Luxury consumer in India comes of age4 min read . Updated: 23 Mar 2011, 10:02 PM IST
Luxury consumer in India comes of age
Luxury consumer in India comes of age
Mumbai: Last year, following the release of the Sex and the City sequel, TSG International Marketing Pvt. Ltd launched the Halston Heritage collection of fashion dresses in India that are marketed globally by Sarah Jessica Parker, who stars in the movie as well as the original television series. TSG operates a multibrand boutique called Kitsch in Delhi and Mumbai that stocks labels such as Alexander McQueen, Stella McCartney, Diane Von Furstenberg, Lanvin and Halston Heritage. TSG is owned by entrepreneurs Priya and Charu Sachdev.
As the luxury market in India evolves, luxury brand marketeers have woken up to serve a demanding, well-travelled and discerning Indian consumer.
Luxury in India, a report prepared by the Confederation of Indian Industries (CII) and AT Kearney, refers to consumer segments in this space under categories such as the traditionally wealthy industrial families, high net-worth individuals, business executives earning Rs1 crore and above a year, and small and medium enterprise owners. Then there are also the aspiring luxury consumers with salaries of Rs10 lakh and above.
People in the first category are aware, in tune with global trends and know what they want. They also want to be pampered. The second category, or the aspiring luxury consumer, meanwhile, is growing at a faster clip, looking for prominent brands and products that are loud since they want to make a statement that they have arrived, says Abhay Gupta, executive director, Blues Clothing Co., the retailer for Versace and Corneliani.
Interestingly, all consumers of luxury in India are known for their thrift. They are aware of prices in West Asia, Hong Kong, Singapore and also compare them with the prices in the US and the UK.
Little surprise then that luxury brands, which are more expensive in India than they are abroad due to high excise and others duties, have, over the past year, reworked their pricing strategies. Earlier this month, TSG launched its “the price-point strategy". The company stated it was lowering its prices by 5-10% to compete with the international markets pricing.
“TSG is competing with Middle East, East Asia and Europe in offering prices that are either lower or at par with these markets," says Priya Sachdev, co-founder of TSG.
The moneyed consumer has also evolved in the way she views expenditure. Those who have the money to afford luxury are overcoming feelings of guilt associated with “splurging on extravagances" and are slowly being wiped out with the growth of the “me-first" MTV and YouTube generation. “Gucci, Prada and Versace are no longer hard-to-pronounce words in a foreign language. People have begun to recognize and value brands much more over the past few years," according to the CII and AT Kearney report.
“This realization and the effort that brands have put in to educate the clientele that they offer the latest merchandise here at globally competitive prices have fuelled the growth of the market in India," says Sanjay Kapoor, managing director, Genesis Luxury (part of Genesis Colors), which is the franchise for Bottega Veneta, Burberry, Canali, Etro, Just Cavalli, Jimmy Choo, Paul Smith and Tumi in India, with 25 stand-alone stores in all for the varied brands across Delhi, Mumbai, Bangalore and Hyderabad.
Despite the evolution of the luxury consumer and brands, the Indian luxury market is not picture perfect. “A large part of the shopping is still need-based," says Pernia Qureshi, fashion stylist and costume designer. “I need this, I know where to go and get it," says Qureshi, whose job requires her to remain updated on style for magazines such as Vogue India and Elle.
The reasons for not shopping for luxury at leisure are easy to find. Luxury shopping in India is still not a pleasant experience. The market consists of just three malls and a handful of 5-star hotels across the country which house luxury labels.
Qureshi finds the mall itself limiting her shopping experience. She prefers her leisure shopping at Madison Square in New York or Oxford Street in London, where one can walk the high street or sit down at the cafés. “I don’t do much experimental shopping here," she says, adding that the market lacks depth and spread.
It is not difficult to understand why marketeers are upbeat about the luxury market despite its limitations.
Pegged at $4.76 billion (Rs21,420 crore) at end of 2009 (at retail prices), it is estimated to grow at 21% to become almost three times its current size by 2015, says the CII-AT Kearney report. The Indian luxury market is around four times smaller than that of China, and has a presence of 100-150 brands compared with over 300 in China, the report adds.
Little surprise then that TSG plans to introduce new brands such as YSL, Catherine Malandrino, and the Celine and McQ second line for Alexander McQueen later this year.
“There is a lot of growth taking place in capturing aspirational consumers and converting them to luxury as they evolve," says Sachdev.
As the Indian luxury consumer evolves, she is also exploring gift options in this space among products such as scarves, wallets and handbags at Dior and Chanel or watches at Tag Heuer.
Gifting is a large occasion for luxury retailers accounting for as much as 30% of the brands sales at Jimmy Choo, says Jharna Badlani, store director, Jimmy Choo.
To be sure, the Halston Heritage collection by Kitsch was retailed in just one store at DLF Emporio in Delhi and it was sold out within a month, says Sachdev.
Rasul Bailay in New Delhi contributed to this story.