Monday, March 05, 2012

The Dear Departed

Laugh and the world laughs with you; weep and you weep alone. There are people who come to this world just to make people smile. God sends them to make us realise how to live life and exude happiness even during the saddest of times. The first time I met poet Joydev Basu (aptly named after the creator of Gita Govinda) was at the Coffee House in Kolkata, when I was in Class IV. My mother introduced me to Joydevkaku or JB (as I used to fondly call him). We became friends almost instantly. Yes, both of us were movie buffs and bibliophiles. We loved everything about movies and books — cutting across every genre and every language.
As years passed by, he became my friend, my philosopher and, more importantly, my confidante. He was the big brother (15 years older) I never had. I shared with him most of my troubles and took his advice on almost every issue — from girlfriend problems to academics. He was always there, ever ready to vanish all my troubles with his smile. Over the years, he gained fame as a poet and his books were doing pretty well in Kolkata. He was also writing scripts for a few television series. Soon JB became busy with his work and I had to leave Kolkata for my job. Initially, we used to write to each other, not email, but letters, once in a few months and then that stopped as well. But he was in touch with my parents and loved a special bhetki preparation that was my mother’s specialty.
Two years ago, I came to know from my mother about his personal troubles and his subsequent health problems. But if you are there with him, you can never sense any of his sadness or the troubles that he was going through. His sense of humour and smile acted as a shield keeping his tears hidden deep inside. JB was a poet, professor, philosopher and also very popular (both for his poetry and his looks). But, most importantly, he was my only confidante and adviser. He made everyone laugh but never shared his sorrow with anyone. He wept alone.

Three Idiots

Ten years ago, three friends were travelling on a train, on their way back to Kolkata from Delhi. Let’s call them – i1, i2 and i3. They had been to the capital for an entrance exam. While i1 and i2 were sure that they had cracked it, i3 was visibly tensed. But there was a twist. While i1 and i2 were also sure that leaving Kolkata was not an option, i3 was ready to go anywhere. For i3, it was only his career that mattered and so he was a free man, only engaged to his career.
Can’t blame i1 and i2 if they can’t stop talking about their girls and how they are missing them, but for i3, being the odd man out, the discussion became unbearable after a point.
“Would you guys please stop. Here we are at such a crucial juncture of our careers and look what you guys are talking about? Are you guys insane?” i2 turned to i3 and said, “What’s wrong with you. We have a life. We have people who love us and are waiting for us back there in Kolkata. As far the DSE exam is concerned, we have cracked it. But none of us will be taking the final offer; we can’t afford to leave Kolkata for two years. So, what’s the point?” i3 replied, “Both of you are crazy, you guys are wasting such a career move just for two chicks. No one knows whether you’ll even end up getting married to them,” i3 said.
i2 suddenly said, “Let’s see who is better off after 10 years: You (i3)— with your loveless and ambitious life, or us, with our girls. And also see if we are still with them even after 10 years?” The three of them agreed to connect after 10 years with their individual status reports.
Cut to today, i3 suddenly, after a decade, sends a LinkedIn request to i1, he is a now a retail banker in a reputed bank in Africa, still single. i1 didn’t end up with his ‘girl’ but is happy with someone else and has a decent career. i2 died in an accident eight years ago.
Only idiots try to predict the future.

Luxury Decoded

So you think it’s the ultra-rich and the neo-moguls who splurge on the luxuries of life. Think again. The luxury market in India, which stood at $5.74 billion in 2010, is primarily driven by small & medium business owners and traders with revenues above Rs 50 crore. This newly rich class constitutes over 50 per cent of the buyers of luxury. Their wealth is their passport to the elite segment of society. And indulging in luxury buying is their way of flashing their entry into the upper crust. Despite all this, the business-owner segment is still under-leveraged. Unsurprisingly, their children are the bigger spenders, having been educated abroad and hence familiar with brands and the luxury way of living.

Newly acquired wealth or not, the spending pattern is not that new. Traditional choices still dominate this segment of buyers, who primarily spend on real estate and jewellery. Although the real estate segment saw negligible growth in 2010 over the previous year, jewellery buying grew 30 per cent during this period, taking the market size to $950 million in 2010.

“The owners of medium-sized enterprises, with a personal wealth between Rs 1 crore and 5 crore, are typically traditional in luxury buying, be it real estate or jewellery. They will not go for the brand, but go for value for money. In real estate, it means the biggest house in the most posh locality. In jewellery, it is unlikely to be a Cartier or a Piaget or a Harry Winston, but the biggest rock or the heaviest necklace, and yes, 22 carats,” Neelesh Hundekari, principal and head, luxury retail practice, India for AT Kearney told Financial Chronicle. In jewellery, buys above Rs 10 lakh are considered luxury spending, he added.

The $1.4 billion real estate segment, having traders, businessmen and industrialists as the dominant buyers, was estimated to grow at 12 per cent but saw negligible growth in 2010 over the previous year.

Another segment that witnessed negligible growth was the $2 million yacht-buying market, which was estimated to grow at 15 per cent with the buyers being primarily industrialists.

The category that has seen the strongest growth in 2010 over the previous year is fine dining, the key drivers being new brands entering the market and footprint expansion in this category of spending. Although this $378 million segment was expected to grow only 10 per cent, it grew by 40 per cent during 2010, according to the 2011 CII-AT Kearney report on luxury.

This is a segment dominated more by another category of buyers being increasingly focused upon by luxury brands: the Facebook generation. Theirs is a different story altogether, compared with the traders and business owners. They are aware of the luxury brands, even though they don’t always have the wherewithal to splurge on big-ticket luxury products. This segment, unlike in China, is not dominated by cash-rich investment bankers fresh out of B-schools who can always go for the big luxury buy. These rupee millionaires with incomes of Rs 10-30 lakh do not really spend on luxury, according to the 2010 CII-AT Kearney report. Though there are plenty of young entrepreneurs and cash rich MBAs, but young professionals who are aware of brands go for mostly sub-Rs 1 lakh buys. So, although this segment is growing fast, it is yet to take on the business- owner class in terms of growth in buying.

However, luxury companies are trying to ‘catch them young’. Given the fast growing and upwardly mobile nature of the youth segment in India today, this seems to be a logical move. While the youth segment does not constitute a significant percentage of luxury consumption yet, by hooking these consumers in at an early stage, luxury players are looking to reap benefits in the long run.

Besides fine dining, the other categories that have seen strong growth are — electronics (35 per cent), apparel and accessories (30 per cent), watches (29 per cent) and wines and spirits (25 per cent). The $216 million electronics segment, again driven by the Facebook generation, also surpassed its estimated growth of 22 per cent.

In the $267 million apparel and accessories segment, couture constitutes the top tier of the buying pyramid, according to AT Kearney research and analysis. However, entry-level accessories such as belts, wallets, scarves and eyewear show a high concentration of buys that constitute the bottom of the buying pyramid and essentially are the focus of ‘badge-conscious’ masstige consumers — the masses that are looking to enhance their prestige. Luxury goods companies develop products that reinforce the masstige to drive volumes.

The luxury market in India has witnessed encouraging trends such as emergence of new catchments, greater involvement of private equity players and policy decisions that encourage luxury brands abroad to enter the country. However, infrastructure bottlenecks and regulatory hurdles still put a question mark on the future of this sector.

The increasing influence and penetration of digital and social media has definitely been a bonus, making it possible for companies to connect to many of the once hard-to-reach Indian consumers. There is a visible change in the mindset of consumers as they are accepting and adopting global trends much faster than anticipated.

Recent investments by private equity funds have helped reinforce belief in the sustainability of this sector. For instance, Franklin Templeton invested Rs 60 crore in Kimaya Fashions in July. Kimaya is a Mumbai-based luxury fashion house focusing on ethnic women’s wear and is promoted by Pradeep Hirani and Neha Hirani.

The government’s decision to allow 100 per cent FDI in single-brand retail is a big boost for foreign luxury brands. However, the government’s decision to put on hold 51 per cent FDI in multi-brand retail is a dampener. Similarly, there are other challenges that the luxury market in India faces, including infrastructure challenges and regulatory constraints which are not likely to be resolved easily in the near future.

Notwithstanding the challenges, the reach of this sector has gone beyond New Delhi, Mumbai and Bangalore to include Chennai, Hyderabad and Pune. North Mumbai and Gurgaon have also emerged as two distinct catchments, as the report says.

According to AT Kearney research, the luxury market is likely to grow at over 20 per cent yearly to $8.22 billion in 2012 and $14.72 billion in 2015, and given the consistency of 20 per cent growth in this market, it seems a realistic target.

Some of the critical factors for success in this market include exploring formats that enable players to attract footfalls, getting the pricing right to encourage Indians to purchase locally and bringing in iconic brands, as Indians still buy luxury products for their brand value. In the end, it’s all about making a statement!