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Inflation may touch 10% by end MarchInflation up at 0.83% on higher food pricesHoarding drives food inflation by 16.32%Inflation a matter of concern: FM

: says C Ravi Shankar, Strategic and Commercial Intelligence, Transaction Services, KPMG. “Many companies are reporting minimal or no slowdown in revenues, though a few have been affected.”

Shankar says some companies focusing on high-end merchandise have seen ‘no impact’ because their consumers were from the ‘traditionally super affluent’. On the other hand, some companies had boosted revenues by attracting the ‘aspiring rich’, with slightly lower priced offerings such as bags. The latter ‘uptrading consumers’ have begun cutting back on non essential spends, and companies that built toplines based on these consumers have been hurt more. “As a countermeasure, some companies have begun focussing on more affordable products with their brand label, such as perfumes. It would be interesting to see how this strategy pans out.”

Affordable luxury

In the prevalent economic situation, affordable luxury continues to have a market. For instance, a luxury lingerie brand entered the country two weeks ago with a retail format distribution map for the country. Secret Curves, which terms its product as ‘affordable luxury’ with lingerie at the upper end selling between Rs 1,100 to Rs 1,800, says inflation ‘does not matter to its high-end customer’. “The income per household has gone up considerably and the spending power has kept pace with it,” says the CEO, Bipin Chandra.

In the Indian context, penetration of luxury goods has been low, averred Shankar, with a ‘significant’ population who can afford but have not begun consumption of these products. “This leaves significant headroom for growth of luxury goods in India, and I would expect the India luxury goods sector to be less sensitive than the rest of the world to downturns. Of course, this is subject to severity and longevity of the downturn.” Moreover, the current slowdown is coming on the back of a four year long bull run, which has catapulted many more people into the wealthy category, and not all this new wealth would have been eroded, he pointed out.

A survey conducted by Technopak Advisors, a management consulting company focused on fashion, packaged consumer goods, retail, healthcare and consumer insights sectors, threw up interesting insights into the luxury category.