Thoughtful And Conscientious Luxury
The days have started becoming shorter, evenings are slightly chilly, the neighbours have dressed up their gardens in fairy lights. In Delhi, the pre-Diwali card parties will begin soon, and the tony neighbourhoods of the capital will glitter with statement jewellery pieces, luxury cars, and beautiful people. Steeped in glamour, this season is all about luxury.
After the low-key phase of the last couple of years, the luxury sector globally is gearing up for a revival. In fact, if Deloitte’s Global Powers of Luxury Goods Report is to be believed, during the pandemic the luxury goods market showed resilience despite sales being hit. The world’s top 100 luxury goods companies clocked revenues of $252 billion in FY2020, down from $281 billion in the previous year. However, despite the drop in sales, more than half of the top 100 were profitable, with 13 companies still reporting double-digit net profit margins. So much for the sector’s resilience!
The last couple of years pushed businesses in the luxury sector to reset some aspects of their functioning. However, the overall sentiment remains positive and the sector is estimated to reach $419 billion in 2027, as per industry reports.
When we consider the aspects that were reset (embracing digitisation for the entire brand journey and sustainability), we understand how crucial the role of technology was in this. Technology was used to deliver luxury shopping experiences, right from creating the product to delivering the service. Partnerships with startups were seen to improve creation and the delivery of services.
Further, luxury companies are looking at NFT and gaming too. NFTs help verify authenticity and ownership of an item and are useful for the sector since counterfeit products have been an issue. Gaming helps engage the new generation of luxury buyers, it provides the buyer an opportunity to virtually try the product/ service prior to purchasing it. At times, people who might not be able to afford it in the real world could do so in the virtual world.
The other important aspect has been the focus on sustainability. The luxury sector has embraced environment friendly practices right from the design stage of the product. Here too, technology has been at the forefront, enabling the transition.
Sustainability in design, production and even communication is the new mantra. The luxury sector is open to concepts of recycling, reusing, renting, and eco-friendly practices. An interesting fact highlighted by an industry report is the use of biomaterials in the luxury sector for apparel, shoes, and beauty products. Here, technology is being used to create materials with minimal environmental impact.
The following are the broad trends characterising the Indian Luxury market:
Personalisation & digitisation
‘Personalisation’ conjures up the image of old Hollywood movies where actors sported monogrammed shirts and bags. It has gone way beyond that now with the help of technology. And, why not? Consumers are paying top dollar for products and services they consider ‘luxury’ and there is nothing like tailor-made luxury.
Renowned menswear designer Kunal Rawal believes that a change in mindset has occurred, “I think we are in the midst of quite an evolution, all thanks to young Indians who are consuming global aesthetics and moving the needle on our design choices as a country. This new and young India is experimenting more, beginning to ask for and value details and bespoke fashion a lot more.”
Rawal believes this has especially impacted the menswear market where for a long time traditional occasion wear was constant and unchanging. “This evolution has also changed the way we look at luxury as a concept. Young India is interpreting luxury as a focus on details and designs that are personal in nature.” Personalisation and an individual sense of style is being seen in the luxury sector, especially in fashion.
Porus Doctor, Partner & Leader - Consumer Industry, Deloitte India concurs, “Understanding the demographic and economic profile of customers and creating a personalised sales experience are critical for the success of luxury brands.” According to him, the luxury goods market in India has seen steady single digit growth from 2019 to 2022 with cosmetics and fragrances accounting for marginally higher growth. The main reason attributed is a rising disposable income fuelling purchasing decisions and the shift amongst consumers to spend towards experience and perception. Moreover, technological transformation and increasing penetration of the startup ecosystem are compelling luxury goods companies to alter their business strategies to reach out to their niche customers.
About physical spaces he says, “Luxury customers prefer elegant stores because they want to enjoy the experience whilst purchasing a luxury item. That explains why luxury brands are investing in boutique stores in premium hotels and malls.”
Doctor further stresses that the future of the luxury products market in India looks positive with several factors including the ongoing digital evolution, an increasing upper middle-class population and the influence of GenZ expected to continue driving the market in the coming years.
Highlighting the change brought about by technology, Amrish Kumar, Managing Director, Reliance Ritu Kumar says the luxury sector is undergoing a shift, which can be attributed to a few major forces. “One, strategic investors and conglomerates are in the picture. Branded businesses are now seeing huge retail investments. Second, the online marketplace has changed. The growth in digitisation and ecommerce has accelerated over the past couple of years, resulting in a rapid sophistication of consumers. The ability to buy online is incredible. Additionally, customers are demanding better-designed and curated products for the price they pay. It means competition in the branded space is set to explode and brands will need to become nimble, innovative, and differentiated to stay relevant. Finally, as with all things, timing is fundamental. We have long predicted that as more consumers enter the marketplace, there will be an upward displacement in preferences”.
Sustainability
With the whole world focused on sustainability, it is no surprise that the luxury sector has embraced the concept and that too, right from the design stage of the product to consumer service.
Frans Westraadt, General Manager, Six Senses Fort Barwara says the luxury hospitality market was the most affected due to the global pandemic and it made one realise the importance of slow travel. Evolved travellers are now well-aware of the kind of experiences they are seeking from a luxury holiday. With this, they are more mindful of the environmental and social impact of their travel choices so they want to travel as sustainably and healthily as they can. Sustainability and environment friendly practices are being taken up across sectors with strategic partnerships where needed, to ensure a positive outcome. “The luxury beauty market has been growing with customers more aware of surroundings, sustainable beauty brands with vegan formulations and eco-friendly packaging,” says, Paul Lee, Managing Director, AmorePacific Group that has brands like Innisfree.
This October, Forest Essentials, the Indian beauty brand will be opening their first brick-and-mortar store in London’s Covent Garden. Samrath Bedi, Executive Director, Forest Essentials says, “As i-beauty continues to trend with consumers looking for effective, natural formulas, the global ayurvedic market is projected to reach almost £19 billion by 2029. Moreover, there is heightened awareness around human rights and climate change that
has resulted in consumers becoming more selective and demanding of business practices, prioritising brands that value transparency and are purpose-led in their messaging and authenticity.”
He further adds: “The brand believes that true luxury is found in the details, the thoughtful touches and the unique ways in which we can create truly memorable experiences.”
