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Since the last few years, various incidents like demonetization, cash related purchase restrictions followed by GST have acted as a great deterrent for the growth of Indian luxury market. However, people had gradually digested these effects and Indian luxury market continues to experience a high growth rate. The development of new markets beyond metros in tier 2/3 cities and growth of new affluent class of consumers have been the key reasons for the expansion of this market in India. But, with the outbreak of Covid-19, the future of Indian luxury market has once again become questionable.

According to the recent report by Bain & Company, global luxury sales could drop up to 35% by the end of 2020. With the key luxury markets across the globe now affected, the pandemic poses serious threat to the sector. Some nations like China are predicted to see the rapid rebound, while others nations like Europe and the US could experience an extended impact. Already, there are signs of recovery in China. For brands ranging from Hermes to Louis Vuitton, store traffic is inching back and is projected to accelerate in the subsequent months. Similarly, with the prompt action taken by Modi government to combat the coronavirus epidemic, it is most likely that India will see strong recovery and emerge as a more powerful nation in the coming months.

Presently, with all luxury stores shut down, fashion shows postponed, art and watch events cancelled, supply chain disrupted and low consumer sentiments, it will certainly take a while for Indian luxury industry to bounce back. However, post Covid-19, success of luxury brands in India is mainly dependent on the following 5 factors:

Go Phygital: Luxury brands must break down the internal silos and seamlessly merge offline and online channels. They should increase the use of digital platform not just for transactional purposes but also to engage, interact and provide bespoke experience to the consumers. To fight this crisis, luxury retailers must invest more in online sales and marketing and leverage the full potential of omnichannel marketing strategy. They may consider to moving their promotional budget from outdoor to online.

Be Purposeful: Today, brands need to be purposeful to remain relevant. From Louis Vuitton to Loreal, all luxury retailers have altered their production units from making perfumes to sanitizers and designer wear to medical gowns and masks. Consumers will embrace the brands which show sense of responsibility and empathy in the hour of crisis. Therefore, it is very important for the luxury retailers to step forward and contribute for the well-being of the society.

Remain in contact: It is important for the luxury retailers to remain at the top of the mind of their high-end consumers. They may use tactics like virtual shopping session, online make-up classes, trunk shows or fitness sessions to engage and interact with the consumers. Luxury brand managers can provide personalized attention to the top clients by one to one engagement and conversation with them. They should develop meaningful content that foster a sense of community building during this epidemic.

Introduce entry level brands: At this point of time, when employment and financial markets are under pressure resulting in low consumer confidence and willingness to spend.  Therefore, brands must use the tactic of introducing ‘bridge to luxury’ brands to make luxury available at accessible prices for young Indian buyers. Luxury retailers should see opportunity in this challenging scenario to entice new consumers by coming up with products with lower price points.

Go Green: Luxury brands must re-think about the planet and people while making the products. The outbreak of the virus has resulted in drastic changes in the behavior of consumers. They have become more concerned about the social and environmental issues. Therefore, fashion and luxury brands must relook at their value chain, from sourcing to manufacturing and from packaging to product disposal. Serious attempts should be made move from traditional linear economic model (take-make-dispose) to circular economy by embedding the 3R principle (Reduce, Reuse and Recycle) into production and consumption process.

Although the future is unforeseen and difficult to predict. Luxury brands must remain proactive and reinvent themselves to survive in this tough situation.

(This article has also been published in ET Retail on 31st March, 2020)

Luxury consumer behavior is transforming significantly due to changing consumer’s demographics, lifestyle, values and interests. Over the years, the meaning and definition of luxury has evolved. Today, luxury is no longer restricted to ‘elite few’ rather more and more consumers are trading up to purchase these products. New-age buyers save every month to buy new Mercedes Benz or new Gucci bag. This market segment spend lavishly when they have money, without much consideration about their debt levels. Marketers cannot ignore them as they provide better lifetime value and loyalties.

Luxury market which has traditionally relied on a sense of ostentatiousness and splendor, need to align itself with the values of new generational cohort. There has been shift in luxury consumption from conspicuousness to personal fulfilment. For millennials luxury is more about experience and authenticity rather than just flashy brand logos. Brands should create marketing strategies by keeping in mind, buying patterns, media habits and psychological motivators of today’s luxury consumers. To remain relevant, luxury companies should reinvent themselves. They need to clearly define what they stand for and what their core values are? They should ask themselves, are the 4 Ps of marketing still relevant? Or it’s about the 4 Es: Environment, Experience, Emotion and Ecommerce.

Environment: Luxury warrants a psychological cost categorized as “guilty pleasures” which might lead to negative emotions after the purchase. Therefore, growing number of people are buying sustainable luxury products to experience “guilt-free” enjoyment.  As per a Neilson survey performed with 30,000 consumers in 60 countries across the globe, 60% of global consumers were willing to pay extra for sustainable products. This new perspective and consciousness toward others will shape the future values of luxury industry. Luxury brands along with consumers can no longer overlook sustainability. Brands are expected to regard environmental sustainability as a core pillar of their strategies. Brands like Chanel, Louis Vuitton and Stella McCartney, among many others, have taken pledge to go cruelty free in all future collections. They are continuously reviewing their value chain to make it transparent and are shifting to plant based alternatives.

Remember: Young consumers look for luxury brands that don’t just elevate status but really touch their souls and help them to create connection with the wider world.

Experience: Luxury has always been about the best quality, the finest materials and greatest savoir-faire. However, there has been paradigm shift in the expectations of the new consumers. They want to feel special, wish to get personalized treatment and desire to obtain immersive experience during their complete shopping journey. The entire experience of purchasing luxury goods is as important as the product itself. Luxury brands need to continuously create new experiences and wow moments for their customers. This is an amazing way to build a story in consumer’s mind- a story that you want customers to take home with them and cherish forever. For instance, Tiffany is opening its first café ‘Tiffany Blue Box’ in London to provide a way to its customers to immerse themselves in the world of Tiffany.

Remember: You must focus on delivering customer experience and not just products. Make your consumers part of your story, clearly communicate the value proposition to them and they will become yours forever.

Emotion: Neuroscience reveals that decision to buy a luxury item is overwhelmingly emotional. For today’s consumers it is not enough that a luxury product is well-crafted with great history and heritage. They cherish products which are authentic with unique and intangible quality of truth. Each promotional campaign must express truth which breathes life into the brand, conjuring perceptions of genuineness and endurance.  New generation value the opportunity to interact with the brand and become part of the brand. Through evoking emotions of pride and awe, luxury brands can build deeper connect with their consumers. Brands must think genuinely about what their clients actually care for and go an extra mile to make them live it. The ability to engage, empower and innovate is a crucial factor for becoming successful luxury brand. Gucci has launched a call center in Florence to give consumers a direct seamless connection to the Gucci community throughout the world anywhere and anytime. It enables consumers to interact with call-center assistants over phone, email or live chat and build personal relationships with assistants, similar to brick and mortar world.

Remember: You must build emotional relationship with your clients both offline and online to win them.

Ecommerce: Being a high involvement product, in-store shopping has been the way to shop for luxury brands. These high-end brands have been really slow to embrace ecommerce as a distribution channel. However, nearly 80 percent of luxury sales today are ‘digitally influenced’. Consumers hit one or more digital touch points in their luxury shopping journeys. Online luxury sales is projected to reach $70 billion globally by 2025. As per recent Euromonitor International Report, luxury goods sales are growing nearly three times faster online than in physical retail. Therefore, traditional luxury brands cannot ignore digital platform today. These brand are now trying to catch up with the changing buying patterns of the affluent consumers. Brands from Burberry to Louis Vuitton, all are making efforts to provide a consistent brand experience both in-store and online. The major challenge for all these brands is to maintain the perceived cache of luxury in the digital world.

Remember: You cannot afford to work in silos today. The combination of offline and online is the way forward. Today, the rule book for what it means to be a luxury brand that is loved by its customers has profoundly changed. It’s no more just about making the finest product. It’s also not just about the brand repute that has been built over years. In my opinion it is about really aligning with a sense of deeply held values to create an authentic brand that connect with consumers.

(This article has been published in indianretailer.com on February 4 2020)

Luxury retail is experiencing a paradigm shift. The traditional ways of doing retail are no more effective and requires a radical makeover. Mobile commerce is blooming worldwide as growing number of consumers are using their smartphones to research, compare, purchase and return products. Does this mean brick and mortar stores are becoming passé? Absolutely true, many iconic retailers like Nordstorm, Lord & Taylor, Victoria secret, Barneys, to name a few, are closing their retail stores. To remain relevant, these stores are trying to reinvent themselves by going digital.  But, simply moving sales online will not be enough for their survival. Retailers need to device innovative ways to make their stores meaningful for the new-age luxury buyers. In tandem, digital players such as Amazon, Rent the Runway and Warby Parker are opening physical stores, as a way to augment the online experience. What’s leading to these changes? Customers urge for seamless, bespoke shopping experience through 360 degree access to retail across all touch points is resulting in luxury retail disruption.

Let’s look at 6 major trends reshaping the luxury retail environment.

Phygital Retail: In future, there is need to blur the line between physical and digital retail. As per Juniper Research, fashion brands’ retail spend on AI is predicted to rise from $2billion in 2018 to $7.3 billion by 2022. Software developer SAP is working with Harrods to develop technology that provides customers with personalized recommendations from the in-store screens based on what they are wearing. Omnichannel brands are using digital behavior to inform in-store assortment. Nike store in Los Angeles furnished the store with Nike Cortez sneakers after knowing through digital commerce data that its local customers enjoy running.

Note: Data-driven technology with help luxury retailers to design appropriate in-store strategies.

Experiential Stores: In coming times, luxury retailing will be driven by experience. Recently opened flagship store of Nordstorm in New York is trying to captivate time-starved buyers by providing dedicated service stations for easy returns/ exchanges, etc. The store is providing a perfect blend of technology, innovation and a truly luxury experience. Store associates are well-trained and empowered to augment customers’ experience. Similarly, Sephora is providing free beauty workshops to not only attract customers but also to provide them with something more than just a product to walk away with.

Note: Luxury retailers need to have celebration every now and then in the store so that people will have a reason to talk and step into the store to discover something different every time they visit.

Care is the new Commerce: Organizations have to adopt ‘care is the new commerce’ mindset. They need to understand each step that customer goes through in their journey while making buying decision.  This will help in knowing customers’ problems better and providing them personalized solutions (services) by leveraging analytics and artificial intelligence. Recently, Cartier has initiated a digital customer care system, ‘Cartier Care’ which is designed to build relationship with clients. It provides clients access to comprehensive suite of watch workshop services like complementary battery changes, brightening and engraving, full technical check, etc. It aims to permit customers to sell their timepieces back to the company and acquire creations from latest collections.

Note: Today, luxury retailers need to go an extra mile to serve their clients.

Zero-inventory Stores: There are many luxury retail brands that focus on ecommerce business model. They can benefit from having physical presence. Various researchers have proposed a novel idea, known as zero-inventory stores (ZIS) which will make physical stores as a platform where shoppers can touch, see and experience the items while orders can be placed online. Less inventory would require smaller store format which would mean huge savings on rental costs. Such stores will enable to gain the best of both physical and digital world. Research suggests this strategy is not only cost effective for retailers but has supercharging impact on digitally native customers.  As ZIS provides millennials with an opportunity to experience the product, it would generate more demand and less returns. JLL, the commercial real estate company, predicts more than 800 new stores will open in next five 5 years by top 100 digital players. Will it have any implications on traditional luxury retailers? In my view, this will have lethal impact on age-old retailers, who may have to find alternatives to survive in this complex and challenging environment.

Note: Experience-driven ZIS will help luxury retailers to engage, inform and provide better service to millennials while leveraging online fulfillment.

Luxury brands partnering with resale/ rental sites: Few years back, high-end brands could never have thought to make collaborations with closet-sharing/ pre-owned apps. However, as luxury consumption patterns of consumers are undergoing drastic changes, brands are exploring new ways such as these to generate traffic into their dying stores, attract millennial clientele and boost sales. Also, because of circular nature of the partnership, it is a way to boost the corporate social image of luxury brands. Lately, Burberry has announced an official partnership with pre-owned luxury site The RealReal. Customers who purchased consigned Burberry items through The RealReal are provided with a unique shopping experience at Burberry stores. Similarly, Rent the Runway and Neiman Marcus teamed up to redefine the way consumers shop.

Note: Luxury retailers have to explore new business partnership opportunities to draw millennials into their stores.

POP-IN / POP-UP shop: Physical retailers like Nordstorm created a POP-IN shop with EverLane, a brand known for its transparency approach, to tap today’s discerning, eco-conscious shoppers. Similarly, many luxury brands like Chanel, Louis Vuitton, etc. are opening pop-up stores to test small before opening a full-fledged store. It helps brands to display their new collections and engage directly with customers. Recently, the Hermes Silk Mix pop-up was held in Munich. The pop-up prioritized on enticing young consumers who feel estranged by flagship stores; for whom sense of community holds great significance.

Note: Luxury retailers have to come up with innovative store formats to excite discerning, new consumers.

Today, luxury retail environment is more challenging than ever. Emergence of collaborative economy, growth of social media, advent of AI and VR and changing consumer behavior has made it hard for traditional luxury retailers to survive. The only solution left with them is to adapt and accept innovative new business models to remain relevant in the future.

(This article has also been published in indiaretailing.com on 13 February 2020)

India is one of the fastest growing luxury markets in the world. The size of Indian luxury market is expected to grow from the current $30 billion to more than $200 billion in 2030. Over the next decade, Indian luxury market is well poised to see positive growth through the economic development, well- being of its people, greater connectedness and policy reforms. It will offer plethora of opportunities for luxury companies to serve the young, affluent, connected and confident Indian consumers.
Here are the 6 major trends for Indian luxury market over the next decade that can help luxury companies to envision the future Indian market.
1. Millennials will be key luxury driver: India is one of the youngest populations in the world and it will continue to remain till 2030 with average age of 31 as opposed to its Western (40 in the USA) and Eastern (42 in China) counterparts. India will add more breadwinners to the world than any other nation. This population will be reared in more confident and open India and thus, will aspire to live a better life and splurge money on discretionary items, unlike their previous generational cohorts. Looking ahead, this favorable demographics will drive strong luxury consumption growth.
Note: This generation will want luxury to be more meaningful and reflect their individuality and values rather than just being a symbol of status.

2. Rise of Gen Z: By 2030, India is estimated to have around 370 million Gen Z consumers between the ages 10-25. For them, digital will be the ‘new norm’. They will embrace tech-driven consumption models. They will have a distinct set of values and beliefs as compared to Gen Y. This segment will redefine the rules of the luxury market. Luxury companies need to pay close attention to this cohort as they will be the influencers for future. Gen Z will choose brands that are ethical, socially responsible and transparent. They will look for more brand interaction and will have greater influence of social media than traditional marketing channels while making purchase decisions.
Note: Luxury companies should work towards development of technologies such as IOT, AI and VR to be able to provide more opportunities to new-age buyers for brand engagement.

3. Growing middle class: It is predicted that middle-income households will grow from 158 million in 2018 to 300 million by 2030 (World Economic Forum, 2018). Upper middle-income households will drive 47% of total consumption as opposed to the current 30%. Over the next decade, 80% of incremental spend will be driven by middle-income consumers. These consumers will particularly climb up the ladder and demand for better products and services. Therefore, luxury companies should offer huge variety of ‘masstige’ brands in categories such as apparel, accessories, watches, handbags and personal care products. Also, spending on entertainment, health and fitness, travel and dining out will substantially increase which will provide immense opportunities for global high-end players to penetrate in these segments in India. For instance, a recent research by Bain PRICE estimated that dining out could well be a $400 billion opportunity in 2030.
Note: Luxury marketers cannot ignore middle-class consumers as they will be the growth engine of Indian luxury market

4. A more connected India: In India, internet users are expected to increase from the current 627 million to around 1.1 billion by 2030, as per the recent report by World Economic Forum. It will produce more informed consumers who will appreciate brands to be more transparent. Democratization of internet access will provide huge opportunity for luxury brands to reach consumers in interiors of India which otherwise would have been a great challenge for luxury brands to tap such a dispersed and fragmented Indian market.
Note: In future, e-commerce will play a major role in bringing luxury in the forefront.

5. Luxury going to smaller towns: As per recent report by World Economic Forum, India’s top 40 cities will constitute of $1.5 trillion market by 2030. With the increase in purchasing power, urbanization, brand awareness, brand consciousness, social media, easy access and aspirations, Indian consumers residing in large as well as small towns will be willing to spend more on luxury items. There will be tremendous change in consumers’ outlook and purchasing patterns. From high-end luxury automobiles, upscale restaurants to affluent lifestyle brands, there will be ample demand coming from different segments across India.
Note: Luxury companies looking for growth will require to reach a highly spread continuum of large and small towns.

6. Tech-led Business Models: New business models driven by technology such as rental services, subscription models, etc. will be future business models in India. As per a report by PricewaterhouseCoopers, the rental market will reach $335 billion by 2025 globally and Indian share is estimated to be around $35billion. Young consumers believe in ‘usership’ than ‘ownership’. They seek for experience, convenience and variety. Therefore, more and more such users will favor sharing economy. Startups like The Clothing Rental, Flyrobe, The Stylease, Rent it Bae, etc. see huge growth potential across India for such models in future.
Note: With evolving consumer attitudes and high internet penetration, luxury consumption on sharing basis will be next big thing in the Indian market across categories including watches, apparel, bags and automobiles, to name a few.

As per Euromonitor Report, 77% of India’s populace will include millennials and Gen Z in 2030. These young, affluent, tech-savvy and buoyant consumers will pave the way for further innovation in products, services and business models in luxury realm.

(This article has also been published in indiaretailing.com on 25 October 2019)

In today’s competitive world, undoubtedly, consumer is the king and companies need to exceed consumer expectations to create loyal customer base. Technology driven global leaders such as Apple and Amazon have raised the bar of consumer purchase experience by providing excellent customer service, convenience, vast variety, on-time deliveries, free returns and what not. Luxury industry is no exception to this phenomenon and increasing consumer expectations from luxury brands makes it imperative for them to understand consumer psychology to thrive in the dynamic luxury retail environment.

For luxury brands and retailers, understanding the luxury consumer journey is most important to be able to deliver best to these well-versed, discerning consumers. It is about knowing what exactly your consumer wants and being able to provide that and much more. Luxury retailers must work to make consumers’ shopping experience a seamless journey. Every time when consumers interact with luxury brands, it is important for retailers to make them feel delighted. This will create customers for life and maximize customer lifetime value for luxury brands. Just think about the last time you stayed in a luxury hotel or shopped at a luxury store or took a ride in luxury sedan or visited a gourmet restaurant or ordered something on a luxury portal. You will certainly have some memory about how you felt about the entire experience. Did you loved the experience or hated it? Was it worth your time and money?

Happiness research reveals that retailers need to trigger emotions of shoppers not just during the time of actual purchase but also during pre-purchase and post-purchase phase. It requires putting the customer at the center of the entire consumer purchase journey and providing flawless experience across all touch points. Personal relationship built on trust should be at the heart of every customer transaction.

Here are 5 keys to provide great luxury customer experience:

• Hyper-personalization: Luxury companies should use technologies like artificial intelligence enabled consumer data analysis to improve hyper-personalization in terms of product, promotion and shopping experience both in-store as well as online. For example, luxury Brands like Gucci and Valentino are using AI which help sales associates to recognize customers, greet them by their name and provide personalized recommendations based on consumers’ preferences and past purchase history. Sephora also uses AI technology to allow users to upload their picture and virtually apply makeup and visualize how products would look on them. The chosen products can simply be purchased via mobile, thereby making the whole purchase experience seamless, convenient and highly satisfying.

Similarly, live chat can provide real time assistance to the online luxury buyers making them feel important. Such engagement will boost consumers’ confidence in brand and refrain them to move to competitors’ brand. A recent study has found that shoppers who are engaged through live chat are 4.73 times more probable to convert and they can spend nearly 60% more than those who are not engaged.

Note: Technologies like AI and live chat are providing a new opportunity for luxury brands to offer better and seamless customer experience both online and offline. But, at the same time, technologies such as blockchain should be used to ensure data integrity and privacy.

• Unified customer insights: Luxury companies should draw unified insights related to consumer profile from all channels such as social media platforms, brick and mortar stores, online stores, website, etc. This will help them in providing unmatched customer experience. For example, omnichannel brands are using online consumer behavior to make decisions regarding their in-store assortment. A Nike concept store in Los Angeles has furnished bright-colored products in their store based upon the data acquired from consumers’ digital footprint.  A 360 degree view of customer insights across touch points will permit luxury retailers to develop more captivating, discerned offers and deliver more meaningful customers experiences.

Note: Luxury retailers need to consciously invest in data driven analysis of in-store purchase behavior which will be the key in providing better customer experience in the future.

• Customer feedback: For luxury companies, it is very important to get honest customer feedback regarding service, product assortment, physical environment, salespersons’ attitude and overall consumer experience. For instance, once a consumer is through with the purchase and making the payment or is checking out of the hotel, he/she should be requested for feedback preferably on a platform which is easy to measure. (Since most of the times either luxury brands don’t have consumer data or even if they have, it is in the form which cannot be measured and so it is useless). This will help brands to gain valuable customer insights and accordingly design strategies to provide frictionless consumer experience in the future.

Note: Luxury brands must quickly act based upon customer feedback as if they will not care about their customers, they will lose their customers forever.

• Invest in customer service training: Regardless of the growing ecommerce business, physical stores and sales associates remain central to the success of luxury companies. Luxury sales associates have the power to transform transaction-led business into emotion-based relationships. As per a recent research by US based Luxury Institute, more than one-third of affluent consumers globally reported helpful sales associate as a prime reason for buying a particular luxury brand. More than 50% of opulent consumers mention product-related expertise as a key characteristic required by luxury sales associate followed by trustworthiness, courteousness and helpfulness.

Note: No matter how significant technology becomes in providing superior customer experience, role of sales associate will always remain most important.

• Building micro-moments: Luxury brands claim that they are in the business of creating dreams and making them true. Therefore, brands must surprise and wow their customers again and again. Marketers must amaze their consumers by doing something which they least expected. For instance, sending a small gift with a hand written note wishing them on their birthday or giving a little freebie with their order just to make them feel special or simply inviting loyal customer to an exclusive VIP sale to make the customer feel part of the elite community.

Note: Small things like a handwritten ‘thank you’ note after the purchase can create a ‘wow moment’ for consumers. So take the extra step to thank them, put them in the limelight and make your brand more memorable and special for your consumers.

In today’s disruptive environment where everything can be copied by your competitors, unarguably the best way to win is- offering a ‘wow customer experience’. This is a most powerful moat to drive sales and develop eternal brand.

The world is steadily moving towards sustainability. In fact, sustainability is well-poised to be the new normal. Now-a-days, veganism is a growing trend, battery driven vehicles are talk of the town and ethical fashion is a buzz word. High-end fashion labels are all of a sudden trying to reestablish themselves as ‘organic’, ‘green’, ‘cruelty-free’, ‘eco-conscious’ and ‘honest’. They have realized strong need to change their business models to succeed in the new paradigm. However, the path towards sustainability is not easy. The key question that haunts everyone is: What fashion brands need to do in order to evolve them as a sustainable brand?

Today’s discerning young consumers are much more aware and concerned about the environment as compared to their previous generations. They have refined tastes and preferences and are willing to spend more on quality products. They are not just fashion conscious but are also intrigued in knowing more about what goes behind creating a particular product. They want to know: Who makes their clothes? What are the materials used? How the materials have been sourced? Are fair trade practices implemented to create the product? What dyes are used and what is the social and environmental impact of the clothes produced? According to Sustainable Fashion Blueprint Report, 2018, sustainability is considered as one of the key factors while purchasing fashion products by the consumers. This clearly reflects the increasing awareness among consumers about sustainability as well as growing concern for sustainability in consumer decision making process. This poses great challenge for the companies to redefine their long-term strategies to fulfill consumers’ call for ultra-transparency and sustainability in the way they operate.

Here are the three most important things that are necessary to develop a sustainable fashion business:

Entrepreneur mindset

Even though creation of sustainable brand has lot to do with resources, but it is more important to have a mindset or willingness that goes a long way in creating such brands. Entrepreneurs’ beliefs are vital while framing an organization’s strategy and are manifested in their priorities, resulting in organizational process and outcomes. The perfect example of this fact is Stella McCartney, who is a role model for sustainable fashion. In one of her interviews, she stated “We really don’t have long now, to change things. But I honestly believe it’s doable – I couldn’t do what I do if I didn’t believe that”. Her eco-friendly ethos has led to disruption in the fashion industry. She has partnered with suppliers to introduce innovative textiles, from leather alternatives to recycled marine plastic and yeast-based silk. Recently, she has made the world’s first fully recyclable hoodie for her Adidas collection through collaborating with textile innovative company Evrnu. They used 60% NuCyclfibre, a material made using the threads from old garments and 40% organic cotton that has been diverted from landfills.

Remember: In order to implement sustainable fashion principles, the most important point is the strong urge to create an ethical product. Unquestionably, entrepreneur need to make long-term commitment and allocate dedicated budget. Use of technology like block chain; networking and partnerships with other actors; certification like Fairtrade, GOTS, etc. and learning by example from early adopters will act as key enablers in the process.

Organizational values

By having intensive knowledge about the value chain and the key influences at each phase, an organization can begin to start its sourcing, design, production and distribution in a more ethical way by considering its impact on people and planet. An environment of transparency can be developed across the value chain. For instance, global luxury group Kering, which owns brands including Gucci, BottegaVeneta, Saint Laurent, Alexander McQueen, to name a few, aims to develop 100% transparent and responsible supply chain by 2025. In 2013, the group developed Material Innovation Lab (MIL) dedicated to ethical material.Through collaboration with start-ups and academia, the group has developed new sourcing solutions and innovative raw materials. 

Remember: Sustainable initiatives should be fostered both internally and externally. Internally, fair trade practices (e.g. fair wages, proper working environment, etc.) should be followed and employees should be incentivized to encourage the adoption of sustainable practices throughout the supply chain. Externally, partnerships and collaborations with innovative start-ups should be promoted that will help an organization in reaching their sustainable goals.

Education

Sustainability efforts are not gaining strong traction among end-users owing to several factors such as lack of awareness and knowledge as well as lack of visibility and availability of sustainable products. Premium prices and limited styles also deter consumers who make an effort to try sustainable products. Brands need to patiently and diligently educate consumers about why their products are priced more, why they should care about the materials used and its environmental and ethical impact. Consumers should be motivated to buy less and learn to choose quality over quantity. Social media and other tools can be used to promote awareness about sustainability among vendors, consumers, etc. Also, there is a strong need to educate fashion entrepreneurs about strategies to implement sustainable supply chain practices.For example, Kering provides training to new-age designers. The group has partnered with universities across the globe to design sustainability curriculums. 

Remember:Education can play a key role in bringing change in the attitude of future designers, employees and customers. It can help enlighten the issues of social and environmental sustainability and encourage them to adopt green practices.

Businesses that can address these challenges can surely leap ahead in the sustainable fashion goods industry. They need to redesign their traditional business models to create a sustainable fashion business.There is great opportunity for businesses to move towards a more conscious
approach to fashion and help drive a shift to a more circular, sustainable industry.

 Recently, a paradigm shift has been witnessed in luxury domain.  There has been increased pressure on luxury companies to adhere to sustainability from not only government, media, NGO’s but also from the growing number of ethical luxury buyers. As the number of well-educated, socially responsible, affluent, global elite is rapidly rising, the concept of sustainability is becoming top priority for luxury brands. Today, global luxury consumers, especially millennials, expect companies to act responsibly. According to a 2018 study performed by McKinsey & Company in association with Business of Fashion found that 66% of millennials are willing to spend more on brands that focus on sustainability initiatives.

In the past few years, sustainability value has derived importance in buyers’ purchase decision.  Luxury buyers want the brands they use to reflect their concerns and aspirations for a better world. There has been a transformation from ‘conspicuous’ to ‘considered’ consumption, from ‘what you wear’ to ‘who you are’, within conscious luxury consumers, leading to rising consumer demands for product traceability, supply chain standards, product authenticity and quality. They want luxury brands to focus on moral issues related to luxury products and have convincing answers to questions of environmental and social responsibility. Therefore, many luxury fashion brands are working towards redefining their business models with the focus on reducing social and environmental problems through the use of progressive production methods and innovative textile inventions. They are using environment-friendly raw materials, like organic cotton and natural dyes, for instance, the leather of a Dior handbag is attained from Italian bio farms. Many organizations are also using recyclable packaging to ensure circular luxury processes.

Few luxury fashion retailers including Prada and Armani are retaliating to the rising consumer demand for making the value chain transparent and sustainable.  Eileen Fisher, an American clothing designer is disrupting the linear production model of take-make-use and dispose. She uses recycled fabrics and give new life to old textiles and discarded garments. Fisher has collaborated with numerous environmental conservation organizations and local artisans with a motive to support planet and people.

A recent study by the Ellen MacArthur Foundation reported that 73% of 53 million tons of garments produced every year ends up in landfill or incinerated. Sustainable consumption act as stimuli among luxury buyerswhowant to feel good and not guilty, when they are purchasing a certain luxury brand. Luxury warrants a psychological cost categorized as ‘guilty pleasures’ which might lead to negative emotions after the purchase. Therefore, growing number of consumers are buying sustainable luxury products to experience ‘guilt-free’ enjoyment. Millennial aspire to rationalize their luxury buying by contributing to social ‘well-being’.

It is a known fact that luxury industry is lagging behind other industries in creating and fostering sustainability. The Danish Fashion Institute (DFI) has pointed out fashion as the second most polluting economic sector after oil business.  Considering the gravity of the situation, luxury industry is progressing towards sustainability as luxury consumers seek for superior quality products which provide no harm to environment. Few luxury fashion brands like Burberry, Gucci and Stella McCartney have set examples for others.

The British heritage label, Burberry, last year took a pledge to stop destroying unsold clothes, which it previously did as a way to preserve its exclusivity. Burberry has partnered with sustainable luxury company Elvis & Kresse to convert 120 tons of leather offcuts into new items. It is also working to drive industry wide change to move towards zero discharge of hazardous chemicals (ZDHC) in the textile supply chain.

Similarly, Gucci, in its effort towards sustainable development, has recently launched Gucci Equilibrium, an online platform designed to connect people, planet and purpose. In October 2017, it made announcement that no fur will be used in any of its collections. It is also working towards creation of new natural materials.

Another example is Stella McCartney who is known for eschewing leather, fur and feathers in her collection. She has created an alternative to leather, made from mycelium- the root structure of mushroom. McCartney is continuously working on redefining fashion through the use of cutting edge technologies and sustainable materials like reengineered cashmere, ethically sourced wool, organic cotton and recycled textiles. She has aligned with various NGO’s such as Parley for the Oceansand Fashion Positive, to bring awareness among the people about how our clothing choices impact the world in which we live.

As we look forward, it is evident that there is a considerable risk to luxury brands that are resistant to invest in people and planet. Therefore, luxury companies should work on reshaping their business models to make it more ethical. Embracing sustainability will provide them with opportunity to enhance their brand image and reputation and possibly create additional value and gain competitive advantage over the other brands.

Though luxury and sustainability appear to be antithetical to each other, but luxury fashion brands must put efforts to reposition themselves as ‘the care taker of mother earth’ to establish a positive brand image among the new luxury buyers.  By 2050, the global economy is predicted to use three planets worth of resources annually. To change that trajectory luxury brands must commit to use less water, leave less fabric waste and emit less carbon. They must invest in renewable energy, innovative technologies, alternative ethical materials and empowering communities.

(This article has also been published in Textile Times in the month of May, 2019).

Millennials are the next rulers of the luxury market. They are more likely to spend more on luxury items as compared to the previous generational cohorts. Millennial consumers are projected to account for 50% of the luxury market in 2025 as compared to the current 32%. They are of significant interest for luxury brands as they tend to provide better lifetime value and brand loyalties. These new-age audiences neither follow celebrity trends nor believe in mindless consuming. They are much more demanding, selective and discerning than their parents and grandparents. Since, millennials’ beliefs and core value structure are significantly different from their prior generations, therefore, it becomes imperative for the luxury marketers to understand ‘millennials’ mindset’ and develop innovative approach to entice this lucrative market segment. Here are the 5 key characteristics of millennials which will help luxury brands to establish better connect with this peculiar group:

1. Purpose-driven: Traditionally people have been buyingluxury brands for its history, craftsmanship, image, exclusivity and superior quality. As per Deloitte survey, these are no longer selling points for millennials. This generation look for purpose, transparency and genuineness. Millennials show greaterconcern for people and planet. As per Nielsen report, 73% of millennials are willing to spend more on a product if it comes from a sustainable brand. They demand for sustainable options that reflect their own values and beliefs. For example, Gucci has been able to pull its sales by winning the trust of millennials through its purpose-driven, ecologically progressive program, ‘Gucci Equilibrium’. Similarly, Adidas is focusing on purpose-based brand creation with emphasis on reducing waste and environmental impact. It has created ‘sustainable sneaker’ by utilizing eco-friendly items. Therefore, luxury brands must exhibit that they stand for a purpose and not just for profits. They can create a niche for themselves by promoting sustainability and ethical business practices.

• Loves to spend: This market segment spend lavishly on discretionary items, without much consideration about their debt levels. Unlike their parents, they are less motivated to save and therefore have greater disposable income. They believe in instant gratification and ‘living in the moment’. Therefore, in 2017, young consumers accounted for 50% of Gucci’s profits.

Millennials prefers to spend more on experiences instead of products. They are willing to pay premium for comfort or services, particularly, opulent millennials who spend more for VIP experience like a gourmet private chef and golf-cart chauffeur service. They look for personalized experiences or products that are either exclusive or specially designed for them. For example, Louis Vuitton offers a monogramming or hot stamping service for their items which provides shoppers an opportunity to make their own unique product by adding their initials. Therefore, luxury brands must provide unforgettable experience or product that resonates with millennials’ self-expression.

• Open to experimentation: Millennials are likely to try something new if it reflects their personal values and passions. They are open to experiment alternative business models thathave emerged in the luxury fashion industry such as luxury renting, luxury fashion libraries, luxury resale, etc. These new concepts provides members an opportunity to try different styles and looks without having to pay full price. Young luxury consumers don’t want to bind themselves to a single product, rather they want to enjoy the flexibility to try new items more frequently. In addition, short-term rentals gives them opportunity to flaunt and express themselves. For instance, if they want to show –off their discerning taste with Rolex or Bulgari watch but they can’t afford it, they can simply rent it. Therefore, embracing new-age focused alternative business models such as luxury fashion ‘recommerce’ can provide a way forward to luxury companies.

Millennials are embracing collaborations as they consider it ‘cool’. Collaborations like Louis Vuitton with Supreme; Chanel with Pharrell Williams; Gucci with Dapper Dan, have been highly valued by millennials. Thus, to succeed, a brand needs to provide millennials an experience instead of simply a label.

• Tech-savvy: Millennials have been identified as first high-tech generation and they embrace new media much more than previous generations. Digital experiences are most important to this segment and luxury brands cannot afford to ignore this fact. They need to create emotional connect with them and build online shopping experiences to access young shoppers in their natural habitats.

Millennials appreciate personalization, interaction and co-creation. Unlike, previous generations. they are not passive consumers. Mercedes Benz’s ‘Take the wheel’ campaign is a perfect example of creating brand story by empowering and engaging millennial shoppers. A challenge was given to 5 Instagram best photographers to spend 5 days each behind the wheels of Benz CLA. Each photographer posted pictures on their account and the one with most likes was gifted the car. The campaign generated 87 million organic impressions on Instagram and more than half a million mentions on Facebook and Twitter. Therefore, luxury brands should utilize social media platforms like Instagram to provide savvy millennials a feeling of ownership over brand story.

• Signal public self-consciousness: Millennials with high propensity to spend money, combined with goal of signaling fashion consciousness and status to other people, makes them an attractive segment for luxury brand companies. They spend unduly on high-end brands and this needless spending is possibly due to their desire to own luxury items to augment their social status. From handbags to hotels, this generational cohort has keen interest in status symbols. Therefore, luxury brands should stress on social cues to attract this audience.

Luxury brands must decode ‘millennial mindset’ and accordingly create new marketing and branding strategies to allure this most significant market segment.

(This article has also been published in ET Brand Equity on May 19, 2019).

Indian luxury landscape is rapidly evolving. With rise in middle class population and increase in disposable income, demand for luxury goods has expeditiously increased in India. Be it Canali’s nawab suit, Chanel’s tote bag or Balenciaga’s clutch, luxury goods are flying off Indian racks. Ralph Lauren launched its first store this year in New Delhi’s luxury mall- DLF Chanakya and brands like Alexander McQueen and Saint Laurent are all set to have their first standalone stores in India by mid of this year. Indian luxury market is expected to grow tenfold in the next decade from the current US$30 billion to US$ 180 billion by 2025. However, India still lags far behind other developing economies like China in terms of its share in the global luxury market. India is a culturally diverse nation with varied languages, religions, food, music, dance and customs. With such diversity, Indian luxury market provides huge set of opportunities as well as challenges to luxury brands. Therefore, it is critical for luxury players to understand idiosyncrasies of typical Indian consumers to successfully serve this lucrative and growing market. Here are four key strategies for luxury brands to succeed in the complex Indian market.

Understand Indian buyers: Indians perceive luxury brands differently. Their values, beliefs and attitude towards luxury vary significantly from their western counterparts. Luxury goods are mainly purchased for personal or social orientation. Indians buy luxury primarily for social gratification. They go for loud brands and signal their status through luxury consumption. Therefore, marketers must highlight on symbolic value derived from luxury brands to gain traction from Indians.

Indians are extremely value-conscious buyers. They are now well-travelled and educated and therefore aware of offerings available in rest of the world. They want full product mix, latest variety and style without having to pay a premium for it. They compare the product and prices across markets and cease the best deal. Therefore, luxury brands must make sure that they maintain parity while catering to Indian market.

Indians, even today are skeptical about buying luxury brands. For instance, they may buy gold worth million dollars at the spur of the moment but when it comes to spending the same amount on luxury brands, they may consider it as a wasteful expenditure. They look for value of raw material and potential resale price while making their purchase decisions. However, with greater exposure towards the international luxury brands, this mindset is gradually changing. Luxury marketers need to raise brand awareness among Indians. They may hire opinion leaders, influencers or Bollywood stars to promote these brands. For example, Shahrukh Khan’s association with luxury watch brand Tag Hueur has been a great success.

Entice young luxury shoppers: Demand for international luxury brands is rising among young Indian consumers with increased access to internet, overseas travel and growing discretionary incomes. Millennials are the next rulers of luxury market. They are experimental, discerning and demanding. Luxury brands can no longer use standalone platform to attract and engage these consumers, they have to provide them seamless bespoke experience which is consistent across all platforms. Young consumers choose social media to stay updated, therefore, a strong social media presence is key for success of these brands. Marketers should unleash the power of social media to tell their brand story and engage consumers to tell their own stories of brand interaction.

Invest in sales personnel: Sales personnel are the brand ambassadors who serve as the face and voice of the organization. They interact with the customer and make or break the brand in their eyes, hence luxury companies should put sincere efforts to empower and enrich their employees. They should be trained to understand what the brand stands for, its DNA, history and heritage so that they can rightly pitch it in front of customers

Focus on innovation: As quoted by Peter Drucker, “Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketingandinnovation.”

Age-old luxury brands known for their history have been reluctant to embrace technology. Today, luxury brands need to be innovative to gain attention of new luxury consumers. It is through innovation that these companies can extend existing products and invent new products suitable for Indian customers’ need and wants. For example, Mercedes Benz introduced compact luxury hatch back A class, particularly for Indian market to attract aspirational buyers. Further, innovation is the best way for luxury companies to create space for themselves in competitive Indian market. For example, they must work on advanced real time data or AI based analytic tools to make informed decisions about their target customers

To conclude, to be successful in Indian luxury market, brands must innovate continuously with an enthralling brand story, a clear approach and a system to deliver a consistent, notable experience for consumers.

(This article has been published in Fibre2Fashion on 20 April, 2019).

Luxury retail landscape has undergone radical changes in the past few years. Thereby, it makes it imperative for luxury retailers to shift their focus from product to impeccable service; from selling to offering personalized experience; from providing consumer satisfaction to giving them ‘wow’ moment at each touch point; from being exclusive to being inclusive; from providing delayed gratification to offering instant gratification; from store associate to a story teller, expert and advisor; from happy visitor to loyal customer and brand advocate.

The convolution of modern retail sales process along with ever-changing business environment scenario makes it essential for luxury brands to empower and enrich their sales associates. Following are the 7 tactics that will help luxury sales associates to convert their prospects into brand advocates.

1. Know your customer: Knowing what is vital to clients, their expectations and the role of luxury brands in their lives may help sales associates to develop deeper connect between clients and the brand. Have knowledge about your clients’ profile to provide personalized services and recommendations. Empathize your clients, listen to their specific needs and develop a personal bond with them. It is very important to engage customers, assist them and greet them as a distinctive guest.

Remember: Luxury customers want to be treated special.

• Know your product: Pay attention to intricate details of your products. Make sure that each product has a story to tell and purpose to define. When customers resonate with these stories, they may understand the luxury brand DNA and brand promise which may create customers for life. Educate your clients on full range of merchandise available or else, you may undersell them. Let your clients decide what enthuses them rather than you limiting yourself or your clients.

Remember: You represent the best and you must be your best to sell it to clients.

• Know your competitor: Do thorough market research and have knowledge about the industry’s best practices. Benchmark direct and indirect competition, identify improvement areas and enhance consumer’s experience. Focus on continuous learning as what is relevant today may not be relevant tomorrow.

Remember: Luxury clients are most discerning and well-equipped.

• Develop interpersonal skills: Greet your clients with an enchanting smile, offer genuine help and assist them in finding the right product.  Build one-to-one individualized relationship with your clients. Be confident in reaching out to them in a way that makes them excited to hear from you. Keep a constant touch with them at every connect point through use of gifts, emails, letters, etc. and remind them of being special. Be passionate and show your enthusiasm.

Remember: Right attitude is key to selling luxury

• Curate unique experience: Create a memorable experience at each step of customer journey, right from the point they enter into the store to initiating the sales process, from product demonstrations to closing the sales, from product delivery to post-sales follow up.

Remember: People may not remember what you said, what you did but they won’t forget how special you made them feel.

• Make suggestive selling: Develop rapport with your clients and seek for ways to suggestively sell additional products to them. Don’t pressurize customers or hard sell but also don’t confine yourself to just one product that customer asked for. For example, if your client is looking for a shirt, why not recommend him a matching trousers or a pair of shoes to complement it. It might interest your client.

Remember: If you don’t pursue, it could be a missed opportunity for you.

• Adapt new technologies:  Use CRM tools and advanced technologies to provide exceptional customer service. These tools will enable you to get access to intricate consumer details not just about their birthdays and anniversaries but also their previous purchased items, their preferences, prior visits, social media handles, etc. It will empower you to effortlessly create seamless shopping experience for your esteemed clients.

Remember: In this digitalized era, you cannot ignore technology.

(This article has also been published in Luxury Daily on Feb 4, 2019).