?
What do we want to be seen as is the first question. By definition and our DNA, we are a brand that brings delight and sparkle to products. We want to work with the most creative talents in the world. And we have an appeal that transcends to the luxury segment as well. By definition, we are not necessarily meant only for the luxury segment. Ours is a broad business. We work with premium brands as well as some of the super luxury brands.
Who is your biggest brand ambassador?
I don’t think the individual thing works for us. But as our users, the European luxury houses are still the biggest ambassadors. Because they still are the trendsetters for the fashion world. They are also the first movers and the most innovative ones. What they do sets a benchmark and works as an inspiration for the rest of the world because when we come to India and work with designers here, in everyone’s mind there is that feeling that if Chanel does this it must be important.
How is the market evolving for Swarovski?
When Swarovski was started 120 years ago, the idea was to make jewel stones—a diamond that anyone could afford. That was the original ambition. And then designers started using it in clothes gradually, so jewellery and clothes are two of our staple businesses. Now, how is it evolving?
India is a good example and I think the same trend mirrors globally. The evolution is happening in terms of the types of usage. There was a time when people wanted a diamond-like finish on their lehngas. That’s more or less gone. Now we sell more vintage shades, matte shades, the colour palettes have evolved which are high on the design element and bring a certain sparkle but that is never in your face. That’s one evolution. The use of Swarovski crystals in a more subtle way. The second form of evolution that we are witnessing is that more brands are wanting to work with us.
Which is your fastest growing segment?
The corporate gifting segment is the fastest growing and contributes about 12-13% of the overall business. We want to do better with that this year. Then the other is brand partnerships. Swarovski crystals contribute shine and decorative impulses to products they are used in.
I think the shine will always be there. Ultimately, why do you have products with Swarovski crystals, be it a lehnga or a Titan Raga watch? It is because you are celebrating life. These are special products. There are countless such products in the market screaming to differentiate themselves so that they can create that delight of ownership for the buyer. Crystal, being a versatile medium, offers that. The shine, the glamour, the celebration, they go together and it will always be there. At the same time, there is something completely opposite that also exists. But that is how the world will always be.
Then there should not be any problem in growing…
The problem really is managing the other things. If someone, for example, asks for a full sari with crystals, and this happens increasingly in India with the nouveau riche, and is not particular about the make and the quality of the crystals, our business gets affected. That is the business we are slowly getting priced out of.
If a sari starts at Rs50,000 and you want crystals on it top to bottom, then you are talking about adding at least Rs5,000-10,000 to the cost of the sari. With that budget, you will only get so many Swarovski crystals. With some Korean makers, for example, you will get a lot many more crystals. So when it comes to volume, people are not worried about the quality of the crystals; the Korean stuff makes more economic sense. But then the buyer of the product is not talking about sustainability, heritage, quality, longevity. So, antithetical as it might sound, the more they use crystals in India, the less business there is for us.
How bad is the problem of counterfeits and how are you dealing with that?
It is a problem everywhere. It is worse in India. So we have an ingredient branding system. It is basically a holographic tag that can’t be copied. It says: “With crystals from Swarovski" and has a tracking number. So you can check whether the crystals are original or not.