Living To The Hilt

Every year as I work on the BW Businessworld annual luxury issue, one of my favourite pass times is to visit the DLF Emporio mall — the Mecca of luxury — in Delhi’s plush Vasant Kunj area and loiter around. I admire window displays, walk into stores, enquire about products, chat with sales attendants and most importantly, observe other shoppers. From the grandmother who wants to purchase a Baby Dior outfit for her granddaughter’s first birthday, to the husband who wishes to clasp the Cartier ‘Love’ bracelet on his wife’s wrist, from the young teenager looking to buy a monogrammed bag as the perfect college bag to the professional who prefers to buy an understated bag that exudes luxury, they are all there. And while I try on a Jimmy Choo shoe or admire myself holding a Dior bag, I overhear snippets of conversations and get a pulse of the luxury sector in India.

Over the years, the luxury consumer has become more confident and aware and knows his/her mind. Whether it is a textile mill owner from Ludhiana who wants a Rolex to impress his foreign clients or the lady from South Delhi who wishes to buy a bag from the latest fall-winter collection or the family from Chandigarh where all 10 members from the groom’s side order the same made-to-measure suit for the wedding to match with the theme, the luxury consumer is splurging. Little wonder then, that the luxury market is growing at a compound annual growth rate (CAGR) of 25 per cent and is expected to cross $18.3 billion by the end of the year, according to an Assocham study. Amitabh Kant, the CEO of Niti Aayog has gone as far to say that the luxury market has the potential to grow to $50 billion by 2020 and to $180 billion by 2025.

What’s Fuelling Growth?
The rise in disposable income, brand awareness amongst the youth and increase in purchasing power of the upper classes in tier-2 and tier-3 cities are cited as the main factors leading to growth in the luxury sector by Assocham. The gap between India and Bharat seems to be fast narrowing, at least, as far as luxury consumption is concerned. Luxury goods are in demand in all parts of the country from Jaipur to Coimbatore and Ahmedabad to Assam. As per the latest Kotak Top of the Pyramid report, 45 per cent of the 146,000 ultra high networth households are in non-metros. These wealthy consumers are willing to spend on luxury goods and visit the metros to shop. “Over the past two years luxury players such as Judith Lieber, Rado, Ethos, among others have expanded to tier-2 cities such as Surat, Ahmedabad, Mangalore and Coimbatore to reach out to these consumers,” says Shreyansh Kocheri, research analyst at Euromonitor International. However, Sanjay Kapoor, managing director of Genesis Luxury that has brought various luxury brands such as Canali, Bottega Veneta, Jimmy Choo etc., into the country says that small towns do not provide a large enough market to open retail stores. “It’s a bit of a misnomer that luxury is being bought in small towns. There are on an average 200-500 rich families in these towns. Their buying capacity cannot be compared to Delhi and Mumbai.”

While that may be true, the fact is that Jayanthi in Tirupur or Mahesh Patel in Surat or Sumeet Kaur in Amritsar have deep pockets and the desire to buy the latest luxury offerings. When they are unable to visit Delhi, Mumbai or Bangalore, they shop online. Luxurystation that deals in both new and pre-owned luxury accessories has nearly 25 per cent clients from tier-2 and tier-3 cites. Confidential Couture, an online portal dealing in pre-owned luxury accessories has 40 per cent buyers in tier-2 cities such as Raipur, Jaipur and Guwahati. Genesis is also tying up with Tata Cliq to make all their brands available online.

Assocham expects a 100 million transactions on the Internet by 2020. “As a result the luxury consumption is going to increase manifold in the country,” says the study.

Online shopping and the increasing desire to possess luxury goods, even by those who don’t have very deep pockets has led to a market for pre-owned or pre-loved luxury. Sites like Confidential Couture, Envoged, Luxepolis are all targeting the growing appetite of Indians for luxury products. “The pre-owned luxury market is very fragmented right now. However, our research shows that it has the abilty to reach $1.8billion to $2billion by 2019,” says Anvita Mehra of Confidential Couture.

As per the Assocham study sectors such as five star hotels and fine-dining, electronic gadgets, luxury personal care, and jewellery are expected to grow by 30-35 per cent over the next three years.

Made-to-Measure
In August, Akash Mehta, 40, a Delhi-based entrepreneur spent several hours at the Corneliani boutique at DLF Emporio with the Italian master craftsman who had come to India especially to take measurements and stitch suits, trousers and shirts for Corneliani’s favoured customers.

Mehta selected the material, the buttons, elbow patches and even the inside lining while he was adviced on the cut that was not only in vogue but was also ideal for Mehta’s profile. Six weeks later, Mehta had a completely bespoke 100 per cent Italian Coneliani suit that even had his initials on the inside coat pocket.

Indians, long familiar with getting their formal wear stitched have taken to the made-to-measure (MTM) concept really well. Of course, the fact that their suits are not being stitched at a neighbourhood menswear tailor but by an Italian craftsman adds to the charm, even if it costs 20-25 per cent higher than an off-the-shelf suit. “There has been a 15-20 per cent increase in the number of MTM customers,” says Salesh Grover, business head of OSL Luxury Collections, master franchisee for Corneliani in India. Corneliani has been inviting the master craftsmen from Milan for the last three years. Ermenegildo Zegna and Giorgio Armani also invite their craftsmen to India to provide MTM services.

Men Are Big Spenders
While women have traditionally been the big spenders and continue to do so, a large number of men are now shopping for luxury. An internal study by DLF Emporio showed that more than 51 per cent of the shoppers were men. “Men come in quietly but purchase more. Women spend more time at the mall hanging around with friends, sipping coffee, browsing, but in terms of volume purchase less,” says Dinaz Madhukar, Senior VP at DLF Luxury Retail. A large number of luxury brands are targeting men with their India-inspired collections. So you have the Canali jacket, Ermenegildo Zegna’s Guru collection and Corneliani’s Court Suit, all of them inspired by the bandhgala. Corneliani has also introduced a cashmere collection exclusively for the Indian market. “With Indian men increasingly spending on luxury goods, most luxury men categories such as men’s luxury jewellery, timepieces and bags among others have been registering faster growth from a lower base compared to women luxury categories over the past five years,” says Kocheri.

As per the Assocham report men decide on purchases related to alcohol, watches and automobiles.

More Retail Space
A perpetual complaint of luxury players in the country has been the lack of good quality luxury retail space in India. Fortunately, now more luxury malls are in the pipeline. DLF will launch its second luxury mall called The Chanakya in the heart of Delhi by March next year. Over 65 per cent of the mall is already leased and will feature luxury brands such as Tom Ford (women), Hermes, Mont Blanc and several bridge to luxury brands such as Ted Baker, Thomas Pink, etc. The Palladium in Chennai is also expected to be operational soon. “Most of the brands in our portfolio will open stores in Chennai,” says Kapoor. He says he will look at expansion in other cities when the right mall comes up.

An expected improvement in the retail infrastructure has also encouraged new brands to foray into the country. US accessories manufacturer, Coach and French company, Longchamp have both opened their first stores in India. Versace Collection will be opening at The Chanakya once the mall is ready.

Meanwhile the Indian luxury consumer is no longer waiting for shopping trips abroad with nearly 59 per cent of the HNIs shopping for apparel and accessories in India as per the Kotak report.

smitatripathi@gmail.com; @smitabw