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Sustainability key in transition from conspicuous to considered consumption

The word ‘sustainability’ is permeating every industry in the world. Rising concerns about environmental degradation and climate change has forced individuals as well as corporations to embed sustainability as an integral element in their day to day lives. In context of luxury, sustainability is all about conserving the art, culture, traditions and ‘savoir faire’; taking care of people and planet. Although, luxury and sustainability have been long considered as antithetical to each other. The unique characteristics of luxury like rarity, timelessness, heritage, restricted supply, hand-crafted, superior quality, localize production and high prices, links it closely to sustainability.

Lately, 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. Today, global luxury consumers, especially millennials expect companies to act responsibly. As per 2010 Havas Media sustainable consumption research conducted with 20,000 consumers in ten countries, 86% of buyers examined sustainability aspects while making purchase decisions. It was also found that 80% of consumers under the age of 35 wanted to go for sustainable option.

In 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.

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’.

Luxury, for decades has been used to depict social-self. Traditionally, the desire of ‘buying to impress others’ was considered as the key motivation behind the purchase of luxury brands. Today, sustainable consumption has evolved as a new form of ‘conspicuous consumption’. Consumers are now spending money on ‘green to be seen’.  Their lifestyle and purchases include everything from organic food to bio-dynamic wine to eco-friendly apparel and zero-emission electric vehicles. They are willing to pay premium for sustainable luxury products to display their success and economic accomplishment to the society. With sustainability becoming a new norm, ‘social’ individuals feel secure while buying luxury products labeled as: ‘organic’, ‘sustainable’ and ‘ethical’.

It is a known fact that luxury industry is lagging behind other industries in creating and fostering sustainability. However, few luxury brands like Tiffany, Gucci and Stella McCartney have set examples for others. Tiffany is among the first few companies to restrict the use of coral in jewelry. From sourcing to production, it makes sincere efforts to act ‘responsibly’.  It has created fair wage practices for workers and has custom-built, LEED- certified factory. It has also set its target to reduce greenhouse gas emissions to net-zero by 2050. 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. Most of her collections are made up of sustainable materials.

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 redefining 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.

(This article has also been published in Luxury Daily on September 27, 2018).

Millennials Redefining the Norms of Luxury Industry

Baby boomers have traditionally been the major spenders on the luxury goods across the globe. However, 85 percent of luxury growth is propelled by Gen Y and Z (Bain & Company Report) today. New age buyers are taking truncheon from boomers and disrupting the rules of the luxury industry. With the democratization of luxury and shifts in power and consumer preferences, the meaning of luxury is being redefined. This major shift is driving luxury companies to restructure their strategies to suit the peculiar preferences of new generation buyers. Brands need to understand ‘millennial state of mind’ and develop innovative approach to entice millennial shoppers. As these new luxury buyers are young, more progressive, more discerning, less wealthy and less loyal, it may provide huge challenge as well as great opportunity for the luxury companies. Therefore, let’s take a closer look at these new norms of the luxury industry and its implications for luxury brand marketers.

  1. Shift from Offline to Online: We all know that consumers’shopping journey has seen radical transformation in the last few years. The rise of internet has led to ‘ROPO’ effect which means ‘research online, purchase offline’ or vice versa. According to recent McKinsey report, one fifth of luxury sales globally will take place online by 2025. Therefore, E-commerce should be taken as an opportunity rather than a threat. A holistic, omni-channel approach should be implemented to provide consistent, bespoke purchase experience to the customers across all touch points, be it be offline or online, events, social media, advertising and PR.  The engagement and interaction with customers across these multiple channels should be seamless and in alignment with each other.

As around 80% of the sales would still be coming from physical stores, it is noteworthy that stores wouldn’t lose their purpose. This poses a bigger challenge for retailers to provide immersive in-store shopping experience to consumers as they would only be willing to visit stores if some differentiated experience is provided to them. Therefore, it is critical for retailers to adapt new technologies to create a convergence between online and offline platforms to empower shoppers’ journey.

  • Shift from Possessions to Experiences: A recent research reveals that at least three in four millennials prefer to pay money for an experience rather than a product. They would rather love to splurge on a lavish holiday or buy front row tickets for a concert than spend on purchasing a car or home. Therefore, marketers need to create seamless consumer journey that permits them to buy tickets, attend the show and share the experience across social channels. They should find ways of how more value can be added to consumers’ experience.
  • Shift from Ownership to Shared Economy: Does a $3000 dress still a luxury product when you are renting it for a negligible price? Such questions certainly make the definition of luxury blur today. But, the new luxury buyers are changing the rules of the game. There is a growing trend of pre-owned luxury goods. Why buy a designer dress when you can rent it? Millennials with spending power are reluctant to spend on big ticket items. They rather prefer to live the moment than to own a product. They believe in the concept of ‘shared economy’. This makes it critical for the luxury companies to remodel their conventional businesses to remain relevant for the new age buyers.
  • Shift from Self- Orientation to Sustainable Orientation: There is a visible shift from ‘conspicuous buyers’ to ‘considered buyers’. Today, consumers want to use the brands that care for environment. This makes it imperative for the luxury brands to shift from linear economic model to closed- loop circular model. Companies need to think of not just profits but also be considerate about people and planet. Realizing the importance of this concept, many luxury firms are redefining their supply chain processes and striving to reduce social and ecological problems through the use of sustainable technologies.
  • Shift from Sales Assistant to Virtual Assistant: Technologies likeartificial intelligence, voice controlled shopping and augmented reality are set to act as ‘second sales assistant’. Interactive chatbots, virtual trial rooms and personalized recommendations through apps are emerging as must have tools to lure new-age buyers.

All these shifts are certainly going to reshape luxury landscape, thereby making it crucial for luxury companies to rethink their brand strategies in order to remain relevant in this disruptive business environment. Today, luxury buyers want the brands they use to reflect their concerns and aspirations for a better world. Through the use of technology and innovation, wider range of sustainable options could be created for the new-age luxury consumers.

(This article has also been published in Luxury Daily on July 20, 2018).

The digital dilemma for luxury

The luxury brands that have trusted upon multi-sensory experiences for ages are now facing digital challenge. Luxury is about uniqueness, rarity and scarcity whereas digitalization is all about breaking boundaries and reaching the masses. The very nature of the two contradicts each-other, making luxury sector reluctant to embrace digital technologies for years. However, as digital platform has become part and parcel of our lives today, luxury marketers just can’t do without it.

New-age technology has revolutionized luxury domain by providing endless opportunities to luxury retailers. Artificial intelligence, augmented reality and voice-controlled shopping are set to reshape luxury retail landscape to make it more customer-oriented. Opulent consumers are expecting effortless and immediate luxury experiences. Voice-controlled ecommerce is enabling luxury brands to provide exceptionally fast service at a minimum cost. Augmented reality such as smart mirrors is allowing luxury consumers to interact and gain appropriate information such as price, materials used or options available, more conveniently. It is facilitating consumers to ‘try’ new offerings at home before buying online. For example, Sephora’s Virtual Artist app assists its users to test makeup products before making virtual purchase.

According to research by McKinsey, almost one-fifth of personal luxury sales will take place online by 2025. Although only a small proportion of luxury sales happen online today but it definitely adds to the offline buying experience. Most of the buyers today explore the product online before indulging in actual buying, either online or offline. Many luxury brands including, Burberry, Gucci, Coach, Louis Vitton, to a name a few, are using digital platforms to establish deeper connect with millennials and providing them with seamless bespoke experience across all channels. They are making huge investments on search visibility, social media marketing, m-commerce and e- commerce platforms. Many brands are extensively using Instagram as sure-fire way of promoting their labels and generating maximum exposure among the youngsters. Instagram has truly been able to engage people through sharing minute details about fabrics, stitching style, designing as well as inspiration behind the collection.

Let’s take a look at the digital initiatives taken by the top luxury brands in the recent past. Burberry launched the first ever “see now, buy now” campaign which was indeed a great surprise for its patrons who were more than happy to buy their dream immediately after the runway presentation. Many others like Tom Ford, Tommy Hilfiger and Ralph Lauren followed the suit. Another one is interactive 3D campaign which enabled customers to design their own Burberry scarves on their mobile handsets and post it on the Piccadily Circus “Curve” screen. Similarly, Chanel has been successful in evoking passion and enthusiasm among people through its engaging YouTube videos. Gucci has been able to pull its online sales many fold times through its easy to navigate, interactive, engaging and fully-functional e-commerce store.

However, these campaigns have gained tremendous success but the big question is: Will the luxury brands known for its rarity and exclusivity lose its sheen by being omnipresent? Will fashion immediacy dilute the image of luxury brands in the long run? Will instant gratification result in moving the luxury brands away from its dream to create desire?

Many luxury houses are taking smart moves to deal with such problems. Some brands are coming with exclusive collection of their designer pieces available only online while others are showcasing limited addition of their items online to select clients. They are trying hard to retain extravagant feel of their brands while going online. Again, the question that comes to mind: Will these efforts help online luxury market gain traction? Future of the luxury industry rests upon the answers to these questions.

(This article has also been published in Luxury Daily on 29 June, 2018).

Circular Economy in Luxury: The New Consumerism

Have you ever thought why to own something that you only use occasionally or why buy an expensive product whose appeal may not last? Definitely yes…this thinking of consumers is influencing their consumption behavior. Today’s consumers are increasingly searching for maximum value and seeking to redefine what is imperative to them. They are guided by sustainability, frugality, shared economy and wellbeing. This concept of ‘New Consumerism’ began a decade ago during global financial recession and continued after that. Circular Economy is one of the several trends of ‘New Consumerism’ which has made impact across various industry. Today, the luxury fashion industry is going through phenomenal change in its landscape and is influenced by circular economy. Today, consumers’ beliefs, attitudes and consumption patterns are changing, with increasing number of consumers looking for sustainable products, marks the beginning of a new consumerism. There has been sizable shift in the primacy of what consumers actually value from ownership to shared economy, from possessions to experiences, from conspicuous consumption to conscientious consumption and from self- orientation to sustainable orientation. They are looking for value beyond the product itself through investment in health and well-being. They want to feel good and not guilty while purchasing a certain luxury brand. With the rising concern about social and environmental sustainability among opulent consumers, especially Generation Y, ‘Green is the new Black’.

In early times, the yearning of ‘buying to impress others’ was considered as principal motive for acquiring luxury brands. However, lately with the consumers’ move towards new priorities, luxury brands are working towards redefining their business models with the focus on reducing social and environmental problems through the use of sustainable technologies. 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 Gucci, Prada and Armani are retaliating to the rising consumer demand for making the value chain transparent and sustainable.  

Circular economy in luxury is a concept of reviving the essence of luxury with its long established emphasis on rarity, reflective buying, restoration, longevity, endurance, hand craftsmanship and consideration for people and planet.Luxury brands are making serious efforts to move from traditional linear economic model (take-make-dispose) to circular economy through embedding the 3R principle (Reduce, Reuse and Recycle) into production and consumption process. The fashion industry unquestionably influences heavily on the environment. It uses vast amounts of water throughout all processing operations, uses 25% of global chemicals, contributes towards unloading polluting chemicals and industrial waste into the world. 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 circularity as luxury consumers seek for superior quality products which provide no harm to environment. Prada is using variety of biodegradable natural fibers in place of polyester. Stella Mc Cartney uses no leather in her luxury collection. Her 70% products are handmade, recyclable and reusable. The circular economy is an appropriate response to face the issue of environmental pollution, because it is a system designed to create new wealth without downsizing the intrinsic quality of the product.

Many players in the luxury industry have realized the importance of sustainability and thus are remodeling their conventional businesses by incorporating concepts of reuse, share, rent or recycle which are essence of circular economy. For a category that is still in its nascent stage, there are quite a few business models. One such online platform running successfully in India since 2015 is “Flyrobe.com’ that rents designer ethnic and Western apparel. Another popular online platform is Swishlist.in. Pre-owned clothes are solution to a growing section of the fashion-conscious people. The clientele of such companies not only embraces people who cannot afford such expensive clothes but also those who are driven by the need of not repeating their outfits or people who rent for the love of fashion. There is cultural shift in consumption of luxury fashion viz. consumers are open to wear hand-me-downs, even if not within the family, people are not interested to spend heavily on one- time usage of such products, and there is aspiration to wear luxury clothes. There has been increased emphasis on ‘Reusability’ by focus on functionality over ownership which leads to the growing trend towards pre-owned luxury goods. Consumers of pre-owned luxury fashion are more contented because they get to uphold their self-respect by secrecy of consumption than declaring their affinity for cheaper clothes. They are working on the principle of circular economy to generate ‘Restorative’ economic model and create timeless luxury items which are inherited from one generation to another. Circular economy has also inspired these brands to follow the concept of ‘Reduce’ through production in smaller batch sizes with slow production cycle. Luxury conglomerates like LVMH and Kering are shortening production cycles across brands. Though luxury and circular economy appear to be antithetical to each other, but luxury brands are putting efforts to reposition themselves as ‘the care taker of mother earth’ to establish a positive brand image among the new luxury buyers.  

(This article has also been published in Luxury Daily on May 22, 2018).

Marwaris and Luxury

The highly successful Marwari community has a long tryst with royalty, luxury and grandeur in their lifestyle. Yet, the thrifty nature of Marwaris prevented them from indulging or splurging on luxury goods as compared to other ostentatious communities of India. With the changing times and evolution of next generation of Marwaris, meaning of luxury has been redefined and given way to more liberal thinking towards luxury consumption among Marwari luxury buyers. Dr. Sheetal Jain, Founder of Luxe Analytics, a luxury market consulting firm and a Marwari entrepreneur herself, explores this changing facet of luxury among Marwari community. She is an internationally published and quoted luxury professional and one of the pioneers of Indian luxury consumer research in India. 

Indian luxury market is mushrooming and among the fastest growing markets in the world. According to an Assocham study, it is estimated to multiply at the rate of 25 percent per annum and reach from the current $18.5 billion to $50 billion by 2020. This sudden growth can be attributed to the changing Indian mindsets and value system, growing brand awareness among the youngsters, multiplying disposable incomes, urbanization and increasing number of middle class population. Marwaris who are considered as the most opulent community in the country, can very well become the flag bearer of the growth of luxury brands in India.

‘Marwari’ refer to baniya or community of skilful traders from all over Rajasthan. The word ‘Rajasthan’ is derived from raja + sthan, meaning place of kings. Rajasthan, till today is considered as a hub of royal families. Jaipur, Mewar, Jodhpur, Bikaner, Udaipur and Jaisalmer are still among the popular royal families of Rajasthan. In addition, for decades affluence and luxury has been embedded in the lives of successful Marwari families. There has been a penchant for luxury jewelry, luxury cars such as Rolls Royce and other symbols of opulence. Therefore, luxury is not new to Marwaris. Marwaris are known for their rich culture and heritage of luxury since the time of maharajas. What is new to Marwaris, however, is the shift to the new forms of luxury.

Erstwhile Marwaris have flourished their businesses by migrating from their homeland Marwar (a region in Rajasthan) to distant locations such as Kolkata, Chennai, Mumbai and other trading hubs in India. Over the years, Marwari business community has developed strong hold over these places. Men migrated to these locations over a long time ago, however, their families joined them later. Today, these bustling Marwari hubs in cities like Kolkata are witnessing radical shift in the predominant Marwari culture, be it be related to lifestyle, education or purchase patterns. Conservatism, key characteristic of a typical Marwari, has paved way to dynamism, innovation and openness. This has led to significant transformation in the luxury consumption behavior of Marwaris. The luxury purchases for the older generation of Marwari families were more value-oriented and restricted to few items like Jewelry and clothing. However, with the changing times and emergence of new generation of millennial Marwaris, affluence is taking a newer dimension. The younger lot is taking the luxury legacy of Marwaris to newer heights with more diversified indulgence. The increased availability and growing exposure to global luxury brands owing to rising overseas travel, social media and changing perceptions about luxury among the Indian consumers have contributed significantly to this new trend among Generation Next of Affluent Marwari families in India.

Marwari Women, then and now

A rich part of Rajasthani cultural heritage is its alluring Jewelry. For years, Marwari women has been embellished with beautiful jewelry from head-to-toe, to name a few, borla, nath, rani haar, bajubandh, bangadi, haathful, tagdi, payal and bichuwa. With their limited education, exposure and knowledge, they saw these jewel pieces as the best option to splurge money. Luxury, for them revolved around possession of expensive jewelry as it was seen as a value investment.  Their world was confined to the boundaries of their household. They had limited aspirations in life. However, the new age Marwari woman has radically transformed. She is independent and confident. She is no more restricted to just her household and kids rather she is making a significant mark in the society. There has been massive change in her lifestyle. Ghagra-odhani, the traditional clothing of Marwari women has become a rare attire, seen only during the weddings of close family members. Borla and ghongat has become passe. New Marwari woman is well- educated, well- travelled and well-versed with the trends across the globe. She has transitioned from saris to shrugs, from pajab to anklets, from customary clothing to designer labels. Her wardrobe is no more packed with only sarees, lehangas and Kundan jewellery. She has become a contemporary women who has the perfect mix of western and traditional outfits. Her closet carries branded apparel, bags, shoes, sunglasses, perfumes, and wide gamut of beauty products. She wisely chooses the best accoutre as per the occasion. She is no more hesitant to purchase a Louis Vuitton bag worth Rs, 1 lakh as she believes in living for the moment and not saving for the rainy day. She lives for the experiential value. She loves to spend money on spa or driving a luxury sedan rather than just buying loads of jewelry. You will be thrilled to know that the first Indian woman owner of one of the world’s most luxurious sports cars, Lamborghini, is a Marwari woman!

Education, then and now

Marwaris have been known for their business acumen, adaptability and success. They are risk takers, great bargainers and venturous. Entrepreneurship is relentlessly encouraged by Marwari community. Education often takes a backseat among Marwaris where it is a long established tradition that sons join their family businesses as soon as they pass out from school. There prevails a strong belief that starting a business will get you more reverence than a college degree. However, in the last few decades this mind-set has radically changed. The younger generation is taking up varied careers like, architecture, hotel management, fashion designing, journalism and teaching. The book, ‘The Marwaris: From Jagat Seth to the Birlas’ also posits that today the young Marwari is going abroad to get the best education at leading international institutions. They are transforming traditional approaches to business and embracing new-age technologies. Millennial Marwaris are receptive, discerning, experimental and willing to explore the world. They are unrestrained towards indulgence in new forms of luxury. They see value in spending on lavish cars, vacations, food and watches.

Extravagance, then and now

Think Marwaris, think money. The Rajasthan-born community has been well defined for the affluence, traditional lifestyle, conservatism and strong focus on “value for money” in their luxury indulgences. They have firm belief in frugal living and saving. They are considered as shrewdest businessmen across the globe. A typical Marwari is known for calculating interest before investing. For years, he has been happily spending huge money on gold jewelry as he see it as an alternative source of investment, but given a choice to spend the same amount on luxury art piece or designer handbag which can also be carried forward as a legacy from one generation to another. A traditional Marwari would never ever give it a thought, for him it is utter waste of money. However, he would not be hesitant to spend hefty amount on lavish wedding as it symbolizes his status in the society. But with times, the mind-set and value system of young Marwaris are evolving. They have no more restrained their luxury spending to just jewelry or weddings.  Rather, they are going beyond to attain individuality, hedonism and self-gratification. They are moving from external to internalization of luxury. They are looking for experiences that help them express who they are.

The Marwaris, aptly called the Jews of India, have transcend over time to illustrate new maturity in their orientation towards consumption of luxury goods and services. New-age Marwaris are depicting similar purchase behavior as evident among youth not only in India but around the world. In nutshell, Millennial Marwai luxury buyer has evolved in pace with the global trends. Today’s Marwari luxury buyers are driven by classic characteristics of luxury such as rarity, quality, craftsmanship, technology and aesthetics. The abode of affluent Marwais are the most lavish, with seamless, exceptional decor. Marwaris have become avid travelers to the most exotic destinations like Iceland, Greece, Finland, etc. We can see today’s Marwaris flaunting various luxury brands from Manish Malhotra to Michael Kors; from Sabhyasachi to Jimmy Choo, from Mercedes to Porsche, to name a few.

Even though Marwari community is not as flamboyant as other communities such as Punjabis, they indeed present a wealth of opportunities to Indian and global luxury brands eyeing growth in the Indian sub-continent. Marwaris have amassed huge amount of wealth over the centuries. It’s the right time for the luxury brands to penetrate deep into this community that has seen the epitome of success in wealth creation.

(This article has also been published in Marwar India magazine on March 15, 2018).

Unfolding India’s Luxury Market in 2018

Today, the luxury market in India garners huge attention as most of the global luxury brands have already arrived or are expected to enter. Luxury retailers have realized that India is one of the world’s most vibrant, diverse and challenging markets for brands that want to capture this market. Success of luxury brands is mainly determined by their ability to understand the complexities of Indian market, to innovate and tweak their strategies to provide affluent consumers unique and bespoke brand experience. India is a distinctive and multifaceted market and reveals a pot-pourri of cultures, customs, and history. Chadha and Husband in their book on ‘Cult of Luxury Brands: Inside Asia’s Love Affair with Luxury’ described that “each country has its own endearing eccentricities that make it unique”. Luxury retailers need to understand following five unique key characteristics to serve Indian market well.

Evolving Indian market

India is still in nascent stage of its development as a luxury retail market. There have been up and down trends in last 10 years in luxury sector. Because of these variations, it’s getting very complicated to precisely judge and gauge the luxury market. While India is visualized as an upcoming market as there is lot of potential, there are also people who believe that the potential of Indian market has been overrated. However, positive thing is size of the market, which, in itself makes it very exciting for people to sit in long term. The top-selling items in the luxury market are watches, automobile, real estate, fashion accessories, handbags, super premium beauty/personal care products, luxury electronic gadgets, shoes and apparel.  

Regulations

Since November 2016 there has been introduction of several cash related restrictions which made an impact on luxury sector- first demonetization, then the 2 lakh limit, after that PAN Card business and the last of them was the GST implementation. Though these policies have initially obstructed the growth of Indian luxury sector but it is believed that these changes may be favourable in the long term. Recently, government has approved 100% FDI under the automatic route for single-brand retail trading and also eased the mandatory local sourcing norms. This would provide greater flexibility to the global retail brands and increased consumer access to global brands.

Diverse characteristics of Indian consumer

Indian consumers are very different from a consumer in China or the West. Indians culturally are value conscious and always look for a good bargain. People always seek value and search for information regarding at what price they can get brands internationally. As import duty is very high, consumers often find it cheaper to purchase from Singapore, Dubai or London. Consumers are ready to experiment; they have become bold. It’s not conventional pattern of buying anymore. People are ready to experiment with colours, styling, irrespective of age. Consumers are brand conscious and logo-centric and logo has to be shown well. For men, shoes with prominent logo sell more in India. Women shoes do not sell well because they don’t see value. However, women buy sunglasses and handbags which are more visible. People like to show-off. Indian buyers give a huge importance to perception and value. Quality and craftsmanship is a selling point but not decider point for Indians, it is prestige that people associate with brand that they are paying for and therefore more than anything else it is perception of the brand in the country that is either making a brand successful or is creating struggle.  

Great demand for affordable luxury brands

Affordable luxury brands like Michael Kors, Kate Spade, Coach and Charles & Keith have been successful in capturing the hearts of young aspirational Indian buyers. These international brands give an option to the brand-conscious Indian shoppers to buy status symbols at a much lower prices than the average luxury brand. According to Euromonitor International, this segment is rapidly growing at the rate of 40% per annum, outpacing rest of the segments.

Luxury space constraint

Real estate is heavily regulated in India; consequently luxury brands generally launch stores in luxury malls or hotels, through joint ventures with local distributors. Presently, there are very few luxury malls in India which cater to luxury brands. In India, luxury retailing is confined to the three metro cities- Mumbai, Delhi and Bangalore. Tier 2 and 3 cities, with large populations and growing wealth are not catered too well. But retailers have to realize that it is not only metros where people have money or purchasing power, even small cities clients also generate revenues. There is no high street for luxury brands in India. All existing high streets are very cluttered and over-crowded and hence, do not provide a suitable ambience that luxury retail demands. In addition, the cost of setting up luxury stores in high streets is very high which dissuade the retailers to open stores in such areas.

Luxury players need to understand that Indian market has some distinct characteristics and in such an environment they have to operate very cautiously and selectively to create value for Indian consumers. Failure to recognize these variations in terms of their levels of luxury addiction, and consumer attitudes for luxury brands can detach retailers to understand consumer behaviour of luxury buyers.

(This article has also been published in Business Today on 24 Feb, 2018).

Evolving Trends in Global Luxury Market

Over the last decade, global luxury industry is witnessing rapid changes due to shift in focus from class to mass; traditional media to social media; offline to online; Baby Boomers to Generation Y; developed markets to emerging markets; physical possessions to experiential value – to name a few. However, how these evolving trends will influence the luxury industry in the years to come is a question for now!

Let’s have a close look at some of the changing trends in Global Luxury markets and its implications on global luxury marketers.

Millennials to Rule the Luxury Market: Gone are the days when luxury was the monopoly of ‘elite few’ who grew with silver spoon and inherited the old money. Over the years, the luxury consumer base has evolved. Now the time has come to shift the focus from baby boomers to millennials. Luxury brands no more see growth opportunities in targeting your grandparents rather they see potential in new age buyers who aspire to buy high-priced designer labels. A recent report by Bain & Co. revealed that millennials are set to constitute 40% of world-wide luxury market across all personal luxury goods categories by 2025. Middle class population in countries including China and India are estimated to add 50 million new users to existing luxury market. This has made it imperative for luxury marketers to come up with affordable and accessible luxury items to tap this growing market segment.

Drive for experience based spending: Today, millennial generation looks life through a different lens. They value experiences more than physical products. Marketers can no longer win them by just selling a product rather they need to create an experience with them. Today’s youth think of spending on a lavish holiday or on front row seats to watch live concert of their favorite celebrity rather than on buying a home or a car. A recent study by Harris Group revealed that around 70% of affluent millennial population prefers to spend more on experience rather material possessions.

Digitalization: The new mantra of success in luxury marketing is going digital. According to a recent research, 95% of luxury consumers are digitally connected and around 75% of luxury purchases are affected by atleast one digital touch point. In the coming years, it will be critical for the marketers to create a unique, integrated, bespoke online experience for their luxury consumers.

These are few upcoming trends in global luxury market which will redefine the future of luxury market.