Luxury june06


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Luxury june06

  1. 1. luxury.qxp 30/506 11:47 AM Page 56 Luxury Luxury Unlimited UPMARKET OUTLETS: “The Indian consumer no longer minds paying a premium for quality” Luxury brands have begun making inroads into India over the past few years. Its only just begun, says Bhakti Chuganee T here was a time when society flocked to India. You can find upmarket are beginning to contribute in a big way to ladies, CEOs and the well heeled outlets dotted all over metro landscapes. the global market for luxury products. This went abroad for shopping. It Says Patrick Normand, managing director global market was estimated at approxi- made for a topic of conversation of Cartier (Middle East & South Asia): “The mately $69.4 billion in 2003 and is expect- at the next party: “How pretty. New York, growth of India as a luxury products mar- ed to grow 42 per cent to reach $100 bil- was it?” “No. Its just a little thing I picked ket, and its emerging potential is very obvi- lion by 2008. A Technopak study puts the up in Paree.” ous now especially as the economy is Indian luxury market at around $444 mil- Paris today is Palika Bazaar in New booming and there is a general positive lion. Thats peanuts, but it is growing fast. Delhi or Heera Panna in Mumbai. Actually sentiment towards global brands.” According to the World Wealth Report thats not quite right. You dont have to Look at some numbers. According to a 2005 published by Capgemini and Merrill depend on the smuggled stuff any more. study by the Discovery division of Mumbai- Lynch, “the so-called BRIC nations - Brazil, The makers of luxury goods have officially based O&M advertising, India and China Russia, India and China — continued to 56
  2. 2. luxury.qxp 30/506 11:47 AM Page 57 its long overdue, but also because Indian consumers have shown a pronounced desire to consume. Instead of making year- The recalibration ly trips abroad to shop, why not make it of the import duty more convenient and bring international brands to India?” structures would Charu Sachdev, CEO of TSG International Marketing, another importer help in maintaining of luxury products, agrees. “Indians have always enjoyed the idea of luxury,” she global price points. says. “In fact, people have always trav- elled to the Europe and the US to buy Today, Indians are upmarket goods.” going abroad like The foreign trip and luxury items thus became intertwined. A luxury brand is all never before. about image; the product does not matter so much. Thus, the early attempts to sell these brands in India did not meet with India in 2002-03 and looked around for overwhelming success. business opportunities. The luxury space Luxury products have been available in beckoned. “India has 70,000 millionaires India since the 1990s. In 1997, Mumbai- who spend $555 million a year on premium based Finex Distribution established a dis- fashion,” he says. (His numbers may be a tribution network for Cartier and Corum. trifle higher than other surveys. But, as the Regent Watch & Jewellery was started in man on the spot, he should know.) 2000 with its first store at the Taj Mahal Thanks retails 22 luxury brands, includ- Hotel in Mumbai, followed by a store at the ing Porsche, Pershing and Capellini furni- Maurya Sheraton in 2003. All these com- ture, besides clothes and shoe brands. panies are essentially distributors who nor- Chloe, Fendi, and D&G are the fastest sell- mally have sole agency rights. They also ing brands at Thanks. “The popularity fol- do promotion and the setting up of retail lows the global trend since rich people do networks. the same thing everywhere in the world,” Finex today has under its umbrella says Chordia. around 15 brands in watches, writing instruments, jewellery, jewellery boxes, luxury mobile phones and other acces- sories. Managing director Raouff Ansari I f Thanks is the new kid on the block, Cartiers association with the country has spanned nearly a century. Jacques Cartier thinks the best is yet to come. “There has visited India in 1911 in pursuit of fine been considerable development in the com- pearls. He also persuaded a number of mercial success of luxury brands in India,” Maharajas to reset their jewels using emerge as an economic force and create he says. “It may, however, not be as per Cartier designs. The necklace, created for wealth in the process.” In fact, China is projections or industry hopes, but thats the erstwhile Maharaja Bhupinder Singh of expected to slow down and its neighbours another story. India is more about future Patiala by the House of Cartier in 1928 is are likely to feel the pinch. “One exception potential.” one of the most expensive pieces of jew- is India,” qualifies the report. Whats available today ranges from ellery ever made. In terms of numbers, O&M says there Porsche cars, Pershing yachts, Louis “For Cartier and me, we both feel at were 61,000 high networth individuals Vuitton bags and suitcases, to Bang & home here,” says Normand of Cartier. “It is (HNIs) in India in 2003. The World Wealth Olufsen audio systems. And of course, the not new to us.” The world famous jeweller Report puts HNI growth in India at 14.6 per numerous clothes brands — Moschino, was back in India in 1997, when the curbs cent per annum, nearly double the global Cavalli, Ermenegildo Zegna and Dolce & on luxury goods imports were eased, with rate. With the recent stockmarket boom, Gabbana (D&G), to name a few. its watches, pens and eyewear. The jew- this is likely to be much higher. D&G is among the fastest-selling ellery has had to wait. Cartier retails its More than the numbers, its the attitude brands at Thanks, one of Indias first multi- jewellery only through exclusive boutiques. that has changed. “The Indian consumer brand retail outlets for luxury brands. The The company is now shopping for the right no longer minds paying a premium for qual- designer store in Mumbais midtown Worli real estate in Delhi and Mumbai. ity,” says Yohan Poonawala, chairman & area, is the brainchild of Ashish Chordia. While Cartier turns up its nose at less managing director of Poonawala Fashions. After graduating from the US, Chordia tony establishments, German luxury fash- “It makes practical sense to bring interna- worked with consultants Deloitte and ion group Hugo Boss has just set up its tional fashion to India. Not only because Tiffany & Co for a while. He returned to fourth outlet, at the Leela Kempinski Palace 57
  3. 3. luxury.qxp 30/506 11:47 AM Page 58 LUXURY TOP DRAWS The five top purchases of the affluent consumer ◆ Jewellery ◆ Clothing ◆ Digital accessories ◆ Timewear ◆ Cosmetics and skincare CATCHING UP Spending on luxury goods (per annum per affluent household) ◆ India $8,900 ◆ US $29,000 WHERES THE MARKET The new generation affluent ◆ CEOs and other senior professionals in their thirties and early forties ◆ Entrepreneurs in new businesses ◆ Returning "prodigal children" ◆ Franchisees, and small and medium retailers INCREASING NUMBERS The luxury space in India ◆ 1.6 million households; this number is likely to cross 3 million by 2010 ◆ Each household earns around Rs 45 lakh (about $100,000) per year ◆ The spend is about Rs 4 Lacs ($9,000) per year on luxury/very premium goods and services ◆ The number of households is grow- ing at 14 per cent per year Source: India Luxury Trends 2006, Technopak Hotel in Bangalore. There are two others in Mumbai and one in Delhi. “Our experience with the first Hugo Boss shop in New Delhi was good,” says Raj Ramanandi, country manager (India), Bin Hendi Enterprises. The UAE-based Bin Hendi is the franchisee for Hugo Boss. It has already pumped in $5.55 million in the four stores in India and will be setting up new outlets in Chennai, Hyderabad and Kolkata. “We feel India is ready for more Hugo Boss stores, as well as other premium brands,” adds Ramanandi. “We are taking a long-term perspec- tive,” says Sachdev of the New Delhi- based TSG International. Her company rep- resents the Milan-based Aeffe Fashion Group, which owns and manages brands such as Moschino, Alberta Ferretti and Jean Paul Gaultier. “There are more new 58
  4. 4. luxury.qxp 30/506 11:47 AM Page 59 LUXURY millionaires in India than any other growing economy,” she adds. THE INDIAN LUXURY CONSUMER Poonawala is the latest entrant to tap the luxury retail space. He stocks six successful self-made brands - D&G, Just Cavalli, Versus, GF people began to be fea- Ferre, Exte and CNC Costume National - tured in magazines. The at his multi-brand store called Escape at concept of luxury as a the Grand Hyatt in Mumbai. “While luxury reward for achievement retailers are witnessing a slowdown in gained acceptance, sales in more mature markets, industry though royalty and the experts predict that luxury retail in India aristocracy continued to will quadruple in the next five years,” says remain the benchmark of Poonawala. the elite. Its thus a combination of push and pull. The real change came Luxury retailers are spreading their wings in the 1990s when more to India because their home markets are no people started making longer growing as fast; push has come to more money. There was shove. On the other hand, there is every LUXURY is no stranger to India. The erst- a sudden explosion of colour and things reason to believe that India will take off. while maharajas and princes led a life of and objet Darts began to appear. In order The experience of the early birds proves opulent splendour. The only way to be a to gain access to luxury and class one this. At Finex, the most popular brand is part of the elite was to be born into it. could just go out and charge it. Cartier in watches, and a luxury mobile The lifestyle was also associated with What contributed to this shift? India phone - Vertu - launched last year. “It has hunting, polo and other games of the opened up to the world. The liberalisation met with surprising success,” says manag- rich. New money could never get into process brought more than high econom- ing director Ansari. “Vertu has been suc- this circuit. ic growth rates. It showed the people cessful because it is a segment creator and The aspiration was always there. But what was possible. In the process, it has very cleverly occupied a space in both the the princes operated in a different league altered mindsets. mobile and luxury areas that nobody had altogether. The era of the self-made mil- The IT revolution, and the consequent bothered about before. Just when people lionaire was yet to arrive. So small pos- demand for Indian brainpower, has creat- thought a mobile could cost no more than sessions, or copied fashion designs with ed a whole new breed of wealthy global $1,111, they came along and offered one a few geegaws thrown in, became the Indians. At the other end, an increasingly for $10,000. And it sold.” height of luxury. An achiever of the open economy has created new business At Thanks, Chordia says that first quar- 1970s could only get by with a good opportunities, which has resulted in a ter targets have been exceeded in less than foam mattress — no Omega, Rolex or slew of new, extremely successful first one month. “The daily footfall of anywhere BMWs. generation businessmen. They are mil- between four and 15 visitors translates This trend saw a shift, a gradual one, lionaires. They spend. They sport Vertu into an average of 60 per cent conversion in the 1980s. Luxury began creeping into mobiles. But they may not even be com- to sales. It doesnt seem like much of a upper class homes through small things fortable with English. challenge when customers have already and symbols. The colour TV came in, the All of a sudden, wealth is no longer the shown a keen desire to be the first among humble pen was elevated to a Parker, preserve of the elite. several hopefuls in the city to flaunt the Source: "Perspective on luxury in India", O&M customised Fendi crocodile bag at a stiff $44,444.” Womens Collection. new malls dont: imagine Cartier nestling Such heart-warming news for the retail- There will be hurdles on the path how- next to Cambridge shirts. “We have to give ers means that everyone is into expansion ever. One issue is the high duty structures. our customers the same luxurious experi- mode. Chordia hopes to add another seven “This has a serious impact on the business ence as they get abroad,” says Ramanandi tier-1 fashion brands, including Van Cleef as we have to try to keep the price points of Hugo Boss. and Arpels, the ritzy jewellery brand, to the in tandem in the markets abroad,” says While waiting for the infrastructure Thanks kitty. Plans are to spread opera- Poonawala. “The recalibration of the issues and the regulatory framework to tions to six more cities by 2008. “We want import duty structures would help in main- become more favourable, all the luxury to be the biggest luxury retail chain in taining global price points.” Today, Indians brands are busy building relationships India,” he says. Poonawala plans to take are going abroad like never before. Why with their customers. “Our strategy is Escape to Delhi, to start with. Other brands should they buy a Cartier here, when they more personal,” says Ramanandi. Adds will be added to the line-up. Finexs Ansari can get it for much less on their travels? Normand of Cartier: “The sale is not the is going to open additional stores in other The other issue is the lack of appropri- final point in our lexicon - its the begin- metro cities in the next two-three years. ate real estate. For luxury products it mat- ning of the relationship.” The luxury Hugo Boss, as mentioned earlier, is looking ters a great deal where the outlet is situat- brands affair with India has also at other cities. It will soon flag off the Boss ed. A five-star hotel works. Most of the just begun. 59