What is luxury? It might seem
like a very obvious question, even bordering on the daft-side. But, just take a
moment and think. What does luxury mean to you? Expensive? Exorbitant? Luxury
comes from the word “luxe”, which means “dazzle”. So, technically, anything
that dazzles is luxury. The premium that a luxury product demands is because it
is able to dazzle you. Whether you call that dazzle “brand equity” or “razzle
dazzle” is completely your call.
Luxury retailing has gone beyond
trunck shows and the exclusive nooks of five-star hotels, the new host being
hybrid malls, which has a mix of luxury and non-luxury stores with customised
services. Small wonder, Kolkata’s first luxury mall Quest, has an anchor store
of Spencers. Developed by the RP-Sanjiv Goenka Group, the mall is going to be
the home of who's who of luxury brands: Breitling, Burberry, Canali, Emporio
Armani, Estee Lauder, Furla , Gucci, L'Occitane , Michael Kors, Omega, Paul
Smith and Rolex. Although the absence of Louis Vuitton, a brand Kolkatans love
to flaunt, is felt strongly, especially when it does not have any presence here.
Unlike New Delhi’s DLF Emporio,
which has exclusivity with luxury brands on its premises, Quest is more like the
hybrid category, more like Palladium in Mumbai. Therefore, customers who shop
at Lifestyle may also walk in and pick up a Burberry trenchcoat or a handbag,
all under one roof, and then, who knows, may also pick up wine and cheese from
Spencers.
RP-Sanjiv Goenka Group chairman Sanjiv Goenka said in a news report on
what made him take this “bold” step: “The desire to have an international,
top-quality facility in Calcutta, my birthplace. And a determination within me
that Calcutta is second to none.”
The city has big spenders, hands down. And they are
not subtle. They are mostly used to luxury shopping abroad or at least in Delhi
or Mumbai. It has become kind of a habit for them. Whether the city is ready
for a full-blown dedicated luxury shopping experience is only for time to tell.
Who drives luxury retail in India?
The luxury market in India, which stands
at $5.74 billion as per the latest estimate in a AT Kearney-CII report, 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.
“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 had told me. In jewellery, buys above Rs 10 lakh are considered luxury spending, he added.
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.
“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 had told me. In jewellery, buys above Rs 10 lakh are considered luxury spending, he added.
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.
However, the rupee millionaires
with incomes of Rs 10-30 lakh do not really spend on luxury. 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.
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.
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!
http://retail.economictimes.indiatimes.com/blog/A-Quest-for-luxury/1
http://retail.economictimes.indiatimes.com/blog/A-Quest-for-luxury/1
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