mont blanc shop online Small is Bountiful
At a current value of $2.45 billion, the Indian luxury market is poised to double its value to $5.8 billion in the next five years, says the latest Confederation of Indian Industry AT Kearney Report on Indian Luxury. The growth, much like India’s larger story, will be propelled by smaller, scattered markets, the new pockets of wealth in Tier II cities. Industrialist Shivaji Mohite constructed the 1.2 km course for his son Dhruv in 2006. Built to international specifications it cost Rs 1.5 crore. In Guwahati, printing press baron Diganta Barua is constructing a Rs 5 crore indoor cricket ground so his 14 year old son can get a competitive edge in that other national obsession.
Wealth creation, without precisely shifting its city centre, has spiralled out to Tier II towns. This year’s World Wealth Report by Cap Gemini Merrill Lynch estimates the number of Indian high net worth individuals with liquid assets of over $1 million at 1,53,000. That’s almost double the 2008 count. India is perched at the 12th position globally in potential to purchase luxury. Yet India accounts for barely 1 per cent of the global luxury goods industry, compared to China’s 10 per cent share. For smaller cities, the obstacles to luxury spending have been access and availability, barriers that are now being breached.
Keeping pace are the luxury products that are increasingly targeted at the big fish in smaller ponds. Says Chadha, “India is in the starter money stage; where people tend to buy logos;
cars, watches, pens.” It is a standard progression for emerging markets. “In China, luxury brands entered in the ’90s and in India you can say that happened in 2003 (with the opening of the first Louis Vuitton store in Delhi), so we’re 10 to 12 years behind. And now, the luxury story in China is all Tier II.”
An unreleased study by management consultancy Technopak estimates that 30 per cent of the business for big city luxury retailers now comes from smaller towns. International luxury brands will still foray into India via Delhi or Mumbai, but they intend to claim their share of that substantial sector. Delhi’s Emporio mall, which gathers Tarun Tahiliani and Tod’s, Giorgio Armani and Manish Arora under one roof, is bringing their brands to the buyers. Dinaz Madhukar, vp DLF Emporio, reveals the ultra deluxe shopping destination is “toying with the idea of running chartered helicopters (to and from Chandigarh, Ludhiana and Jalandhar) with intimate invitations for select shoppers”. The ones without that instant name recognition need to peddle their premium wares a little differently.
The Hermes made in Paris sari is making headlines in India. It costs RS 4.5 lakh.
Priya Sachdev who owns and runs the multi brand fashion collective, Kitsch, plans to open stores in Ludhiana and Chandigarh this year. Kitsch retails labels such as Lanvin, Gaultier, Stella McCartney and Diane Von Furstenberg. “We’ll have to discover how adventurous customers are. In April last year,
Aurangabad placed an order for 150 Mercedes cars worth Rs 65 crore. The consortium of industrialists which bought them wanted to position Aurangabad as an economic powerhouse and if judged by media coverage, it succeeded.
Unlike China, where luxury brands have tapped into social nuances of esteem and class, the average wealthy Indian customer resists the equation and perhaps needs a cultural nod. “The market is still shallow,” says Neelesh Hundekari, principal of the luxury and lifestyle practice at AT Kearney. “Certain brands have acquired a regional prestige, but only jewellery is really made to order. Global brands are still not doing enough to customise for India, which is why there’s low penetration.”
That process has begun. The Hermes made in Paris sari is making headlines in India. Along with the Knot India minaudiere by Bottega Veneta, the Canali Nehru jacket, and Prada’s Made in India slippers, it’s at the vanguard of the new incursion.
Each Tier II city, of course, has its own set of aspirations, and specific socio cultural customisation will make the decisive difference in how a luxury brand performs. In Surat, where 92 percent of the world’s diamonds are cut and polished, locals are looking to add some shine to their cars. While Ludhiana likes to wear its wealth on its wrist, Visakhapatnam is still watchful with its conspicuous consumption. Jalandhar likes its luxury to come with logos that everyone can see. We spotlight eight cities emerging in their own right,
as consumers and purveyors of luxury.