Nine years ago, on an exploratory trip to Singapore, I was walking with a manager of a luxury mall on Orchard Road. It was morning but there was already a large queue of half-asleep people in the age group of 20 to 40 outside a European luxury brand store. It was to launch a new bag that day, slightly smaller than earlier versions but with bigger, shinier locks. These customers were not necessarily well-heeled, but many were gasping to splurge on a new bag with a huge emotional upgrade. I trudged off, ruing the challenges for a premium brand in India, dreaming of the day when mass consumers start trading up.

Barring the small consumer class that enjoys champagne lunches at five-star hotels, brands are not perceived as extensions of personality in India. Our big splurges at weddings are more a hard-nosed negotiation of every-day commodities—from jewellery to flowers.

Unlike in Russia or China, the story in India is largely driven by the urban mass consumer whose trading-up decisions are driven more by attributes rather than aspiration. Durables, health, communication and financial services lead the trading-up rankings; beauty and lifestyle follow. As a CEO, it gives me a horizon from today to when I can expect to see this moving closer to my business.

These trends are prone to rapid change. At Ritu Kumar, we have witnessed more change in tastes and perceptions over the past five years than in the 20 before that. The customer has traditionally followed the dictum of measuring the worth of the product/garment. In the past, the price of a product dictated depended significantly on tangible features—embroidery, print, fabric, etc. Today, weight is ascribed to intangible benefits such as styling or trends. For instance, on our website, customers seem to be searching more for gowns than lehngas over the past 18 months. Off-shoulder tops fashioned from European trend magazines generate more interest than block-printed kurtis.

This is heralded by a new generation of young buyers who evaluate worth on a different set of parameters. We are most likely witnessing the beginnings of consumerism being driven by emotional benefits and status. Interestingly, the customer attracted to age-old handloom today is driven by wanting to enhance one’s personality rather than conforming to an identity.

India is beginning to see the emergence of home-grown brands. The Indian fashion industry and other interesting indigenous brands like Raw Mango, Forest Essentials, Goodearth—some of which have grown over the past decade and more—fill the role of niche brands. However, these are not representative of a large-scale trading-up behaviour. Almost all premium and luxury brands are still small scale. Only a handful have managed a significant year-on-year expansion.

India currently reveals both trading-up and trading-down consumer behaviour. The latter is amplified by supply-side factors including the e-commerce marketplace and discounting.

The new-generation customer spends more, as a whole, but expects a larger basket of goods, thus reducing per item spend. Online sales of discounted apparel tend to outsell full-price goods by 4-5 times and returns usually hover around the 40-50% range. The scale of this acquisitive behaviour far outweighs the green shoots of trading up. This has led to a plethora of brands, which look similar and make identical products. International brands that enter the country also fall into similar price-conscious segments like fast and youthful fashion.

Trading up in India is at the early stages, but it has started establishing itself in categories that fall under the “need to take care of oneself"—listed as one of the powerful drivers in a study done some years back by Boston Consulting Group (BCG). The desire to have personal style, the need to connect with others and “questing desire" followed. Cosmetics and wellness fall under the first criteria. A discussion with Samrath Bedi, CEO of Forest Essentials, suggests that this industry has started seeing the winds of trading up unlike apparel. Bedi observes that cost is no longer the over-riding factor in choice. Customers are moving from curative to preventive, and a distinct trading-up for quality and emotional brand promise—especially in cosmetics—is underway.

The next five years are likely to be interesting. If we were to plot consumerism on the BCG scale, India would be currently somewhere between ‘taking care of oneself’ and ‘having a personal style’. Two forces will shape the market on the consumer side; the Indian consumer is becoming more discerning and international. Social and lifestyle media is creating a significant impact on taste; Bollywood is no longer the only influencer. Although this is largely an urban phenomenon, the speed of its influence is marked. Brands need to sharpen their offerings and pick a strategy. On the supply side, there are likely to be many more brands entering the country and many will start developing product lines to suit the market. Home-grown brands have starting advantages, but in order to survive, they will need to be able to scale.

Trading up is an important development if we must have meaningful product innovation and move up the value scale. It allows superior skills to fetch a premium, creating incentives to make better quality.

We are at the cusp of trading-up behaviour; the question is only about the time and shape it will take.

Amrish Kumar is CEO of Ritu Kumar.

Fine Print publishes viewpoints on luxury and design from different writers.

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