Introduction
LUXURY is no stranger to India. The maharajas and princes have led a life of opulence. But the only way to be associated with it was to be lucky enough to have it in one’s heritage. Luxury then was associated with hunting, polo and other activities of the rich. It was an unwritten rule that the “Aspires” cannot climb up to the “Globals” segment. The Princes operated in a different league altogether. The era of the self-made millionaire was yet to arrive. An achiever of the 1970s could only get by with a good foam mattress — no Omega, Rolex or BMWs.
It was in 1980s that Luxury Brands saw themselves into upper class homes through small things and symbols also through “aunties and uncles” having brought a gift from their first trip abroad. The concept of luxury as a reward for achievement gained acceptance, though royalty and the aristocracy continued to remain the benchmark of the elite.
The real change came in the 1990s when more people started making more money. What contributed to this shift? India opened up to the world. The liberalization process brought more than high economic growth rates. It showed the people what was possible. In the process, it has altered mindsets. The IT revolution, and the consequent demand for Indian brainpower, has created a whole new breed of wealthy global Indians. At the other end, an increasingly open economy has created new business opportunities, which has resulted in a slew of new, extremely successful first generation businessmen. They are millionaires. They spend. They sport Vertu mobiles. But they may not even be comfortable with English. All of a sudden, wealth is no longer the preserve of the elite. Mr Keegan Paes, the store manager of JBL, an US based home and car audio provider company, says that they have Indian customers who are ready to buy car audio systems that are in the range of five lakhs rupees.
Finally, one need not go all the way to Paris when the brands are available in places such as The Taj or The Trident, one need not use smuggled stuff or wait for their “not so favorite uncle and aunty” to go abroad and get their favorite brands.
Luxury – Redefined.
Although a brand may be perceived as luxurious, consumers and researchers have recognised that not all luxury brands are deemed equally luxurious. 'Luxury is particularly slippery to define. A strong element of human involvement, very limited supply and the recognition of value by others are key components ... So between premium and luxury, in marketing terms is a Cadillac and a Rolls-Royce may be both perceived as luxury cars, but one compared with the other would be considered more luxurious. In this case, the Rolls-Royce could be assumed to be more luxurious than the Cadillac. The perception of what is and is not a luxury brand, as well as the amount of luxury contained in a brand, may be dependent on the context and the people concerned.
To the point now “what is luxury?” ---Each to its Own…..Really? Let’s think about it again? If it was that, then one would not be bothered that “I can’t wear a Swatch since my subordinate has it--- I need a Cartier now”. For example, Raymonds has launched the Chairman collection specially to outfit the cream of the crop. A typical fabric in this collection costs anywhere between Rs 50,000 to Rs 1,50,000 per meter.
In marketing parlance luxury is nothing but “the art of pampering a consumer’s senses and ego overtly”, the latter part becomes very important in developing countries like India where the new rich want to announce their arrival and the new rich want to separate themselves from the new. A luxury brand is all about image; the product does not matter so much. It is about the feel good factor, celebrating one’s success and aspiring to reach out for more…..Harry Winston a US based jewellery brand is soon planning to launch it’s outlet in India. On display will be jewellery and watches. One of the watches that will be on display costs around rupees fifty seven lakhs.
Moreover luxury is no longer limited to apparels, accessories, automobiles and the likes…but has also extended to categories such as Food and Beverages. Like, a brand of salt White Rose is available for rupees 2400 per kg and in Metro AG sells branded Mushroom Truffle are available for Rs. 1.5 Lakhs per kg.!!!! In the beverage segment a vintage wine called a bend in the river is available at Rs. 30 lakhs per bottle!
Dimensions of LUXURY brands
These are the five key luxury dimensions that must be established or monitored for creating a lasting luxury brand. It is expected that different sets of consumers would have different perceptions of the level of luxury for the same brands, and that the overall luxury level of a brand would integrate these perceptions from different perspectives.
Perceived conspicuousness: The consumption of luxury brands may be important to individuals in search of social representation and position. This means that social status associated with a brand is an important factor in conspicuous consumption. Furthermore, consumers who perceive price as a proxy for quality often perceive high price as an indicator of luxury.73 Hence the measure of conspicuousness includes items such as 'extremely expensive' or 'for wealthy' that tap into perceptions of price and social status associated with the brand.
Perceived uniqueness: Scarcity or limited supply of products enhances consumers' preferences for a brand. when Consumers are searching for something that is difficult to obtain (for example, a Louis Vuitton handbag). Uniqueness is sought to enhance one's self-image and social image by adhering to one's personal taste, or breaking the rules, or avoiding similar consumption. The uniqueness dimension is based on the assumptions that perceptions of exclusivity arid rarity enhance the desire for a brand, and that this desirability is increased when the brand is also perceived as expensive. A luxury brand that would be difficult to find because of its uniqueness (such as a limited edition), and which would be expensive compared to normal standards (for example, a Jaguar car), would be even more valuable.
Perceived extended self : Consumers may use luxury brands to classify or distinguish themselves in relation to relevant others, but they may also try to integrate the symbolic meaning into their own identity. Social referencing and the construction of one's self appears to be determinant in luxury consumption. The possession of luxury brands may be more appreciated by consumers who are highly materialistic and susceptible to interpersonal influence.
Perceived hedonism : Luxury-seekers are considered hedonic consumers when they are looking for personal rewards and fulfilment acquired through the purchase and consumption of products evaluated for their subjective emotional benefits and intrinsically pleasing properties, rather than functional benefits.
Perceived quality: It is expected that luxury brands offer superior product qualities and performance compared with non-luxury brands. Perfectionist consumers may perceive more value from a luxury brand because they may assume that it will have a greater brand quality and reassurance. Consumers influenced by the quality dimension of luxury may perceive that luxury brands have superior characteristics compared with nonluxury brands. These characteristics may include, but are not restricted to: technology, engineering, design, sophistication and craftsmanship. For instance, speed and acceleration for a luxury car or precision for a luxury watch are elements reflecting the perceptions of quality
Challenges for Luxury Brands
The ideal location--- Not yet arrived!!!: Though the luxury brands are keen and have every reason to enter India but the main question faced is “where they should be located?” Brands such as Jimmy Choo, Chanel and Christian Dior have found their place in 5 star luxury hotels like The Taj Mahal,Hilton Hotels in Mumbai. However, hotels are hardly the ideal space to shop for luxury brands as they lack the space, variety and atmosphere that a luxury shopping experience warrants. The concept of luxury high streets and luxury malls is yet to catch on in India.
We are at lesser price, in more variety abroad!!: One of the major roadblocks for these brands is, they are available at a much lesser price and also in greater variety abroad. The prices are much less abroad as they carry import duty, currently at 35% and in case of luxury watches it is as high as 50%. Italian fashion house Ermenegildo Zegna says India's luxury market is at least 10-15 years behind China's, and primarily due to a much higher duty structure. Joseph Wan, Group Chief Executive for Harvey Nichols, the London-based retailer, says India's recent economic growth and indications that New Delhi is prepared to liberalize its markets are encouraging, but adds that prime real estate in Indian cities is too expensive and that tariffs are prohibitively steep. "Harvey Nichols caters to the top 3% of the population, and that 3% are very well-traveled," says Wan. "If my Dolce & Gabbana in India has to be more expensive because of import duties, how can I do any business? You just can't. Also India’s existing FDI policy which limits the foreign ownership in ventures has discouraged a number of luxury brands from establishing a significant presence in the country.
The Long wait..: Another challenge for a brand in this category is to sustain its exclusivity & pricing in the long run. And that is the reason why we do not have our own genuine high end brand. Often, brands start premium, but quickly trickle down to cater the junta. The temptation to give in to lower prices is way too high. Patience & commitment are two essential factors for a brand to create its own niche market.
The Indian Market is “different”: Although, the craze for luxury brands is catching up in India & China, the luxury market in India is driven by a different set of rules. Players in this field are now feeling the need to modify & customise their products before catering to the Indian elites. For instance, both Audi and Sweden based Volvo have made their cars tougher and more suitable for the Indian roads. “Veze” from Versace has plans to roll out something exclusive for the Indian market. Also, Louis Vuitton,has not launched its ready to wear yet in India, as the CEO, Yves Carcelle feels that Indian women still prefer wearing saris to parties.
Forces behind the Luxury Brands:
Emerging Retail Avenues: New retailing opportunities are also quietly revolutionizing the format of luxury retailing. Luxury boutiques were traditionally confined to the secure but often inaccessible surroundings of exclusive hotels. The shopping mall boom is set to democratize luxury consumption. With pioneering projects such as the opening of the Delhi luxury-goods mall, Emporio, and UB City, Bangalore, shoppers will be overwhelmed by over 70 international high-end brands, but also immersed in a pleasurable and memorable shopping experience.
Media Exposure:The significant increase of media exposure is helping to instill and forge positive brand images. Zenith Optimedia reports that advertising expenditures in India increased from US$1.1 billion in 1996 to US$4.7 billion in 2006. Forecasts suggest that advertising spending will exceed $7billion in 2009. Increased product knowledge and brand awareness are translating into greater consumer confidence – an important catalyst for luxury consumption in a fast-emerging market.
Increasing no. of “Indian Globals”
McKinsey forecasts that the Indian middle class (defined as those with disposable incomes from 200 thousand to 1 million rupees a year) will increase from approximately
5% to 41% of the population and will become the world’s fifth largest consumer market by 2025. Indeed, the desire for international brands is also driving consumption abroad. According to a study by Visit London, Indian visitors to London spent more than Japanese tourists.
Merrill Lynch and CapGemini’s World Wealth Report 2008 says India, China and Brazil had the highest high net-worth individual (HNI) growth at the country level. Not just that, in 2007, India actually led the world in HNI population growth at 22.7 per cent, exceeding gains of 20.5 per cent in 2006.
Market regulation : Although high import duties on luxury goods continue to prevail, India’s policy of liberalization and deregulation has improved its image as an attractive destination for foreign investment. Foreign companies that sell products under a single brand, such as Ermenegildo Zegna, have recently been allowed to acquire up to 51% in Indian joint ventures. The introduction of market reforms is winning over the long-term commitment of foreign investors.
Looking beyond the obvious : Luxury brands in India need to look beyond South Delhi and South Mumbai. There are about 16 lakh homes in India that annually spend atleast Rs 4 lakh on premium and luxury products and services. Alongside, there is another emerging India, of 400 million upper middle class, with rising disposable incomes and big aspirations. But are luxury brands missing the opportunity? The answer may be no as a luxury brand like Swaroski is planning to have its boutiques in cities like Surat and Ahmedabad to tap this market.
With a whole new lot there waiting to be tapped, experts believe that dynamics of Indian luxury market are set to change. Where it may be early for the luxury brands to set up retail space in small rich towns, direct mailers and relationship building might be the need of the hour. In India the expatriate population is on the rise thus, giving one more reason for the luxury brands to come and stay here.
Conclusion: Luxury is arrived, to stay, to grow and to flourish……though there lay ahead no. of challenges for luxury brands in India but they are definitely the lambi race ka ghoda as India is considered to be the land of youth, of growing millionaires and a land which is been eyed by the Global World as the Super Power by 2032 according to the BRIC report.
Allure the new rich, delight the old rich, pamper them both and have a long , long stay!!!!!!
References
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