<div>The swish set may not quite approve of this move. Tag Heuer, the watch brand from LVMH , which cheekily entered the luxe phone category, flashing rather pricey smartphones (we are talking Rs 6 lakh-plus toys) that were built like armoured cars, though encased in gold and leather trimmings, has suddenly done an about-turn. <br /> </div><div>The brand has climbed down the luxury phone ladder with its recent offering — the Tag Heuer Racer priced at a piffling Rs 2 lakh. But don’t worry, the gold and titanium bling is there, and it continues to be built in motor racing mode, chassis at the back, et al. Let’s just say — there is more rubber now than alligator skin. <br /> </div><div>“We are democratising our phone offering and bringing it closer to our watch positioning, which is in the affordable luxury category,” explains Serge Simon, general manager at Atelier Haute Communication, experts in tailor-made mobile phones. On balance, it might be a smart move by the Swiss watchmaker. For affordable luxury — the bridge category between pure luxury and premium, where Tag Heuer operates — is where all the action is today. </div><div> <br /> </div><table width="500" cellspacing="9" cellpadding="9" border="0" align="center"><tbody><tr><td><span style="color: rgb(128, 0, 0); "><strong>CARS:</strong></span><strong> <span style="color: rgb(128, 128, 128); ">(</span><span style="color: rgb(128, 128, 128); ">lead Image)</span> <span style="color: rgb(128, 0, 0); ">DRIVING UP: </span></strong><span style="color: rgb(0, 0, 128); "><strong>From the BMW X1 (extreme left) through the BMW 5-Series, right up to the 7-Series, the German auto major has successfully driven into India with a car in every segment</strong></span></td></tr><tr><td> <br /><span style="color: rgb(128, 0, 0); "><strong>WATCHES: TICK MARK:</strong></span><span style="color: rgb(0, 0, 128); "><strong>Boundaries may blur between premium (Tissot 1853 Automatic PRC 200) and affordable luxury (Tag Heuer Formula 1), but a Chopard is pure luxe all the way</strong></span></td><td><br /> </td></tr></tbody></table><div><br />This paradigm-breaking category has changed the way luxury is marketed, and helped grow the size of the luxe pie. If the projections (CII-AT Kearney luxury report) turn out to be right and India’s luxury market does triple from its current size of $5.8 billion to $14.72 billion by 2015, then a large factor could be the way the luxe category has widened. </div><div> </div><div>No longer is luxe the exclusive preserve of the champagne and caviar class. A growing breed of luxury marketers is now increasingly aiming at aspirational buyers, value-conscious wealthy, and even the middle-class consumer who occasionally goes on an indulgent splurging spree. </div><div> </div><table width="600" cellspacing="9" cellpadding="9" border="0" align="center"><tbody><tr><td><img width="600" vspace="9" hspace="9" height="350" align="left" alt="" src="/image/image_gallery?uuid=1e2e5b3f-667f-4a8d-85ae-5ceb6c663a75&groupId=222852&t=1347852470628" /></td></tr><tr><td><span style="color: rgb(128, 0, 0); "><strong>APPAREL: TREND-SETTER:</strong></span><span style="color: rgb(0, 0, 128); "><strong> Lacoste (left) may like to reposition itself in the niche affordable luxury segment where Hugo Boss (centre) is, but consumers perceive it as premium.Gucci is haute couture</strong></span><strong><br /></strong><span style="color: rgb(128, 128, 128); "><strong>(Photographs: From Companies)</strong></span></td></tr></tbody></table><div> </div><div><strong>It’s All About Positioning</strong></div><div>During the recession years of 2008-10, many uber luxury brands managed to grow their businesses in tough markets by reorganising and repositioning their collections to make them more accessible. Think Poppy, the sister line that Coach launched; or Prada’s Miu Miu, a brand extension that caters to an aspirational younger set. Or Jimmy Choo and Versace’s capsule collections for high-street retailer H&M. Closer home, BMW, Mercedes and Audi scored in India with competitively-priced entry-level models under Rs 30 lakh that were positioned between premium cars such as a Honda Accord or a Toyota Prius, and their own higher-end offerings. </div><div> </div><div>But for every pure luxury brand that has laddered down, there are also premium brands that are going up the value chain. Take home-grown leather label Hidesign, which has recently tied up with Milanese designer Alberto Ciaschini to foray into the luxury segment with an eye on the bridge segment. </div><div> </div><div>Indeed, affordable luxury is a bit of a positioning and perception game. So much so that what is seen as premium in one country might be perceived as affordable luxury in another. A Miele appliance, for instance, which is regarded as premium in Germany, is positioned as luxury in India and elsewhere. </div><div> </div><div>break-page-break</div><div> </div><div>According to Kanchan Lall, associate vice-president at business consultancy Tecnova, the definition of affordable luxury also varies from category to category. In some categories, what was once considered pure luxury has now become a necessity, and hence migrated down the value chain as it has lost its uniqueness. For instance, staying at a five-star hotel, or flying first class. Once the exclusive preserve of the ultra rich, now such things are accessible to a far wider crowd. As Prasanjeet Dutta Baruah, vice-president of marketing at the Oberoi Group, explains, business executives who get used to the 5-star experience during their work travel are unwilling to settle for less anymore and so choose the same for family holidays. So, the consideration set is growing. </div><div> </div><div>In apparel, as Rajesh Jain, director and CEO, Lacoste India, explains, “Premium as a perception comes with a certain assurance of style. Premium consumers are those who closely observe trends in fashion and make an effort to sport the same at a price. Luxury wear, on the other hand, is supremely priced but is accompanied by a legacy that assures high quality, attention to detail, impeccable craftsmanship and finer design sensibilities.” Between these two parallels, he says, lies the niche affordable luxury space, where Lacoste would like to be. Unfortunately, it lost its higher positioning in the 1990s because of an over-expanded distribution channel.</div><div> </div><table width="150" cellspacing="9" cellpadding="9" border="0" align="right"><tbody><tr><td><img width="150" vspace="8" hspace="8" height="150" align="left" alt="" src="/image/image_gallery?uuid=3de497bf-d462-4399-9ad0-51bfaecc4dbf&groupId=222852&t=1347852592470" /></td></tr><tr><td style="text-align: left; "><span style="color: rgb(128, 0, 0); "><strong>THE DEFINITION OF AFFORDABLE LUXURY VARIES FROM CATEGORY TO CATEGORY<br /></strong><span style="color: rgb(0, 0, 128); "><strong>Kanchan Lall, associate vicepresident, Tecnova</strong></span></span> </td></tr></tbody></table><div>Atelier Haute’s Simon says pure luxury products have a timeless appeal while affordable luxury can have shorter time cycles.</div><div> </div><div><strong>Have Money, Will Splurge</strong></div><div>In India, says Tecnova’s Lall, the growth of affordable luxury is being fuelled by a new breed of aspirational young consumers, aged between 20 and 30, who know about international trends but do not have the means to spend on real luxe goods. However, they do have the budget and the desire to spend on luxury for life-altering events such as marriage, or even when a performance bonus comes their way. </div><div> </div><div>Lacoste’s Jain says affordable luxury consumers are those who enjoy fine dining, are increasingly travelling abroad, have a taste for fast cars and tech gadgets and visit niche music and lifestyle events. He says, at times preferences are inherited as children grow up observing their parents patronising certain brands. On other occasions, it is an acquired taste thanks to increased exposure. Jain has no doubt about the buoyancy of this segment — he points out how in 2010, western wear in India clocked sales of Rs 860 crore. Of this just Rs 50 crore came from luxury and the affordable luxury market. </div><div> </div><div><strong>Exclusivity Versus Commodification</strong></div><div>So, here comes the conundrum for pure luxury brands. While it is tempting to grow the consideration set, won’t the lustre of the brand get dimmed if it is too democratised? Isn’t there a danger of getting commoditised, and alienating the luxe connoisseur who cherishes a brand for its exclusivity and uniqueness? </div><div> </div><div>Shweta Jain, assistant general manager of marketing at Pernod Ricard India, makers of premium wines and spirits, admits that with income levels rising, a wider base is consuming a brand such as Chivas Regal. “But this is where laddering comes in,” she says. “We create limited editions, collector’s specials, and work extra hard to keep the myth about the brand alive.” </div><div> </div><div>Oberoi’s Baruah gives the example of how hotel groups democratise and yet preserve exclusivity by segmenting their offerings with, say, presidential suites for the super elite, and so on. Several hospitality brands have also uptraded in other ways, creating more luxurious boutique hotels or seven-star properties. </div><div> </div><div>A store such as William Penn, which stocks premium, affordable luxury as well as pure luxury pens, takes the same laddered approach — but through service. Anita Paily, the company’s brand manager, says their 17-brand portfolio includes premium offerings such as Sheaffer or Waterman priced at an affordable Rs 2,000-8,000, moving up to affordable luxury brands such as Omas and Sailor (Rs 10,000-plus range) and then the ultra luxe brands of Mont Blanc, Caran D’ache and Visconti (some models can cost more than a lakh). To keep their high net worth clients happy, the store even organises private screenings at their homes, sending trained staff who are well-versed in the intricate details of every product.</div><div> </div><table width="600" cellspacing="9" cellpadding="9" border="0" align="center"><tbody><tr><td style="text-align: center; "><span style="color: rgb(0, 102, 0); "><strong>WHO IS THE LUXURY SHOPPER?</strong></span><strong><br /></strong><span style="color: rgb(153, 0, 0); "><strong>The Indian luxury buyer is as diverse as the country. Here’s a pen sketch of some of our luxe customers</strong></span></td></tr><tr><td><img width="600" vspace="8" hspace="8" height="292" align="left" alt="" src="/image/image_gallery?uuid=7bd15a08-c2f4-4d39-b866-766fa081fa32&groupId=222852&t=1347852908217" /></td></tr><tr><td><div><span style="color: rgb(128, 128, 128); "><strong>(From The Left)</strong></span><span style="color: rgb(153, 0, 0); "><strong> <span style="color: rgb(0, 102, 51); ">RICHIE RUSTIC:</span> This one is the oddball who defies stereotyping and has the luxury brands utterly confused.Operates out of all known paradigms and could pick up the most baffling purchases, for no apparent rhyme or reason. Very difficult to pigeonhole.<br /></strong></span></div><div><span style="color: rgb(153, 0, 0); "><strong><br /><span style="color: rgb(0, 102, 51); ">VIVACIOUS VIVANT:</span>This is the class — mostly self-made entrepreneurs or professional business executives — that has the money to enjoy the good things in life, and does so without guilt. The motto is work hard, and play harder, and celebrate success with irreverence and fun.<br /><br /><span style="color: rgb(0, 102, 51); ">POLITICAL PROWLER:</span> Acquisitive to the core, has a childlike mentality of coveting whatever he sees new. Luxury brands talk in hushed tones about this consuming class, the origins of whose wealth are shrouded in mystery, but who is perhaps the biggest contributor to the bottom lines of the high end brands.<br /><br /><span style="color: rgb(0, 102, 51); ">AFFLUENT ASCETIC: </span>Very rich, but as comfortable in a Kolhapuri chappal as in a pair of Jimmy Choo pumps. A value seeker, will not buy luxury unless it fulfils a need. Years of socialist idealism and guilt of conspicuous consumption has ingrained a frugalism. Now, finally yielding to the temptation of enjoying the fruits of labour.<br /><br /><span style="color: rgb(0, 102, 51); ">CLASSY CONNOISSEUR</span>: Hails from the ultra-high net worth segment and consumes luxury for intrinsic satisfaction.Luxury is no novelty but part and parcel of everyday living. Discerning with a discreet style, everything has to be just so for this consumer.<br /><br /></strong></span><div><span style="color: rgb(0, 102, 51); "><strong>FLASHY FLAUNTER:</strong></span><span style="color: rgb(153, 0, 0); "><strong> Is the new rich status seeker who chases after visible luxury. So will be seen sporting fancy watches, driving high-end cars, wearing designer clothes but will not invest in the invisibles — designer lingerie or top notch kitchen and bathroom fittings.<br /><br /></strong></span><div><span style="color: rgb(128, 128, 128); "><strong>(Illustration By Dinesh S. Banduni) </strong></span></div></div></div></td></tr></tbody></table><div> </div><div><strong>The Address Matters</strong></div><div>Another tool in the kit is store positioning. It makes a lot of difference in attracting the right target segment, says William Penn’s Paily. Since the writing instruments company caters to all three spectrums — from premium to luxe — its stores are present at Delhi’s Select Citywalk mall, which attracts a wide range of consumers, rather than at a DLF Emporio mall (Delhi), which mostly houses high-end brands. Paily, however, says that if a William Penn store was present in Emporio, it would exhibit only niche products. </div><div> </div><div>Emporio’s vice-president Dinaz Madhukar agrees that address matters, adding that a lot of thought has gone into zoning at the mall. The prime atrium space is reserved for top-end luxe brands such as Cartier and Louis Vuitton, while the first floor houses next level luxe brands such as Burberry and Canali. The affordable luxury bridge brands are next door at DLF Promenade. By creating affordable luxury products for the aspirational consumer, high-end brands are investing in the future, says Madhukar. </div><div> </div><div>Dhananjay Chaturvedi, managing director of appliance maker Miele India, sums it up thus: today’s aspirational consumer is tomorrow’s pure luxe shopper.</div><div> </div><div>chitra(dot)narayanan(at)abp(dot)in</div><div> </div><div>(This story was published in Businessworld Issue Dated 24-09-2012)</div>