India has seen much activity this past year. Not just in the luxury sector, but in the general political and economic scenario as well. 2019 promises to be even more challenging, and should we say rewarding, provided you read the signs carefully and create strategies accordingly.
Assocham figures continue to be optimistic. As per last projection, not only is the industry expected to be of a size of USD 30 billion by the end of 2018, but is also to continue its growth trajectory unhindered. But owing to the sudden instability in the political applecart, the floundering rupee and the eminent global slowdown of 2020 looming large, owing in no small measure to the American president, ground reality for luxury could be different.
We put down some global trends that could guide the Indian luxury industry in tackling what is about to come in their widely volatile path:
1. Mergers and acquisitions: Reliance Brands (Indian retailers of Ermenegildo Zegna, Kate Spade, Thomas Pink and more) have taken over Genesis Retail (Indian retailers of Bottega Veneta, Canali, Paul Smith and more) in 2018. And with that, the largest fashion and accessory conglomerate of Indian Luxury and premium space has taken shape. Similarly, Michael Kors, after acquiring Jimmy Choo in the past, acquired Versace in 2018, and gave birth to a new parent company – Capri Holdings Limited. We are seeing the creation of an American luxury conglomerate, which may give European counterparts a run for their money.
With little competition, the all-powerful Reliance Brands group may become the only point of entry into India. Independent brands and smaller groups continue to offer their wares, but the sheer strength, negotiation powers and might of Reliance will perhaps prove to be the single driver of the fashion and luxury space in India.
Consolidation, therefore, may be the way forward to minimise losses and amplify profits while combining expenses.
2. The rise of new markets: Luxury has slowly spread its wings to the hitherto sleepy Tier I & Tier II towns. The fast emerging Indian market is not only witnessing demand for luxury products from the usual suspects but also Tier I and Tier II cities such as Chandigarh, Ludhiana, Ahmedabad and others which have a sizable number of HNIs (High Net-worth Individuals). Alongside, an increase in wealth for the middle class coupled with internet penetration has resulted in newer segments of first-time luxury buyers. This has given ample space for a whole lot of brands to set up shop in India and retail their brands through distribution networks. This will be the next growth driver for luxury companies in India.
3. India’s luxury travel offerings: With increased e-visa processing, faster on the ground arrival support, eye catchy Incredible India campaigns, the tourist inflow from within and outside is likely to further increase. Allahabad’s Kumbh Mela in 2019 is going to pull in quite a bit of crowd with TUTC’s glamping options helping with luxurious stays. Kapil Chopra, an ex-President of Oberoi Hotels, has started his own hotel brand in India, giving a fine boost to the Indian hospitality sector.
A new report of the World Travel and Tourism Council (WTTC) reveals that India’s travel and tourism sector ranks 7th in the world in terms of its total contribution to the country’s GDP. Foreign Tourist Arrivals increased to 8.36 million in January-October 2018, achieving a growth rate of 6.20 per cent year-on-year according to IBEF (Indian Brand Equity Foundation). Be prepared to give that famous Indian welcome.
4. The big fat Indian wedding: There’s never been a better time to be a part of the wedding industry in India. With India’s largely young population standing at the altar, millenials and the next generations are getting married every year with even more options in hand to make it special. According to a 2017 KPMG report titled ‘Market Study of Online Matrimony and Marriage Services in India’, the marriage services industry is estimated to be worth approximately US$53.77 billion (Rs 3,68,100 cr).
This is one sector which boosts sales in all sectors of the industry – from beauty, fashion, accessories, photography, jewellery, travel, hospitality, gifting to also the cuisine segment. With high standards being set by star weddings such as those of Priyanka Chopra-Nick Jonas, Deepika Padulone-Ranveer Singh and Isha Ambani-Anand Piramal in 2018, the aspiration of the average Indian to splurge on weddings is reaching a new peak. With Rolex watches as gifts to the entire wedding procession to bespoke clothing from super luxury brands to not only the entire family but the whole procession adds further fillip to the trade.
5. Luxury homes that speak & think: From high end home appliances such as Sub Zero Wolf to tech controlled homes like Home Automat, luxury and technology seem to marry and create an inseparable union. What was earlier restricted to high-end laptops and mobiles, demand has now invaded the home entertainment and kitchen space. Luxury phones brand Hanmac, which has operations in China, is entering India. Smart ovens that calculate and cook for you, chromotherapy showers and smart mirrors which track your health are soon going to become usual in Indian homes.
6. Luxury retail & technology: Omni-presence now means beyond just available everywhere to also be ‘Phygital’. A merger of the physical and digital retail is quietly invading the global retail. Amazon Go has already launched eight cashier-less stores in Chicago, Seattle and San Francisco & plans to ramp up to 3,000 by 2021.
In Bangalore, Decathlon launched a similar store by introducing a ‘phygital experience’ – an innovative mix of physical retail and digital touch points. From virtual reality to digital payments the intent is to create a fun and immersive user experience designed to engage and add value to the consumer at every step of the way while choosing their favourite sports gear. Another concept store called ‘Watasale’ also created a cashier-less store, its first one being in Kochi, and has plans to expand to other cities including Bengaluru and New Delhi in the near future.
Virtual reality, artificial intelligence and augmented reality are changing how consumers interact with products and services. Luxury brands have already being introducing features in their stores internationally. Examples are Dior’s virtual reality headsets and Kate Spade’s ‘Make it Mine’ service. Indian stores, though, have not come into their radar yet.
In India, brands like Arvind have introduced Magic Mirrors through its brand Creyate Custom Clothing. Shoppers Stop has launched an innovative augmented reality-based dressing room: ‘The Magic Mirror’. It is an intelligent photo booth that gives customers the option to select and view apparel and accessories on themselves without having to physically ‘try on’ the desired products. Ecommerce players such as Lenskart and Caratlane are already into virtual trial of products by customers.
Can the Indian luxury industry ignore this anymore?
7. Predictive analysis to predictive selling: The Indian fashion industry proudly receives its first futuristic analysis software, ‘Stylumia’. Created by ex-Myntra founder Ganesh Subramanium, the software will assist in better buying to be able to improve efficiencies and sell through ratios. Most luxury brands dependent on the human predictions of the buyer can now resort to technology and manage their budgets better. This coupled with predictive selling, could bring in the much needed correction in stocks over-load with luxury brands. Here’s to more profitable times!
8. Reusable/rentable luxury: As per an Allied Market Research, the global online clothing rental market was valued at $1,013 million in 2017, and is estimated to reach $1,856 million by 2023, registering a CAGR of 10.6% from 2017 to 2023. North America leads the online clothing rental market, followed by the Asia-Pacific region. Asia-Pacific is expected to grow at highest CAGR of 11.4% mainly led by India and China.
But what started as a trickle two years back, is now a stream, with many ventures offering specialised product categories. Websites such as Confidential Couture offer reusable luxury goods while Ziniosa and Rent A Closet offer fashion on rent. And now, even affluent women are renting high-end jewellery for their wedding. The fashion rental market is becoming the biggest trend. A wedding suit or gown worth Rs. One lakh could be rented for as low as Rs. 2000 to Rs. 2500!
9. Ethical, authentic luxury: Luxury brands are increasingly giving sustainability a larger portion of their production and marketing agenda and budget. From farm-to-fork restaurants to conservation of oceans and heritage sites to creation of garments with used fabrics, the luxury industry is bending rules to create a happier, healthier environment.
In India, GrassRoot by Anita Dongre and Nicobar by Good Earth are few names that are setting standards for their sustainable offerings. Slowly but surely, the well exposed Indian consumer seeks value over mere brand name. Value definitions are shifting rapidly in line with global shifts. ‘Carbon footprint’ and ‘sustainability’ are gaining deep meaning for the young generation today. A brand who pays heed to such demands will perhaps go a long way.
10. SUV’s take over the roads: The typical Indian, fond of big cars, is rapidly switching to SUVs. Various variants have been introduced by automakers of all categories. From Lamborghini Urus to Rolls Royce Cullinan, almost all luxury brands have come up with their SUV variant. Porsche’s Cayenne takes things forward by making it electric.
Sale of SUVs grew seven times faster than that of passenger sedans. While small cars and sedans managed a growth of 3% in the last financial year, the sales of SUV grew by 21%. The share of SUVs in overall passenger vehicle sales rose to nearly 30% in 2017-18, compared to 14% recorded at the end of March 2017-18. According to numbers released by Society of Indian Automobile Manufacturers (Siam), 9.2 lakh SUVs were sold in 2017-18 against 7.6 lakh units in the previous year.
As the Indian luxury industry and consumer changes its character and personality, international luxury brands will need to keep stepping up their efforts to lure the Asian jewel.
Abhay Gupta is the founder, promoter and CEO of Luxury Connect (a boutique consulting organization) and Luxury Connect Business School (LCBS). He has helped establish luxury brands like Versace, Versace Home, Versace Collection, Corneliani, Arredo Classic, etc in India. Luxury publication Blackbook recognizes him as one of the ‘Top 100 Indian Luxury’s Most Influential’ for the past 6 years. He is also a recipient of the ‘Luxury Retail Icon 2012’ title by Asia Retail Congress. Having being featured in Forbes Luxury Trend Report 2012 as one of the industry leaders, he has also been widely recognized as a luxury expert by many media organisations. Fondazione Altagama has also recognized his contribution to the growth of Italian luxury industry by his pioneering efforts in India.Â
