Walk into the swanky Palladium Mall in Mumbai or the humungous DLF Emporio Mall in New Delhi and you may think you are shopping at London?s Bond Street or New York?s Fifth Avenue. The top luxury brands of the world?Louis Vuitton, DKNY, Gucci, Harley Davidson, Jaguar?each of them have their exclusive stores attracting the connoisseur as well as the noveau riche. And many more luxury brands are queuing up to enter India attracted by the growing number of high-spending Indians looking to splurge on high-end brands.
Though the luxury market in India is just around 1% of the global luxury market, the growing number of high net-worth individuals? 1,26,700 in 2010 ?is enticing enough for luxury brands to set up shop here. The profile of the Indian luxury consumer has changed tremendously over the last few years, especially with the burgeoning middle class aspiring to be proud owners of luxury labels. However, even as these brands have set up shop here in anticipation of a demand boom, conversion of potential demand into actual sales have been slow. The core clientele?film stars, celebrities, politicians and industrialists, top bankers and young professionals, and erstwhile royalty?has remained largely unchanged.
The reasons for these are many. From high tariffs that make products at luxury stores in India more expensive than those in the West to a limited number of showrooms to the quintessential Indian quest for ?value for money?, all these keep the Indian consumer from swiping her credit card. Most importantly, her tastes are very different from her Western counterpart, as these luxury marketers have discovered. Her aesthetic considerations, cultural moorings, and her need to flaunt her new-found status all influence her purchase decisions.
Global fashion design house Donna Karan International, part of the world?s leading luxury goods group LVMH Moet Hennessey Louis Vuitton, which designs, markets and distributes collections of women?s apparel, sportswear, accessories and shoes under the Donna Karan and DKNY brands, entered India in 2009, when it opened three stores at DLF Emporio mall, DLF Place Vasant Kunj and Saket in Delhi. As it soon realised, the Indian high-end consumer?s shopping habits were quite different from her Western counterpart. While the Indian consumers? expectations are much like that of the international consumers of the brand as they expect quality, value, aesthetics, style, exclusivity and customer service, the uniqueness of the Indian consumer becomes evident in terms of their product preferences, says Shuchi Singh, brand head, DKNY. ?India for us is essentially a logo driven market and we appreciate and capitalize on this knowledge, as well as our understanding about the Indian consumers? love for colour.?
Agrees Anand Dikshit, executive director?corporate finance and investment banking, of global consulting firm PricewaterhouseCoopers. ?The nouveau riche nowadays prefer luxury goods with logos that immediately communicate a status symbol, they are unlike the traditional rich who for generations have believed in buying luxury rather than shouting luxury,? he says.
Not just in the socio-economic classes eyeing luxury brands, there is also a shift in the age bracket that aspires to flaunt a luxury designer label, as Sanjay Kapoor, managing director of Genesis Luxury Fashion which has brought to India the classic menswear Italian luxury label Canali, the iconic British label Paul Smith, eclectic accessories and clothes by Just Cavalli, Italian handcrafted leather bags and accessories by Bottega Veneta, and upscale shoe brand Jimmy Choo, notices. ?Earlier, the age bracket was narrower with most clients being from an older age group. Today with presence of many luxury brands in India and with increasing brand awareness, the market has grown bigger and the age group wider. For instance, currently, teenagers form one of the biggest consumer segments for women?s handbags.?
Kalyani Saha, vice-president, marketing and communications- India, of French fashion label Christian Dior, which debuted in India in 2006, says that since the entry of luxury goods happened only nine years ago, that makes India the most nascent luxury market yet. Therefore, there?s a lot of learning on both the seller and the buyer side. ?There is still a lot of education required, but Indians who travel around the world are some of the biggest buyers of luxury brands. There is a vast awareness since the last nine years due to media which dedicates an ample print space on fashion even in their dailies. There is a consciousness of quality over quantity amongst the well heeled and young corporates who value the aspirational buy which secures a certain status with that designer bag or pair of shoes or even entry-level merchandise like sunglasses.?
The global brands are certainly learning fast. Says DKNY?s Singh, ?For DKNY in India my strategy is to ?think global and act local? which essentially means that we look at what works internationally but localize it according to the unique demands of our market considering what is preferred by our consumers. In keeping with this strategy we have just initiated the concept of exclusive screening of the new season collection for our select VIP clientele, which adds to the exclusivity factor of our brand.?
Customising to the needs of its Indian customer is the best strategy, as many brands have found out. As Dior?s Saha puts it, ?Indians have traditionally been the largest consumers of luxury through various royal families who had the best luxury houses, customizing everything from cars to jewellery to French chiffon for the families.?
For instance, luxury writing instruments (read pens) brand Montblanc ? which successfully operates around 19 retail points across first, second and third tier cities in India ? has regionalised all its marketing material to connect better with its target customer. Again, ad campaigns of high-end cars for whom stressing on the driving experience would be de rigeur elsewhere, have preferred to focus on the pleasures of the rear-seat in India. After all, a chauffeur-driven car is the ultimate in driving luxury in India!
Customers are also getting smarter. Dikshit of PwC highlights an interesting shift from consumers looking at ?expensive? to ?exclusive?. According to him, traditionally, price had been the easiest differentiator. Every business could tweak the prices upward to represent a product offering superior to competitor. But this tactic is quickly becoming less influential. He says, ?Customers want to know about what is relevant to the brand and to the consumer. Exclusivity is evolving from price-driven to scarcity-driven.?
As the profile of the consumer has changed, so has the ways to attract them. Luxury brands? marketing communication is increasingly reflecting these changes. ?There is a need for premium brands among certain segments and the communication is reflecting the affinity that people have developed for such luxury items. The advertising techniques have also changed over the years. It is more oriented to connecting the product to the customer?s persona, touching her heart and making her feel special,? says Dikshit.
The marketing spends on any luxury brand are certainly much higher today in India than it was a few years back. ?The advertising budget, which is a very important part of our annual spend, has only grown over the years. The main objective has been to create awareness of the brand itself in a market that is the most nascent yet, being only nine years old,? says Saha.
The print media has been the most popular choice for luxury brands in India due to a number of advantages that the medium offers while targeting the right set of niche consumers. ?There has also been an explosion in the number of titles, national and international, that are in the country today. The reader is completely spoilt for choice and luxury brands are able to find an apt environment to advertise in terms of quality of publications and readership,? says Genesis?s Kapoor.
Saha says that the electronic media is way too expensive to advertise in but choosing to partner certain television programmes helps put the message across to the audience, especially the ?aspiring? class. ?We have had some very interesting participation and partnered programmes which have been mutually beneficial,? she says. Tag Heuer and Longines are into TV advertising also, apart from print and digital.
High-end fashion magazines such as Vogue India, Marie Claire, Harper?s Bazaar attract the bulk of print ads brought out by these global brands. Most brands, however, use their international print campaigns in India, though a few are opting for Indian celebrities to endorse their brands. Watch brands such as Tag Heuer, Longines, Omega and Tissot, have been in the forefront of this strategy, signing up Bollywood actors Shahrukh Khan, Aishwarya Rai Bachchan, Twinkle Khanna and Deepika Padukone respectively. ?Luxury consumers want insider status such as connecting themselves with the celebrity/ brand ambassador. Some promotions are also oriented to create the halo effect which serves as the core strategy,? explains Dikshit. Most brands associate themselves with events such as fashion shows, annual fashion weeks, polo matches, golf tournaments, etc.
Another medium that has become an important choice to deliver the right message is digital. Says Singh of DKNY, ?Advertising channels for luxury brands in India are still very traditional, but we are increasingly considering social media platforms to establish a direct connect with the consumers. For DKNY, the digital space is very important because it provides us an instant way of connecting with consumers.?
Saha of Christian Dior agrees. According to her, the digital medium is slowly taking over and respected blogs are being followed, read and absorbed as the bloggers today are either journalists of good repute or are experts on fashion or style. ?It is just a click away to a gamut of information and is the most popular discovery of this generation. It is the quickest and easiest way to reach out to a certain genre of the market, depending on your viewership. Social network sites are also a great media to spread any message across today and have become very popular.? Christian Dior recently unveiled an iPhone app with which one can get the latest updates from fashion shows, and learn about the range of perfumes, skincare products, clothes, and watches launched by the brand.
While Dikshit agrees on the importance of digital medium for luxury brands, he feels that unlike other brands, luxury brands cannot use this medium for their research and development. He says, ?the presence of brands on Facebook and Twitter in recent times seems to have created quite a buzz. These extend the image of a brand as a vibrant and energetic brand. Advertisers argue that one can use the social media to understand customer requirements and create products based on that understanding, reinforcing research and development activities, etc., but this might not be true for luxury brands which are supposed to be trendsetters. However, digital media (especially social media) in the present scenario is inevitable given the presence of major customers such as celebrities and sport stars on it. The masses relate themselves with them and this definitely goes a long way in enhancing brand value.?
Given their recent debut in the Indian market, the biggest media platform for luxury brands is perhaps the retail store itself. ?Visual merchandising is a critical and indispensable part. Retail space plays a major role here in terms of understanding the brand and its heritage and full product range,? says Dikshit.
As of now, it?s more of a learning phase for global luxury brands as they try and experiment with different marketing strategies, consumer insights and media plans. Most experts agree that the luxury market in India will boom by 2015. ?The Indian luxury market is currently growing at 15-17% and is expected to touch $14.7 billion by 2015. However, this largely depends on relaxation of foreign direct investment (FDI) norms for increased foreign capital in single-brand retail and opening up of FDI in multi-brand retail,? says PwC?s Dikshit.
Notwithstanding all these obstacles, the global brands are all sure they are in India for the long haul. As Dior?s Saha says, ?In 2008-09, when the whole world had collapsed with the recession, we had growth! India is no longer an ?emerging market? as we have proved with our sales, the ability and the capacity and definitely the potential that is still dormant and I feel in the next five years, we will be a force to reckon with.?