As the smartly dressed luxury professionals from India and abroad filed inside the Shahjehan Hall at Taj Palace Hotel, New Delhi, we could figure out that the forum was bound to be a success, simply because of the attendance of important people from the luxury industry. The setting was luxurious, as befits an event of this kind, and there was a seriousness and determination in the air to learn from the conference and benefit from it.
Inaugural Session
The Inaugural Session was opened with a welcome address by Thomas Varghese, Chairman, CII National Committee on Retail and CEO, Aditya Birla Retail Ltd. He started the conference on a positive note and stated that there is a definite surge in consumption by young and aspirational consumers.
Sanjay Kapoor, Chairman, CII Luxury Goods Forum and MD, Genesis Luxury Fashion Pvt Ltd, spread a cheer in the audience by listing some positive changes in the industry. He said, “Indians used to travel to shop abroad. But today Indians travel exotic, to see new places and experiences, but not for shopping.” He also said that luxury in India is sitting on the brink of a huge potential and we need to uphold brand value since the Indian consumer is value-sensitive.
Armando Branchini, Executive Director Altagamma, however, was still a little skeptic about the growth of Indian luxury industry. He said, “The bad news is that Indians are still shopping abroad a lot. And also, the custom duty and tariff structure is very high, which is particularly negative for luxury goods.” But he also had a reason to make everyone happy in the audience. He said that Italian luxury brands have plans to make huge investments in India in the coming months.
There was a little break in the inaugural session with the release of the CII-AT Kearney report on Luxury in India: Charming the Snakes and Scaling the Ladders. Neelesh Hundekari, Principal and Head – Luxury & Lifestyle Practice, AT Kearney India, gave a gist of the report. Following are the major points which came out in the research:
1. Luxury consumption starts by consumers who have an income of INR 10 lakhs and becomes serious by those who have an income of INR 1 crore and above.
2. The definition of a millionaire in money terms is: Real Millionaires (industrialists, traditionally wealthy, select CEOs with an income of INR 5 crores); Near Millionaires (medium enterprise owners, CXOs, top professionals with an income of INR 1-5 crores); and Rupee Millionaires (young professionals with an income of INR 10-15 lakhs)
3. Fashion consciousness is low among Indians, but brand awareness is increasing
4. Mumbai and Delhi are the largest luxury markets, followed by Kolkata, Chennai and Coimbatore. However, Mumbai and Delhi are still largely unpenetrated.
5. Indian luxury market has grown 13% in the past three years. It is currently at 4.76 billion USD.
6. Luxury products have seen a 22% growth rate in India
7. Luxury service revenue has declined (like hotels, fine dining, spas, etc)
8. Luxury assets (like real estate) have shown growth
9. The luxury product market is 1.5 billion USD (includes mostly jewellery, apparel and accessories)
10. Jewellery is the largest luxury segment in India
11. Wines, spirits and electronics have grown strongly
12. Excluding jewellery, it is still a men’s market, accounting for 60% of luxury consumption in India
13. People are not buying enough
14. It is expected that the market will grow three times by 2015. But even then there will be significant latent demand.
The barriers to the growth of Indian luxury industry are:
1. Difficulty to reach the consumer since the target population is scattered.
2. Consumer’s reservations about luxury purchases (there is a low penetration among rupee millionaires and there is reservation about lesser known brands)
3. Lack of talent in the industry (low experience and lack of vocational training)
4. Infrastructure and regulatory constraints
Some possible solutions are:
1. Get the footfalls right by:
a. Micro-segmentation: based on occupation, community, location, life status, etc
b. Personalised outreach
c. Innovative media choices
d. Break the myth about prices being high
e. Provide an experience
2. Get iconic brands and ladder brands: Ladder brands are those which fill the price point gap between luxury and mid-priced brands. For example: Coach
3. Get the cost structure right
4. Experiment with new formats to make luxury reach your target consumer
However, all ears were waiting to hear Jyotiraditya Scindia, Minister of State for Commerce and Industry, Government of India. He swept the audience as he began the speech by praising all present at the conference. He said that all the stalwarts of the Indian luxury industry, and those he created this industry, are present here. He explained that not only will this gathering have the first mover advantage, but also make the industry grow to new heights. Everyone was surely proud to hear that!
Scindia then took the main matter at hand and said that India’s economy continues to soar and Indians are eager to shop. He said, “I take India as an elephant. We may be slow in taking steps, but we won’t ever go back.” Scindia also implored the international luxury brand CEOs present to set up production centres in India along with developing India as a market. “We have a history of captivating fabrics, arts and designers. Marry that opportunity. Help us showcase the diversity and vivacity of India,” he implored. He gave the example of chanderi silk and how his family has patronized the small community of weavers who make this wonderful fabric. He left the dais on a very encouraging and positive note. International luxury brand CEOs kept referring to his speech after he had left.
Indian Drive: Opportunity for luxury in India
After a refreshing tea and coffee break, everyone returned energetically for the first session of the day. We have to say, it was the liveliest of all the sessions.
The keynote address was given by John Hooks, Deputy Chairman, Giorgio Armani Group. The session moderator was Neelesh Hundekari. The panelists included Sanjay Kapoor, Dinesh Vazirani (CEO and co-founder, Saffronart), Radha Chadha (author and brand consultant) and Ram Iyer (COO, The Collective).
Hooks gave a glimpse of the Giorgio Armani Group and the brands under them. Talking about India, he said, “We still don’t have a clear idea of the growth in India market.”
After the keynote address, the panelists had a lively (not to say heated) discussion about the industry. It was universally agreed upon that Indian luxury consumer is unique. They are educated and want to be spoilt. It’s all about making Indians feel special with special products. Sanjay Kapoor categorically mentioned customizing for the Indian market, a case in point being the Canali Nawab jacket. John Hooks, however, refused the concept of customization. He said, “Our products speak a language for consumers who want to show peers that they are successful. We want to create a global identity, hence no customization at this point of time.”
Radha Chadha hoped that luxury brands will build on Indian heritage and artisans especially since Indians hang on more to the traditional rather as compared to other Asians – mainly because of rich Indian weddings. She gave the example of Shang Xia, the new brand by Hermes launched specially for the Chinese market.
It was also agreed upon that India is a country with many countries inside it. Sanjay Kapoor shared an interesting anecdote, “We get calls to our Chennai stores asking when the store will be empty so that they come to shop at that time. On the other hand, our Delhi stores get calls asking when will there be the maximum crowd so that they come to shop at that time!” Therefore a single strategy won’t work in India. It has to be regional.
Ram Iyer, based on his experience at The Collective said that known brands work in India. Customers also look for prominent logos so that their purchase is more visible and instantly identifiable. He gave an example of how an Indian customer specifically demanded a Polo Ralph Lauren dress shirt with their big horse logo at the front – something which the brand doesn’t do anymore! Iyer reiterated that customizing works for Indians and fashion consciousness has to improve.
The online medium sparked a heated debate among the panelists. Everyone said that while internet is a powerful medium, they were not too sure about how much will the medium benefit the luxury industry. Another point raised by Iyer was that brand integrity needs to be preserved online. Dinesh Vazirani, however, emerged to be a staunch supporter of the medium. He said that even though internet penetration is low in India, the kind of people who are and could be interested in luxury have access to internet.
Collaborations in Business: New Frontiers
This session aimed at discussing appropriate ways of collaboration and business models for various stakeholder groups like joint ventures and partnerships, easing barriers for FDI in multi-brand retail and exploring new potentials in luxury including creating marinas. Other issues like revenue sharing models between retailers and real estate players were also discussed.
The session was opened with a keynote address by Marco Bizzarri, CEO of Bottega Veneta. The session moderator was Jayant Kochar, MD, Go Fish Retail Solutions. The panelists included Rajiv Suri (Group CEO – Retail, Jashanmal Group), Armando Branchini, Shubhranshu Pani (MD – Retail, Jones Lang La Salle), Malav Shroff (CEO, Blue Ocean Boating), Sonica Malhotra (Director, MBD Group) and Devaunshi Mehta (President, Dia Precious Ltd).
Marco Bizzarri started his speech by wondering how an Italian could teach Indians about India! This set the tone for the discussion. After giving a brief presentation about his brand Bottega Veneta, he mentioned that the brand is more popular in Asia as compared to Europe and America because Bottega is quality and value for money. Taking a cue from the earlier session, he said that though customization is important, it should not change the brand’s language.
He said that a successful business model is not defined by a franchise or joint venture, it’s about the people and the customer. Therefore, marketing is important, but real luxury comes from consistency and product quality which guarantees success in the long run.
When the question was put up whether international brands needed to partner with Indians to market their brand, Devaunshi Mehta correctly said that Indian to Indian relationship is important, hence partnership is also important. Shubhranshu Pani pointed out that the trust between brand managers and real estate developers is still not there. He also said that luxury in India is slow and will take time to mature.
Both Rajiv Suri and Sonica Malhotra said that there are no fast returns in luxury. Brands have to stay in India for a long time and market themselves continuously before expecting ROI.
Malav Shroff said that 99.99% luxury consumers have new wealth. Thus luxury brands have to put a whole education process in place. Also, Indians are rational buyers as compared to Westerners who are passionate buyers. Therefore it’s very important to teach Indians about what you want them to buy.
Armando Branchini gave three stages of an emerging luxury market. It starts with Accessible Luxury, goes on to Aspirational Luxury and finally reaches Absolute Luxury. We think keeping these stages in mind and judging their brand penetration on these bases can help clear a lot of things.
India as a Luxury Tourism Hub
After a hearty lunch, the audience filed into the hall for more education and discussion. The topic of the session confused us a bit, but it basically focused on parameters to create Indian luxury brands in the products and services sector. The panelists also talked about connecting luxury with exotic Indian tourism, making India a manufacturing hub, improving infrastructure, increase in airport retail capacity and creating heritage shopping districts.
The keynote address was given by Stefano Canali, General Manager, Canali. The session moderator was Nandini Chopra, Executive Director, KPMG. Her slew of achievements, when read out, made the audience clap and cheer! Panelists included Nakul Anand (Chairman CII National Committee on Tourism and Divisional Chief Executive, ITC Ltd – Hotels Division), Ankur Bhatia (Executive Director, The Bird Group), Mira Gulati (Founder and Principal Designer, Mirari), Savitri Devi Singh (Business Head, DLF Retail) and Pradeep Panicker (Chief Commercial Officer, GMR).
Stefano Canali, after giving a short presentation on the brand, enumerated some post-recession changes in consumer demand. He said that consumers now demand high quality products priced properly, that is, value for money; timeless products, that is, long lasting and consistent with the brand’s DNA; trusted products (long known, known by word of mouth and through social networks); bearing a credible brand heritage; sold/explained by knowledgeable sales people; and showcased in a compelling store with an attractive ambience.
Canali also said that India needs basic and luxury infrastructure in place in order to make international brands invest more in India. Import duty reduction is also needed and much welcome.
The panel discussion started with a light presentation by Nakul Anand who tore through some quotes on what luxury means and how it is perceived. It definitely roused everyone from their lethargic state which is quite a common post-lunch phenomenon!
Some interesting case studies came through Mira Gulati and Savitri Devi Singh. Gulati started her own jewellery brand Mirari in India. The production and manufacturing of the jewellery is done in India and she has made the brand global to a certain extent. Armed with beautifully designed Indian heritage inspired jewellerey and singer Anoushka Shankar as the brand ambassador, Mirari is going places globally. She said that though India has the best of resources and human power, one thing that Indian-born luxury brands have to learn from international brands is presentation.
Savitri Devi Singh rued the lack of government support which prevents India from becoming a luxury tourism hub. She cited the example of DLF Emporio and told the astonished audience that they had to make the road in front of the mall themselves and generate their own electricity for the mall – something which the government should have given them.
Ankur Bhatia also supported the fact and said that the whole framework has to be there, including roads, infrastructure and malls, to portray India as a luxury tourism hub.
Role of Media
As the name says, the session delved into how media can be used to help in the growth of the luxury industry.
The keynote address was given by James Greenfield, CEO, Kenzo. The session moderator was Manvi Dhillon, Resident Editor, NDTV Ltd. Panelists included Colvyn Harris (CEO, JWT), Santosh Desai (MD and CEO, Future Brands), Mala Sekhri (COO, Lifestyle Group and Music Today), Anita Khatri (General Manager, Times of India) and Feroze Gujral (Fashion Consultant and Columnist, Vogue).
Appreciatively, James Greenfield was the only keynote speaker who did not give a presentation about his brand! As other speakers before, he also said that building awareness and educating consumers is the key to generating traffic. He enumerated three major brand enhancers:
1. Fashion shows and product presentations
2. Print and outdoor advertising
3. In-store events
He, however, also said that online medium is coming up as a big influencer too. Therefore, they have recently launched an online store; e-CRM is important; and blogs and social networking is important as well.
He raised two very important questions to the panel:
1. What innovations are needed to educate consumers about new luxury?
2. How to increase retail traffic?
Colvyn Harris instantly answered both the questions by saying that international brands have to first invest in India, stay here, understand the market and not back out – then only can the media be expected to help in the growth of luxury brands.
Santosh Desai said that brands need to connect themselves with some cultural signposts in India so that people recognize them. A case in point is taking Bollywood icon Shahrukh Khan as the brand ambassador for Tag Heuer. Indians now KNOW about the watch brand due to their association with the superstar.
Feroze Gujral, in turn, said that Internet is a very powerful medium and should not be avoided. She cited the example of Burberry streaming their London Fashion Week show live to Burberry stores across the world where the viewers could order the clothes straight off the ramp on the iPads which were provided to them.
Other panelists, however, were a little skeptic about the online medium. Harris categorically said that selling luxury brands online in India will take a long time to pick up since Indians still like to ‘see, touch and feel’ what they are buying, specially when it’s something so luxurious. But everyone was willing to agree that internet is a growing medium and one which cannot be avoided.
On this note, the sessions ended and the delegates walked around to network among peers. A beautifully organized fashion show with apparel by Ashima-Leena and jewellery by Mirari set the tone right for a cocktail party. Guests enjoyed the beautiful Indian collection by the designers as wine, champagne flutes and cocktails were passed around.
On the whole, it was a luxuriously appointed day which began with some serious work and ended with some cheerful camaraderie among luxury industry professionals. A new found enthusiasm to build and grow the industry together…
