As the smartly dressed luxury professionals from India and abroad filed inside the Shahjehan Hall at Taj Palace Hotel, New Delhi, we could figure out that the forum was bound to be a success, simply because of the attendance of important people from the luxury industry. The setting was luxurious, as befits an event of this kind, and there was a seriousness and determination in the air to learn from the conference and benefit from it.
The Inaugural Session was opened with a welcome address by Thomas Varghese, Chairman, CII National Committee on Retail and CEO, Aditya Birla Retail Ltd. He started the conference on a positive note and stated that there is a definite surge in consumption by young and aspirational consumers.
Sanjay Kapoor, Chairman, CII Luxury Goods Forum and MD, Genesis Luxury Fashion Pvt Ltd, spread a cheer in the audience by listing some positive changes in the industry. He said, “Indians used to travel to shop abroad. But today Indians travel exotic, to see new places and experiences, but not for shopping.” He also said that luxury in India is sitting on the brink of a huge potential and we need to uphold brand value since the Indian consumer is value-sensitive.
Armando Branchini, Executive Director Altagamma, however, was still a little skeptic about the growth of Indian luxury industry. He said, “The bad news is that Indians are still shopping abroad a lot. And also, the custom duty and tariff structure is very high, which is particularly negative for luxury goods.” But he also had a reason to make everyone happy in the audience. He said that Italian luxury brands have plans to make huge investments in India in the coming months.
“ Indian luxury market has grown 13% in the past three years. It is currently at 4.76 billion USD ”
There was a little break in the inaugural session with the release of the CII-AT Kearney report on Luxury in India: Charming the Snakes and Scaling the Ladders. Neelesh Hundekari, Principal and Head – Luxury & Lifestyle Practice, AT Kearney India, gave a gist of the report. Following are the major points which came out in the research:
1. Luxury consumption starts by consumers who have an income of INR 10 lakhs and becomes serious by those who have an income of INR 1 crore and above.
2. The definition of a millionaire in money terms is: Real Millionaires (industrialists, traditionally wealthy, select CEOs with an income of INR 5 crores); Near Millionaires (medium enterprise owners, CXOs, top professionals with an income of INR 1-5 crores); and Rupee Millionaires (young professionals with an income of INR 10-15 lakhs)
3. Fashion consciousness is low among Indians, but brand awareness is increasing
4. Mumbai and Delhi are the largest luxury markets, followed by Kolkata, Chennai and Coimbatore. However, Mumbai and Delhi are still largely unpenetrated.
5. Indian luxury market has grown 13% in the past three years. It is currently at 4.76 billion USD.
6. Luxury products have seen a 22% growth rate in India
7. Luxury service revenue has declined (like hotels, fine dining, spas, etc)
8. Luxury assets (like real estate) have shown growth
9. The luxury product market is 1.5 billion USD (includes mostly jewellery, apparel and accessories)
10. Jewellery is the largest luxury segment in India
11. Wines, spirits and electronics have grown strongly
12. Excluding jewellery, it is still a men’s market, accounting for 60% of luxury consumption in India
13. People are not buying enough
14. It is expected that the market will grow three times by 2015. But even then there will be significant latent demand.
The barriers to the growth of Indian luxury industry are:
1. Difficulty to reach the consumer since the target population is scattered.
2. Consumer’s reservations about luxury purchases (there is a low penetration among rupee millionaires and there is reservation about lesser known brands)
3. Lack of talent in the industry (low experience and lack of vocational training)
4. Infrastructure and regulatory constraints
Some possible solutions are:
1. Get the footfalls right by:
a. Micro-segmentation: based on occupation, community, location, life status, etc
b. Personalised outreach
c. Innovative media choices
d. Break the myth about prices being high
e. Provide an experience
2. Get iconic brands and ladder brands: Ladder brands are those which fill the price point gap between luxury and mid-priced brands. For example: Coach
3. Get the cost structure right
4. Experiment with new formats to make luxury reach your target consumer
However, all ears were waiting to hear Jyotiraditya Scindia, Minister of State for Commerce and Industry, Government of India. He swept the audience as he began the speech by praising all present at the conference. He said that all the stalwarts of the Indian luxury industry, and those he created this industry, are present here. He explained that not only will this gathering have the first mover advantage, but also make the industry grow to new heights. Everyone was surely proud to hear that!
Scindia then took the main matter at hand and said that India’s economy continues to soar and Indians are eager to shop. He said, “I take India as an elephant. We may be slow in taking steps, but we won’t ever go back.” Scindia also implored the international luxury brand CEOs present to set up production centres in India along with developing India as a market. “We have a history of captivating fabrics, arts and designers. Marry that opportunity. Help us showcase the diversity and vivacity of India,” he implored. He gave the example of chanderi silk and how his family has patronized the small community of weavers who make this wonderful fabric. He left the dais on a very encouraging and positive note. International luxury brand CEOs kept referring to his speech after he had left.
After a refreshing tea and coffee break, everyone returned energetically for the first session of the day. We have to say, it was the liveliest of all the sessions.
The keynote address was given by John Hooks, Deputy Chairman, Giorgio Armani Group. The session moderator was Neelesh Hundekari. The panelists included Sanjay Kapoor, Dinesh Vazirani (CEO and co-founder, Saffronart), Radha Chadha (author and brand consultant) and Ram Iyer (COO, The Collective).
“ We still don’t have a clear idea of the growth in India market. ”
John Hooks, Deputy Chairman, Giorgio Armani Group
Hooks gave a glimpse of the Giorgio Armani Group and the brands under them. Talking about India, he said, “We still don’t have a clear idea of the growth in India market.”
After the keynote address, the panelists had a lively (not to say heated) discussion about the industry. It was universally agreed upon that Indian luxury consumer is unique. They are educated and want to be spoilt. It’s all about making Indians feel special with special products. Sanjay Kapoor categorically mentioned customizing for the Indian market, a case in point being the Canali Nawab jacket. John Hooks, however, refused the concept of customization. He said, “Our products speak a language for consumers who want to show peers that they are successful. We want to create a global identity, hence no customization at this point of time.”
Radha Chadha hoped that luxury brands will build on Indian heritage and artisans especially since Indians hang on more to the traditional rather as compared to other Asians – mainly because of rich Indian weddings. She gave the example of Shang Xia, the new brand by Hermes launched specially for the Chinese market.
Radha Chadha, Managing Director, Chadha Strategy Consulting
It was also agreed upon that India is a country with many countries inside it. Sanjay Kapoor shared an interesting anecdote, “We get calls to our Chennai stores asking when the store will be empty so that they come to shop at that time. On the other hand, our Delhi stores get calls asking when will there be the maximum crowd so that they come to shop at that time!” Therefore a single strategy won’t work in India. It has to be regional.
Ram Iyer, based on his experience at The Collective said that known brands work in India. Customers also look for prominent logos so that their purchase is more visible and instantly identifiable. He gave an example of how an Indian customer specifically demanded a Polo Ralph Lauren dress shirt with their big horse logo at the front – something which the brand doesn’t do anymore! Iyer reiterated that customizing works for Indians and fashion consciousness has to improve.
The online medium sparked a heated debate among the panelists. Everyone said that while internet is a powerful medium, they were not too sure about how much will the medium benefit the luxury industry. Another point raised by Iyer was that brand integrity needs to be preserved online. Dinesh Vazirani, however, emerged to be a staunch supporter of the medium. He said that even though internet penetration is low in India, the kind of people who are and could be interested in luxury have access to internet.