AG

Lure of the luxe

The Luxury Knowledge series
“
... Luxury is no longer the privilege of the few who were born into wealth. There is
now a larger consumer base, which has the money to splurge but want a real value
proposition. Going forward, this will be the biggest challenge faced by luxury brands
this year.
” Abhay Gupta
Founder - Luxury Connect & Luxury
Connect Business School

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Contents
Page 4-7
New Frontiers of Luxury

Page 8-10
Changing Face of Luxury in India

Page 11-16
Beyond Disruption: Building Success in India’s Luxury Market

Page 17-20
Top 10 Misconceptions about Indian Luxury Consumers

Page 21-23
Opulence Goes Digital

Page 24-26
BlockChain is here to stay and it can disrupt the Luxury Industry.
Are the Brands Worried?

Page 27-29
Oppurtunity for Entrepreneurs in the Booming Luxury Industry of India

Page 30-32
Opportunities are young and ripe in India’s Luxury Market

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The New Frontiers Of
Luxury

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“The one fundamental truth that remains unchanged
however is that ‘luxury at its heart has always been and
continues to remain all about status”

Luxury, a hitherto ‘reserved for the elite’ phenomenon,

has been undergoing a titanic shift in its core perception,
mainly due to market-driven forces causing a deviation
from ‘reserved for the classes’ to ‘appeal for the masses’.
The democratisation process initiated sometime in the
1970s saw a major change when luxury brands started to
spiral downwards with brand/product extensions allowing
them to cater to what is now called the ‘accessible
luxury’ space. The ideology was to target the fast-growing
new money economy in emerging markets where restaurants, designer residences, bespoke clothing, footwear,
aspirations of announcing ‘one’s arrival’ was the key cars and even weddings is growing evidence of such a
driver for a luxury purchase. phenomenon.

However, with the advent of the millennial consumer Sharing over Owning
(or Gen Y) in the early eighties, consumer behaviour The sharing economy has never had it better. Luxury brands
has steadily and drastically deviated from the previously and products have had to struggle to keep pace with this
defined norms of luxury. The centennial Gen Z (or digital growing phenomenon to avoid being sidelined. Why buy
natives) are further seeking change necessitating luxury anything when you could share or rent an Uber, a wedding
brands to take notice, innovate and offer products and dress, a fully furnished apartment, a luxury sofa, and movies
services to suit their preferences. to even companions that would suit your mood/need/
temperaments.
“Millennial (Gen Y) and Gen Z consumers are proving
to be the main growth engine in the luxury market, Refurbished Luxury
accounting for 30 per cent of luxury sales, yet fuelling
For those who wish to have the feeling of their own
a massive 85 per cent of all growth in 2017. But the
ownership, reusable luxury has become an acceptable norm
younger generations are also reshaping what “luxury”
of the day. From just cars, this trend has now graduated to
is, thereby what luxury brands need to do to appeal to
dresses, bags, accessories, home products and appliances,
them,” according to Bain & Co.
etc. Special websites have sprung up as aggregators, curators,
re-furbishers who on one side assist a bored owner to help
A few of the trends shaping the new luxury are as
liquidate and make space for a new purchase, while at the
follows:
same time help another aspirant indulge in affordable high-end
luxury.
Being over Having
The new luxury consumer favours an ‘experience over Green is the New Black
ownership’. They truly believe in the YOLO (you only live
Sustainability, environmental friendly, compassion for other
once) theory and focus more on experiences rather than
living beings is forcing luxury brands to go back to their
big-ticket product purchases.
innovation boards. Lab-grown diamonds, artificial furs,
scientifically curated leather, sustainable building materials,
Personalisation & Customisation energy efficient homes, solar powered lights, etc are slowly
Major expenditure shift is being diverted towards but surely replacing animal skins, fox furs, mined diamonds,
customisation. Be it products, services, holidays, homes, traditional building materials and energy guzzler appliances.
experiences, content and or travel. The rising popularity
of reality shows, Netflix-like web series, speciality

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Craft over Brand offered by all luxury brands. A trend initiated by Louis Vuitton
No longer can a luxury brand sell itself by pure brand and Virgil Abloh via Supreme is being taken on by the new-look
appeal. While branding plays its own role and is crucially Burberry, thanks to Riccardo Tisci. “Gucci did it. Yves Saint
important, the young ones question the necessity of Laurent did it. Givenchy did it. These designers — Alessandro
paying extra just for the brand value. The craftsman, Michele, Hedi Slimane, Riccardo Tisci, Demna, Virgil — they’re
detailed crafting, rare techniques, handmade, uniquely all turning the definition of luxury on its head,” said Yu-Ming
rare creations that emit emotions, story and feelings is Wu, Co-founder of Sneaker Con and Founder of Sneaker News,
the order of the day. a streetwear specialist reporting portal. “These designers are
turning the definition of luxury on its head.”
The Future of Luxury Fashion
While leather goods have always been a benchmark of Sneakerisation of Luxury
the beta luxury consumer, the availability of top quality Leading and supporting the forefront of this
leather being scarce, luxury brands are finding ‘fishy ‘streetwearification’ of luxury is also the trend aptly named
alternatives’. For their collections and fashion shows, as ‘sneakerisation of luxury’. Global sales of sneakers — or
John Galliano, Prada, Christian Dior, Louis Vuitton and trainers — rose 10 per cent to 3.5 billion euros last year,
Salvatore Ferragamo are all sourcing fish skin at premium outperforming a 7 per cent rise in handbags, according to
prices from Atlantic Leather, a UK-based fish skin consultancy Bain & Co. From the red carpet to Oscars, from
specialist company. Louis Vuitton to Gucci, all luxury brands have now invaded the
‘sneaker culture’. Sneakers with suits, sneakers with dresses,
Street Fashion is Now Luxury even sneaker stilettos heels!
For luxury fashion houses, there’s a new ultimatum as
they look to win over a younger set of customers — find Online Luxury Continues to Grow
a way or risk irrelevancy. The relaxed, casual stance of More and more luxury sales are taking place online and
the millennial is now invading the boardrooms. Hoody could make a significant impact on physical store sales in the
style shirts, baggy pants and oversize clothing are being longer term. Luxury online sales jumped 24 per cent in 2017,

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 culture so driven by the self-obsessed selfie generation has
turbocharged the sales of beauty, perfumes, cosmetics and
skin care products.

‘Phygital’ is the New Retail

From omnichannel retail to now ‘phygital’ retail, the humble
shop has taken a quantum jump in evolution. Shoppers were
offered a seamless experience with no human interaction
is the order of the day. No long queues, no sales pitch, no
cashiers — ‘just pick and go’ is now a reality. From Amazon
go in Seattle in the US to a Decathlon store on Brigade Road
in Bangalore or a WatAsale store in Kochi, India, the surreal,
cashier-less, checkout-free store is now a reality. Luxury brands
have so far adopted features like ‘a magic mirror to entire
product history’ to i-Pad-based checkout to 3D size scanning,
reaching an overall market share of 9 per cent. Bain & Co etc. The days of the seamless luxury store are not far away
estimates that by 2025, online sales of personal luxury either.
goods will make up 25 per cent of the total market. In
India, still at a nascent stage, online luxury sales are Affluence and connectivity have changed
being fuelled by reusable luxury, rent-a-luxury product and everything
luxury service providers. Last but not the least, rising affluence and supersonic
connectivity has changed everything. Luxury is no longer about
‘See Now-Buy Now’ to Capsule Collections the supercar, or the dream holiday or the designer handbag
In order to try restricting the influx and invasion of fast as is still desired by but remains elusive to many. After all,
fashion brands into the luxury domain, traditional luxury supersonic connectivity ensures all these or more on hassle-
brands introduced concepts like ‘See now–Buy now’ free on-demand service. Rising affluence and the amazing
a few years ago. However, the latest experiment by lifestyles made possible by connectivity have shifted the
Burberry is around the concept of ‘capsule collections’ frontiers of luxury. The one fundamental truth that remains
where smaller doses of fresh collections will be added to unchanged however is that ‘luxury at its heart has always been
the stores regularly. and continues to remain all about status’.

Experiential Luxury
With experience being supreme, the physical retail has
tried to keep pace with the digital onrush by bringing in
aspects of virtual reality, augmented reality to on-demand
luxury. Men’s wear retailers offer more than just clothes
— from coffee to a soothing drink to a salon to a meal,
the men are pampered with their favourite relaxant while
sales may or may not occur. On the other hand, hotels,
travel locations are offering virtual reality enabled appeal
of five senses where one’s hotel room could convert
from a beach to a mountain top environment at the push
of a few buttons.

The rise of the Selfie Culture

The rise of this self-obsessive, look-good-all-the-time

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The Changing Face Of
Luxury In India

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The Indian luxury landscape is clearly experiencing
strong evolutionary undercurrents that are redefining
the consumer profile.

In the past few years, luxury in India has been growing

at a compound annual growth rate (CAGR) of about
25 per cent. As per a report by Assocham, the market
is expected to exceed $18.6 billion by 2016-17.
Interestingly, as per Amitabh Kant, CEO, Niti Aayog, the
luxury industry in India has the potential to grow 10-
fold from its current size and reach a top line of $180
billion by 2025.

The Indian luxury landscape is clearly experiencing

strong evolutionary undercurrents that are redefining the
Value proposition
consumer profile and also how luxury players need to
One of the key challenges for the luxury industry is to establish
operate in this domain.
the right “value” equation in the Indian consumer minds.
Commensurate value - given the craftsmanship of the product,
Service areas such as fine dining, electronics, luxury
the brand pedigree and heritage, and therefore its impact on
travel, luxury personal care and jewellery have seen
their status - professionally in business and in society. In a
increasing revenues and are expected to grow 30-35 per
country obsessed with ‘quantity over quality’ - the ‘kitna deti
cent over the next three years. Spending on luxury cars
hai’ syndrome cannot be ignored.
continues to rise growing upwards of 18-20 per cent.
As the purchasing power of women is rising in India,
luxury beauty products market is witnessing a fast-paced Targeting a first-time buyer
growth. According to Euromonitor International, the India throws up surprises to one and all. McDonald has to
luxury product categories that have recorded considerable invent a McAloo Tikki burger priced at Rs 25 and created
growth are luxury jewellery as well as timepieces, luxury especially for India. BMW, Audi, and Mercedes Benz have all
writing instruments/stationery; super premium beauty/ realised the potential of this ‘first-time luxury buyer’. It cannot
personal care products, luxury electronic gadgets and be ignored and yet needs to be treated well like any other
luxury tobacco. luxury consumer. The definition of luxury consumer is changing
rapidly in India. Intimidation created by the aura of the brand,
Besides, the Indian luxury market is developing many lack of brand knowledge, enthusiasm to obtain a social status
facets. Luxury is no longer restricted to the rich and symbol are key elements that a brand needs to cater to.
famous alone; the new age consumers, who do not
typically fit into the boardroom definition of luxury Mental barrier to conspicuous consumption
consumers, are staking claims to luxury products, brands While a set of customers wants to flaunt its luxury purchase,
and services, but on their own terms. there is another which is vary of conspicuous consumption.
The ‘nazar lag jayegi’ syndrome drives away many a shy
Luxury is no longer the privilege of the few who customer. This is a mindset issue which the brands/franchisee
were born into wealth. There is now a larger consumer need to tackle. Rewarding oneself for success achieved
base, which has the money to splurge but want a real after hard work needs to be celebrated — the Cadbury ‘kuch
value proposition. Going forward, this will be the biggest meetha ho jaye’ campaign says it all.
challenge faced by luxury brands this year.
Welcome this shy, first-time buyer with grace, dignity and
It is against this backdrop that one needs to study the key respect.
challenges presented by the changing face of luxury in
India:

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 abroad.

(c) The presence of “knock-off” products in the local market.

The local market is much more open/susceptible to trade in
fake goods. As per Assocham, the size of the counterfeit
luxury goods market in India was estimated to be a whopping
Rs 5,600 crore in 2015.

(d) Multiple taxes across the country maintaining a single MRP

with differential taxes across states has been a challenge till
date. Recent GST rollout is, however, expected to ease this by
April 2017.

(e) Crackdown on big-ticket purchases by the IT department.

Retail environment
Revision of cash transaction limits to Rs 2 lakh from the earlier
More brands, more services, more customers -
Rs 50,000 could help the luxury sectors like fashion, footwear,
they all need the right retail environment. Luxury
low-end jewellery/watches; bags and accessories, etc.
retail infrastructure is nonexistent and street-level
environments are often unkempt. This forces luxury
However, recent reports about legitimate big-ticket purchase
brands to generally launch boutiques in luxury malls or
items being targeted by IT officials is expected to affect sales.
hotels. ‘Hybrid malls’ - the Select City Walk in New Delhi
Customers just want to avoid the harassment value and prefer
and The Palladium in Mumbai are the best examples
to shop abroad.
of transitional customer behaviour when the customer
moves up the value chain.
(f) Ease of doing business, including the general infrastructure
of roads, airports, warehouses, add further to the challenges.
Talent Besides, real estate is heavily regulated for a brand to want to
With so many varied customers shopping luxury, a key build ground up.
challenge is talent. Cannot be too sophisticated to scare
away the new customer, at the same time cannot be As the disposable income of aspiring consumers in India rises,
too ordinary to make an aristocratic customer shy away. and the share of men and women as a separate category
Driving this balance in line with the brand’s cultural keeps further increasing, luxury and bridge brands will continue
customer experience is perhaps the biggest operational to outperform.
challenge for any franchisee or brand. Train, educate,
invest and believe in your staff — this could be the best Brands and businesses need a conducive environment from
way to empower your talent. all fronts to help create a presence and maintain a personal
touch with customers across platforms. Focus on maximising
Regulatory Cholesterol the efficiency of the supply chain and human capital by training
(a) Foreign direct investment restrictions are keeping their associates will be the ones to increase conversion and
brands out of India, 51 per cent foreign ownership is the retention.
limit; 100 percent is allowed but only with 30 per cent
local sourcing which many brands find difficult to comply The journey has just begun!
with. The recent amendment of elongated relaxations of
the initial period is confusing and unclear to most. Brands
fear for dilution of their name and harm to their business
models.

(b) Import tariffs are high at an average 30-40 per cent,

which causes simple price parity and margin issues for
retailers. It is hence often cheaper for Indians to buy

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 Beyond Disruption
Building Success in India’s Luxury Market

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The luxury fashion and lifestyle market in India is one
of the world’s most multifaceted, exciting and tricky
markets.

The idea of luxury today has evolved into a complete

lifestyle, spanning fashion, food, travel, hospitality, health
and wellness, and even technology. Yet, it is also a well-
established fact that ‘fashion remains the fulcrum of
luxury’ and that all other sectors prey onto fashion as a
category to drive, growth, inspiration and value additions.
Hence, when it comes to luxury, the first thing that most
people think of is ‘Fashion’, which itself is a broader
concept spread across the realms of apparel, footwear,
jewellery, timepieces, eyewear, fragrances and alike.
likes of H&M were resorted to by a few established names of
However, in the present era of democratization of almost the luxury fashion space.
everything, the luxury fashion industry is finding itself in a
strategic dilemma. The commercial demands of business However, the core fulcrum of apparel fashion stood the test
have begun to take a toll on the creative aspects of the of time until the very recent times when corporate-led brand
designer community, while the rapidly-evolving business companies began to demand ‘fast fashion’ from established
landscape is also impelling the luxury brands and luxury brands. This has led to further disruption in luxury
retailers to rethink and adapt, as they strive to preserve fashion to date – no clear path seems to be emerging.
themselves in the quintessence of luxury amid creative Attempts of ‘See now, buy now’ introduced by a few top
and business disruptions. names like Burberry are yet to prove themselves and may not
find favour among true connoisseurs.
The phenomenon is prevalent the world over, including
India. Importantly, the luxury market in India is still Collaboration: The Way Forward?
nascent, but definitely growing, and is peculiar in its own Caught in creative disruptions, the global luxury fashion and
way. lifestyle brands and companies have been trying to find
and define a success formula that can ensure commercial
Enduring Creative Disruption success without compromising on the carefully crafted brand
The very essence of luxury fashion lies in deep-rooted positioning, ethos and value propositions. Some have gone
research; emphasis on new textile blends; inspiration on to collaborate with designers, artists and even hotels and
– the Eureka moment for every designer; silhouettes auto companies to further their popularity, revenue as well as
perfected via multiple prototyping; and collections large prestige.
enough to satisfy every global patron. The essence
over the last some decades has got slightly tweaked, Historically, the western luxury brands have quite frequently
however. The luxury fashion first faced disruption way and successfully used the ‘collaboration’ methodology. The
back in 1975 when fast fashion brand ‘Zara’ cannibalised French fashion house and luxury retailer Louis Vuitton has
on the very process of how luxury fashion ought to be had several such associations, while various other have also
created – in a slow, relaxed and cyclical manner. explored the genre. Here, are some of the most successful
fashion tie-ups of the West.
The luxury fashion brands thwarted the onslaught by
fast downscaling to introduce entry-level elements of Louis Vuitton X Art
eyewear, perfumes, and accessories like footwear, The fashion powerhouse Louis Vuitton (LV) has been
scarves, ties, belts and even bijou jewellery. teaming up with ‘Art, Artists and Artisans’ for many years
Experimentations of associations/special lines for the now.

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 Louis Vuitton X BMW
In 2014, LV created a special luggage collection for BMW’s
revolutionary sports car ‘i8 plug-in hybrid’ that fits precisely into
its boot space. The collaboration was acknowledged as the
‘pure expression of the art of travel’.

The Takashi Murakami collection

Renowned Japanese artist Takashi Murakami had
designed a multi-coloured monogram accessories
collection In SS2003 for LV that became highly sought-
after.
Alexander McQueen X Globe Trotter
The Iconoclasts collection Alexander McQueen and Globe Trotter, two iconic British
On LV’s 160th anniversary in 2004, six art and design luxury brands, had launched special limited edition luggage
legends – Karl Lagerfeld, Rei Kawakubo, Frank Gehry, collection that helped strengthen and accentuate both brands’
Cindy Sherman, Christian Louboutin and Marc Newson appeal to their classic luxury audiences.
– co-created ‘The Iconoclasts’ collection, signifying their
interpretation of the LV monogram into their design and Over time, the trend has permeated the Indian market as well.
product sensibilities. Several Indian designers have entered into collaborations with
international and home-bred lifestyle brands and/or companies,
The Richard Prince-inspired range adding a new dimension to the country’s luxury space. Enlisted
The Marc Jacob for LV SS2008 accessory bags and caps below are some of the notable tie-ups in the Indian context:
collection was inspired by artist Richard Prince’s ‘The
Spiritual America’ exhibition in 2007. Rohit Bal X Titan
Leveraging each other’s brand strength, watchmaker Titan
The Yayoi Kusama range and ace designer Rohit Bal introduced a range of luxury watch
In 2012, the brand released its bags-to-clothes range collection targeting the top segment in 2003, which became
featuring signature polka dots by legendary Japanese quite a hit.
artist Yayoi Kusama who is famous for her fascination
with polka dots. Sabyasachi Mukherjee X Bombay Dyeing
This was in 2007. What could be a routine branding exercise
The Chapman Brothers between a textile giant and couture king for its range of Bed
British visual artists Jake and Dinos, popularly known as & Bath line, the tie-up further strengthened the designer-
Chapman Brothers, have been tapped twice by LV. Both corporate collaboration trend.
their AW2013 and SS2017 collections have been well-
liked.

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Sumeet Verma X Judith Leiber and emotion.
This is perhaps India’s most acclaimed partnership in
‘true’ luxury. Designers Sumeet Verma and Judith Leiber Withstanding Business Disruption
came together in 2009 to create bejewelled handbags Amid creative disruptions, the luxury brands have a lot to
range. It was an instant hit at a time when international deal with on the business front as well. Some of the long-
luxury had just begun to surface on a wider scale in India. established business models are on their way out, paving way
for newer and innovative concepts. Who would have thought
Tarun Tahiliani X Timex that luxury items would be available through virtual shops one
Iconic designer Tarun Tahiliani co-created a mono- day or that the world order would go a drastic change with
branded watches range in a tie-up with world-renowned the emergence of new luxury consumption centres like China,
watchmaker Timex Group. Launched in 2010, it has Japan and now also India, while the traditionally rich western
turned out to be one of the most long-standing and countries will slow down? Even the consumer attitudes are
profitable fashion collaborations in India. now changing at a much higher pace than before.

Confluence by Swarovski The liberalisation of the Indian economy in the 1990s and
the policy changes thereafter have been a rollercoaster ride
Austrian crystal maker Swarvoski’s avant-garde, India-
for foreign as well as home-bred companies across sectors,
inspired jewellery line has been co-created with eleven
including luxury. However, some sweeping developments
top Indian designers like Rohit Bal, J.J. Valaya, Suneet
that unfolded over the last 3-4 years have unleashed a fresh
Verma amongst others. The collection, launched in 2016,
whirlwind of the transformation of the country’s business
is available in India, USA and Europe through various
milieu. Let’s take a glance at them:
multi-brand designer stores and portals.

The digitisation of Financial Services &

Abu Jani-Sandeep Khosla X JW Marriot
Demonetisation
Designer duo Abu Jani and Sandeep Khosla designed
Both these government initiatives aimed at weeding
and curated the fashion event ‘Wedding of the Year’
out alternate economy from the system came as a big
for hospitality brand Marriot International at its 5-star
blow to various sectors. Luxury, however, was gainfully
property New Delhi in July 2017. It became one of the
impacted during the initial window of relaxations during the
most appealing associations of the year, taking the
demonetisation drive launched in November 2016. Cash
collaboration trend to a whole new level of experience
transactions peaked for a few hours when accessories,
jewellery, watches, real estate and other high-value goods
ended up being replaced with stashed away cash. Thereafter,

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 business’ index. Moody’s also has upgraded India’s sovereign
rating to Baa2 from Baa3, putting India on similar lines as
Philippines and Italy. As a collective result of the aforesaid,
over 250 to 300 foreign brands have announced their plans for
India.

Creation of mass affluence

With increased focus on infrastructure development,
employment generation and growth in smaller cities are
imminent. Rapid urbanisation has led to increased awareness
and a new demand for premium-to-luxury goods. Brands like
Zara and H&M have now become household names in most
middle-class families in tier II and even tier III towns. Luxury
brands have begun to seep in via trunk shows, private sales
and events that cater to the rich and affluent classes.
there were mixed reports as to positive or negative
impact. Most brands feel that the initial slowdown
was replaced by more balanced cashless transactions, Success in Evolving Landscape
bringing in more control and ease of doing business at the The luxury fashion and lifestyle market in India is one of the
storefront level. world’s most multifaceted, exciting and tricky markets. Brands
and retailers that want to capture a share of this rapidly-
Goods & Services Tax (GST) evolving market need to learn to adapt, or risk missing one
The single most key factor driving mixed emotions post of the next greatest untapped opportunities for the luxury
demonetisation has been the implementation of GST. business. Some of the keys to success in 2018 and beyond
With multiple slabs, a plethora of paperwork and lack include:
of clarity, GST started with a resistant trade blockage
in general. Luxury brands operating in malls found their Learn, adapt & diversify
overall costs coming down due to inputs being credited India being a vast demography, a ‘one size fits all’ strategy will
for GST paid for imports and/or real estate rentals. With not work. Diverse strategies are needed to handle different
a uniformity of taxes across stores in various states, the demographics in order for brands to be unbeaten in the luxury
margins could be healthier too. Clearly, well-implemented sector. Luxury experiences, both in store as well as online, has
GST can give a boost to the luxury trade. become of prime importance for consumer acquisition and
retention. Deeper research into the ethnicity of the region can
FDI policy changes be a great help. A region-wise marketing and communications
While FDI was technically opened up in 2012, complex campaign could pay rich dividends.
sub-clauses on sourcing norms, investment size, location,
etc., had restrained brands from announcing their plans.
However, recent changes in single-brand retail norms and
relaxations on sourcing restrictions have been welcome
by global luxury and superior premium brands.

Ease of doing business

With several positive announcements regarding new
company formation, single window clearances and
faster clearances of permits, etc., India’s ranking has
significantly improved on the World Bank’s ‘ease of doing

15
 this market.

Collaborate, not compete

A relatively easier method that can work in a foreign brand’s
favour is to collaborate with like-minded but differently skilled
Indian brands and add value to each other. Recent associations
between Christian Louboutin and Sabyasachi, Swarovski and
various designers are a gaping example of this factor.

The Indian luxury sector is growing at CAGR of around 25

percent. Last projected at US $18.7bn, it is expected to reach
US $180bn by 2025, as per NITI Aayog CEO Amitabh Kant.
The growing number of Indians climbing up the ‘affluence’
ladder and many more turning ‘aspirational’ presents a massive
market potential for luxury and ‘affordable luxury’ fashion
Focus on brand value proposition companies. Significantly, the Indian origin premium-to-luxury
Indians generally are extremely value-conscious. It is brands are also making their presence felt. The likes of Titan
fairly important for brands to communicate their value and PC Jewellers have made it to the international legion of top
systems clearly and loudly and provide closeness, 50 luxury goods firms that was topped by Louis Vuitton.
uniqueness, product and brand acquaintance with
appropriate messages. They need to educate this new Hence, even as there is still some way to go for India to
Indian customer on their value proposition to win them. become the next luxury fashion destination, the good part is
that the country’s business environment is becoming ever
Indians are digitally-savvy more conducive to luxury businesses. The India growth story is
Don’t ignore the digital medium. The R-O-B-O (research indeed promising, no doubt!
online – buy offline) phenomenon is perhaps the deepest
in India. Recent reforms towards a ‘Digital India’ have
ensured that the power of the net is freely available to a
larger populace.

Train, educate and invest in HR

With so many varied customers, the lack of human
resource (HR) talent is a key challenge. The luxury
brands neither can be too sophisticated to scare away
the new customer nor can be too ordinary to not make
an aristocratic customer shy away! Driving this balance
in line with the brand’s cultural customer experience is
perhaps the biggest operational challenge for them.

Believe in the market & stay invested

India is a long-term paradise. A brand needs to be patient,
keep controls in place and let the ‘brand – customer’
relationship evolve. There are no quick gain methods in

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Top 10 misconceptions about
Indian luxury consumers

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2016 came to an eventful end with various upheavals
across the globe. Ranging from terror attacks in Europe;
the Brexit fiasco in Great Britain; the unexpected victory
of Donald Trump in the USA and to the last but not the
least, the demonetization drive by Prime Minister Modi in
India.

All these factors have had adverse and or positive

impacts on the luxury domain. Global luxury industry
valued at a whopping 1 trillion Euro in 2015 (Bain & Co)
registered a mere 5% growth over 2014.

The global luxury market has reached an era of

single-digit growth.
highly knowledgeable, likes to preserve his heritage and wealth
handed over by the generations. The new Maharaja, on the
However, as the rest of the world stabilizes, the Indian
other hand, having made the entire wealth in his own lifetime,
growth story is hard to discount. For most luxury brands,
is a cautious, hard working and extremely value-seeking
India has become the ‘hottest marketplace’. Growing
customer. His erstwhile middle-class background makes him
at approximately 25% CAGR, it is estimated to have
seek justification for every spend he carries out.
reached $18.3 billion from $14.75 billion in 2015.

Both seek respect for their time, recognition for their hard
The single biggest factor contributing to this growth
work, status and individuality – do not take them for granted.
is the steep rise of the affluent class due to the stellar
performance of the economy and the ‘start up’ culture.
Estimates reveal that the number of HNI households
All Indian Nouveau rich are conspicuously
have grown at a CAGR of 16% from 81,000 in 2011-12 to ostentatious spenders
146,600 in 2015-16. This is further expected to increase While this may be true for a vast variety of customers visiting
to 294,000 representing a total net with of IRS 319 luxury stores, it is a grave mistake to generalize all the nouveau
trillion! rich into logo thirsty clientele. Fact remains that many of
the ‘valuation business’ (read e-commerce boom) super-rich
While there is a tremendous buoyancy around the generation have made quick money in the past few years.
affluent Indian & his luxury consumption, there are clearly Usually, of highly technical background, the back end culture
a few misconceptions in the minds of the marketeers. they belonged to never give them any real need for all things
fancy & expensive. They now wish to acquire style to suit their
The affluent Indian makes & spends money status, which is not necessarily loud, & logo driven. They are
shy as well respectful towards others, typically will experiment
easily
with brands, products, services. Influenced by other user
This perhaps is the biggest misconception going around.
experiences rather than just pure sales talk in their decision-
Making an Indian spend his money is an acid test for
making process, they usually like to be subtle and elegant
any brand. India typically has two types of affluent –
rather than loud and garish.
‘The khandani raaes’ (traditional rich) and or the ‘New
Maharaja’ (people who made money post-partition in
Treat them with respect for their human values and admiration
1947). Both of them work long hours, forego a lot of
for the success they have achieved in a short span of time. Not
personal time, make sacrifices, undertake a lot more
many can duplicate what they have achieved in a very short
risk & add value to the society as compared to many
span of time.
others. Hence, they are cautious spenders & research
well before they splurge on luxury, only to seek the best.
The traditional rich, being generally well-informed &

18
Most (new) Indian affluent can’t define Indian affluent spend more on luxury goods than
luxury nor recognize luxury brands services
On the contrary, most of them are clear with their There can be no bigger misnomer than this. While the initial
definition of luxury. To mistake their simplicity for spends are towards luxury goods like watches, apparels,
ignorance can be a fatal mistake. In a fast emerging accessories, automobile followed by home and interior, the
market like India, they may not recognize the brand switch to services happens quickly. The newly acquired
or even get the brand name pronunciations wrong. status needs to be shared and appreciated by near & dear
However, each one has his own purchase motivations, ones extending into a wider social circle. Spending on beauty,
which may run beyond the standard boardroom definition fitness, entertainment, fine dining, concierge, travel, tourism
of luxury. They are fast learners and would like you to etc quickly ramp up the spending chart.
arrive at the value proposition of your brand quickly.
Offer compelling experiences to them and their circle of
‘Underestimate yourself & overestimate the other’ can be friends to enable them feel important in the eyes of their
a sure shot success mantra. Inform, educate, guide and social network.
lead them to purchase.

Luxury is the sole prerogative of the affluent

class
On the contrary, in a country like India, luxury is a bigger
pull for various other classes. These range from the
Henry, the upper middle class, the returning NRI, to the
first time aspirant. (Read ‘The Incredible Indian Luxury
Consumer). Luxury brands and services need to address
and offer products that can draw in all such classes into
their zone and create a much wider reach, recognition
and goodwill for the brand.

India is a market with a majorly unexposed population

– people with rich tastes and high cultural values seek Indians do not shop Luxury online
all things good in life. Expand your horizon beyond the
A generally tech-oriented nation, thanks to the smartphone
theory book definition.
revolution, the customer has quickly leapfrogged into the digital
space! From books to cars to homes and now even yachts
are being sold online. Newer concepts like ‘Pre-owned luxury’;
‘Rent a luxury’ are not only adding new dimensions to luxury
purchases but also new customers.

Be open to experiment and adapt to a fast evolving

market.

Indian affluent and Luxury is restricted to

metro’s
Contrary to popular belief, the Indian affluent is spread across
the entire country. Luxury brands do face a challenge with
respect to setting up physical stores in every location, but
servicing this fragmented market may be the key to success.
The digi-wave has given many new customers to the luxury

19
brands. They now order through various channels Indian affluent is not brand loyal
ranging from wats app to facebook messenger to trunk While most Indian are yet experimenting with luxury brands
shows conducted by brands or event companies across and services, the fact remains that by basic nature Indians are
the sub-continent. generally very loyal – to their wives as well as their brands!
Affluent who have done the entire trial cycle swear by the
Think beyond the metro’s – reach out, inform, educate brand they settle with unless until they encounter some quality
the affluent beyond traditional markets. or service issue.

Indian affluent does not refer to consumer Ensure to deliver product and service value every time that the
ratings customer shops with you. Do not take him for granted.
The sharing economy encourages one and all to share
experiences, thoughts, opinions and post-purchase Demonetization will affect luxury consumption
reactions. Once again, a typically technologically inclined Against popular belief, an informal survey with most brands
nation engages with unknown brands basis not only the across goods & services show that the affluent and the brands
opinions shared by the brand website but also other uses both have embraced the digitization drive for money transfer
comments and reactions. This is particularly so in the very well. Post an initial lull and slow down, it is anticipated
service sector. While WOM is the universal promoter that business will be back to normal very soon.
for luxury goods & services, online referrals are equally
important for a wider reach. Luxury surely is recession proof – unaffected by shocks in
the economy or otherwise. The Indian affluent continues
Be true to the customer by sharing genuine advice to enjoy his taste of all good things in life.
& information rather than exaggerated claims. The
customer is in all probability pre-informed.

20
Opulence Goes Digital

21
Digital innovation and the emphasis on consumers
have led to merging of fashion, technology and
luxury to provide a seamless experience.

Luxury as a segment has been a reluctant acceptor

of the digital medium in general. Its touch-me-not and
dominant, almost dictatorial attitude, which borders on
‘you-accept-what-we-design’, has always been wary of
being seen as for the ‘masses’. Many iconic brands have
feared the vulnerability, openness, high visibility and easy
accessibility that the digital world is all about. But things
have started changing over the last two or three years,
and we are now witnessing a trend wherein top luxury
brands are engaging with consumers online like never
before.
Digital platforms like ‘Mercedes-Me’ wouldn’t have been
Brands go hi-tech possible a few years ago. As a seamless integration between
Modern shoppers worldwide view the world in a way the vehicle and the company, it gives people a chance to
that retailers do not completely identify with yet. This have automated appointments, personal financing, co-create
is now inspiring luxury brands to engage customers innovative ideas and have access to maintenance data. For
through richer digital interaction and storytelling. Burberry example, it tracks the usage and wear of brake pads and lets
has been a first mover in using digital technology to the firm know before the customer does that the car needs
increase brand awareness. They have been the first to servicing.
stream their shows in 3D and have also made outfits
and accessories featured in fashion shows available to Sites that hard-sell luxury
order online during or immediately after the show. This is According to new research, two-thirds of India’s web users
futuristic. More recently, Burberry created an innovative access social media daily and spend more time on it than
and technologically advanced space on Regent Street, on emails. This, coupled with India’s soaring love for luxury
London, where the digital and physical worlds merge goods, rise in high net worth individuals and the influence of
for shoppers, presenting a unique experience. Here, globalisation, is leading to an exponential boost in online luxury
the store employs a technology called radio-frequency platforms.
ID which engages customers to try clothes in front of a
mirror that doubles as a visual display. Sales executives Also, according to an AC Nielsen report, almost 67 per cent of
use iPads to virtually personalise the trench coats Indians in metros and Tier 1 cities check online reviews before
for customers and to immediately order out-of-stock making final purchase decisions. Key portals in the Indian
inventory. luxury market catering exclusively to high-end brands such
as Darveys, Genesis Luxury, Elitify, Stylebop, Exclusively and
Similarly, merging social media with the physical others, offer a unique platform to choose from wide collections
store, German fashion designer Karl Lagerfeld has also of such brands and offer delivery at your doorstep. With luxury
equipped his concept stores in London and Amsterdam shopping comprising a sizeable market size in India, especially
with ‘selfie-ready’ iPads in fitting rooms. Users can apply during the wedding season, Darveys has come up with the
‘Karl-inspired’ photo filters before sharing the post via concept of wedding trousseau where a service of purchasing
Facebook, Instagram, Twitter and other social media and packaging of luxurious gifts and wedding basics is offered
platforms. to the to-be brides and grooms.

22
Why brands must innovate is all set to blur. From the digital dilemma to digital dominance,
Digital innovation and the emphasis on the customer change is on its way. Issues such as malware, privacy,
have raised standards across the market. This is leading personalised service, attention to individual customised needs,
to a substantial change in the velocity of customer safe and secure transactions-all of which acted as digital
preferences and product lifecycle. More than ever, roadblocks-are being addressed systematically. The merging
brands need to differentiate their value proposition while of fashion, technology and luxury has begun to take place with
developing the required managerial skills in order to the launch of an Apple watch with Hermes leather strap and
simplify their organisation systems while the digital space driverless Mercedes Benz cars.
is providing a seamless experience. When it comes to
luxury, the human touch is as important since luxury is Fusion is the new digital luxe mantra.
also about emotion and intelligence.

The millennial mindset is the most prone to seeking

validation from peer groups and is highly responsive
to digital marketing drives. From posting selfies to
participating in the story of the brand, it is the next
communication platform. Sharing inside glimpses will
entice future consumers while promoting allegiance
among existing consumers.

In short, the divide between luxury and the digital space

23
Blockchain is here to stay and it can disrupt the Luxury
Industry. Are the brands worried?

24
Armani Watch for $100? Prada Bag for $10?

If it sounds to be too good to be true, it generally is.

Counterfeits are the biggest pain point for any luxury

industry. As per the Global Brand Counterfeiting Report
2018, counterfeits cost the luxury industry $30.3 billion
in lost online sales in 2017. While the authorities across
the world have formed task forces to fight the war on
counterfeits.

As new brands adapt to technology, blockchain is one

new technology that is getting rave attention from
technologists and brands alike. It is already getting rave
reviews as the enabling backend technology for Bitcoins.
Luxury Timepieces brand, Hublot has jumped the wagon Now imagine that possibility in all transactions. By allowing
to celebrate Bitcoin’s decade anniversary with a limited the data to be distributed and not copied, blockchain as a
edition $25,000 watch. Customers can purchase the digital ledger can act as a possible solution to better verify
watch in exchange for bitcoins exclusively. the authenticity of the luxury products, document their supply
chain movement and ultimately act as the proof of authenticity
In the real world, however, Blockchain as a distributed for customers investing in genuine luxury products. Luxury
database technology is being touted as the new brands could choose to invest in creating tamper-proof
masterstroke that the luxury industry needs. packaging that could be tracked remotely, devise unique serial
numbers with transaction history and closely monitor the
But first, what is Blockchain? movement of the product through various stages - movement
In simple terms, Blockchain is a decentralised public of raw materials, production, delivery and store inventory. As
ledger system that keeps a record of every transaction an end user application, it could help consumers simply scan
ever done using the technology. It uses large peer to peer the barcode or the serial number and get instant verification
network to verify and approve each transaction. Think directly from the brands.
of it in terms of Google Docs. When multiple changes
are made to the same document, the tool doesn’t So What’s Next?
create multiple versions of the same document. Instead, Authenticity
what you get is one document that has all the changes Taking a cue from major technology brands, luxury brands have
incorporated. One file that all users can view and verify. now started to realise the potential of the technology and have
That’s blockchain in a nutshell. invested in the blockchain technology themselves. De Beers is
one such brand that has launched its first diamond blockchain.
Tracr, a blockchain based platform built by the UK based
diamond mining and trading company, will allow the brand to
track the movement of its diamonds from mining all the way
to the consumer to the retail store. The platform would work
on data science and physical verification techniques to curb
duplicity and ensure transparency in the diamond trade. With
authenticity easily verifiable, DeBeer’s is on its way to a lot of
happy customers and improving sales.

25
 looking for an expert who can appraise the watch, you
would probably approach a store and ask for verification. But
blockchain could potentially eliminate this issue in the future. If
the authenticity and the ownership are accessible on an open
system, verifying the authenticity of products would become
much easier. Since verification becomes convenient, product
value would only increase over time due to transparency
in ownership, maintenance, upkeep, damage information,
insurance claims, and all other such relevant information. This
would be beside the large amounts of investments brands
would be able to avoid, previously allocated for manually
resolving such issues.

The blockchain technology will inevitably distinguish early-

adopting luxury brands from their competitors because of
Trends the numerous features it will provide, including certification,
Another key benefit to using blockchain is the direct
impact with the close monitoring of movement of the
entire supply chain, from raw materials to finished goods.
Using blockchain technology, brands can get real-time
analysis of which raw materials are in demand and which
finished goods are selling more. Brands who closely
leverage technology for data insights and deep learning
will be able to more swiftly respond to changing market
trends. With product launch and consumption cycles
becoming shorter and shorter, technology-enabled deep
data insights would play a key role in cutting costs and
reducing wastage.

Sustainability
A great application of blockchain in the luxury industry is encrypted digital vaults, unique smart-asset technology, ease
sustainability. With sustainability becoming a big agenda of verification, supply chain improvements and a massive data
across industries, the luxury industry is under focus to hub previously unavailable at such scale. Not only does the
reduce waste and adopt greener ways. Blockchain’s open technology offer better pricing and reduced costs in the long
ledger system allows brands to monitor their resources term and short term, but customers would also appreciate the
and reduce wastage wherever possible. At the same authenticity and invest more in the brand at an emotional level.
time, customers would be assured of the product’s
originality and know that the brand is doing everything in
its power to reduce wastage and source raw materials
from sustainable sources.

Long-term impact
Imagine this. What if you found a 50-year old Rolex
watch. What would you think would be its value as an
authentic vintage piece? If you are not sure, Besides

26
Opportunities for entrepreneurs in the
booming Luxury Industry of India

27
The word entrepreneur originates from the French
word, entreprendre, which means “to undertake.” In
a business context, it means to start a business. The
Merriam-Webster Dictionary presents the definition of
an entrepreneur as one who organizes, manages, and
assumes the risks of a business or enterprise.

– “one who undertakes innovations, finance and business

acumen in an effort to transform innovations into economic
goods”.

What are the typical qualities of an entrepreneur?

What is entrepreneurship?
– A tendency to break away from the regular and be different.
A business model in which you create your own business
entity and perhaps hire a few people is entrepreneurship.
– Spot the needs/problems/ challenges and convert them into
Over and above all, entrepreneurship is a mindset
opportunities for success by being solution oriented.
which makes you think beyond the normal. A craving, a
desire and an ambition to break past the set norm and
– A determined mindset to innovate, create value and be
create a unique identity for oneself and his enterprise.
continued growth oriented.
Entrepreneurship is also a process of new venture
creation.
– Original Thinker.

Who is an entrepreneur? – A Risk taker.

• Someone who wants to and also generates
employment for others is an entrepreneur. Someone who – Takes responsibility for own actions
wants to be his own boss is an entrepreneur. Someone
with a vision, a passion for his product or service and – Feels competent, confident and capable
a deep determination to succeed against all odds is an
entrepreneur. So we can summarise that – Sets high goals and enjoys working toward them even with
high personal sacrifices
– ‘An entrepreneur is someone who organises, manages
and assumes the risk of a business entity, enterprise and What is Luxury?
or identity in either goods or services sector’.
Luxury is an often misused term in today’s world! Almost
everyone and everything claims to be ‘Luxury’. So what really
– ‘Entrepreneurs are people that notice opportunities
is the meaning of ‘Luxury’?
and take the initiative to mobilize resources to make new
goods and services.’
If one tries to Google the word luxury, one is thrown up with

28
innumerable meanings in a split second! This only means by 2020 and 180 b by 2025. (as quoted by Amitabh Kant in
that ‘Luxury is relative & subjective’ – meaning ‘to each February 2016). The ‘make in India’ movement is expected to
his own’. fuel the domestic design industry towards this sector. Recent
success of young Indian designers is a case in the example of
In the words of the famous Coco Channel, ‘Luxury this rising phenomena.
begins where necessity ends’.
How is Luxury Entrepreneurship different and
We can thus summarise that luxury is much beyond how can one become one?
need – it is a desire that fuels our emotional appeal. In the luxury space, the depth of the vision, the originality
Something which defines our social status to others of the creative designer, the brand building process, the
besides just providing us material comfort, great quality, marketing & communication as well as the customer service
unquestionable functional benefits and makes us feel a orientation is completely of a different level. The aura of
part of a social set normally called ‘The Elite’. the brand, the magic around the intangibles, the romance
& mystics behind the product which is accentuated by the
So what then is Luxury Entrepreneurship? impeccable service plays the key role.
Someone who has a burning desire to create a business
venture or a product or a service which services this Let us say that the basics remain the same, but the treatment
sector directly or indirectly is a luxury entrepreneur. is entirely different.
An individual with an uncanny eye for detail and
excellent customer service can be a successful luxury The best way, of course, is to undertake a short course on
entrepreneur. ‘Luxury Entrepreneurship’ to clear up one’s concept and
knowledge of this sector and study in depth the nuances
What are the sectors one could explore involved in handling such a business.
within the Luxury domain?
Unfortunately, most people link and restrict luxury to Then on, if one is a creative person he can begin on his own.
fashion and ramp shows due to the glamour attached. If one is a moneyed person, he can have his idea developed
There is no doubt that fashion is an essential part of by a creative team. Alternately, there are a plethora of national
luxury and is in every way the fulcrum point, but luxury & international luxury brands across sectors that are keen to
extends way beyond fashion, giving an entrepreneur reach out to the Indian luxury consumer and the fast-growing
options to choose from areas like jewellery, watches, market here. One is open to exploring franchise opportunities
fitness & wellness, beauty and skin care, real estate, with them.
home and interior, aviation, yachting, automobiles to also
travel, tourism, hospitality and events etc. Worldwide, there are very few schools that provide this sector
of highly specialised education. At LCBS (www.lcbs.edu.in)
Luxury is thus a complete lifestyle that defines the usage are one such school with a clear well-defined focus on luxury
pattern of the affluent class. education as a niche area. The scope for such schools is clearly
very high since as per an NSDC report, some 5 m people are
If one is a fashion designer or has an inclination to be going to be required to service this sector by 2022. As a new
beautician, traditional jewellery, boutique owner, travel business opportunity, this is a great investment direction for
service provider or even a wedding planner, it is possible upcoming edupreneuers.
for him to position himself in this niche space.

What are the Growth opportunities in the

Luxury sector?
Luxury in India has been growing continuously at a
pace of 20 – 25 % PA for past several years. Currently,
at about 18.5 b USD, it is expected to touch 50 b USD

29
Opportunities are young and ripe
in India’s luxury market

30
India’s Luxury Industry – Growing At A Rapid Pace

Louis Vuitton, Gucci, Dior, Versace, Salvatore Ferragamo

– names that arouse aspiration and a sense of
achievement. And India has achieved - from its own
story of luxury back in the era of the Maharajas to Louis
Vuitton’s India entry in 2003 to today, over 50 luxury
labels now retailing out of the Indian market through
flagship stores.

Growing at a Compound Annual Growth Rate (CAGR)

of 25%, India’s luxury market has had quite a journey. In
fact, last year has been a milestone when the industry
touched a whopping $18.5 Bn from its $14.7 Bn mark in
2015.

understanding of the luxury industry and specialise in selling

While luxury cars, fashion and accessories, international
or marketing a product that comes with a hefty price tag.
hotel chains, real estate and luxury watches may be the
Customer interaction in-store needs to be personalised and
biggest drivers of growth – other segments like beauty,
the approach unique. Sales staff plays a vital role in the way a
wellness, furniture, travel and food are putting their best
first-time customer connects with a brand both emotionally and
foot forward in order to appeal to the well-heeled and
financially.
give them a world-class experience.

Luxury brands will profit by “communicating quality,

The Need For Trained Professionals
service and craftsmanship, creating authentic
Selling luxury is not the same as standing behind a
relationships, having docents, not salespeople, and with
counter and showing products to a customer. Luxury is
brand messages built on the aficionado’s love of details,”
synonymous with ‘exclusivity’ and hence, the service a
said Ms. Cara David - Senior Vice President, American
brand offers when a customer walks into a luxury brand
Express Publishing while speaking at the Luxury Daily
showroom has to be equally exclusive and special.
First Outlook 2014 held in New York.

And that calls for a burgeoning need for trained

According to the National Skill Development Corporation, by
professionals who are well spoken, have an
2020 the Luxury Products and Services market in India will
seek close to 5.6 million skilled personnel.

Clearly, there is demand but do we have the supply? The

answer is a big ‘NO’. A lack of trained professionals is being
perceived as a major hindrance to the growth of the industry.

Why India?
An in-depth study by research firm McKinsey shows that
the overall luxury industry is showing increasing signs of
growth from emerging countries with India giving China tough
competition, thanks to a slowing economy in the latter. Russia
and Brazil too seem to be showing no signs of revival and the
same seem to hold good for South Africa.

31
India’s HNI and UHNI population too is growing at a In fact, the study also showed that it is the younger
rapid pace – it is estimated that by 2020, the wealth of generation who has fewer years of experience who will
HNIs in India will see a 94 per cent rise as opposed drive the industry in the coming years. Almost 40 per cent
to China’s 74 per cent. This means more opportunities of the current manpower is young with 4-6 years of work
for luxury retailers in India leading to an increase in job experience, which means there is a huge scope for those who
opportunities as well. want to start early.

Current Pool Of Talent Opportunity is knocking, waiting for the door of success
A study by Luxury Connect Business School (LCBS) to be opened and embraced not just for fresh graduates
shows that approximately 54 per cent of luxury brands/ willing to make their mark in the luxury industry but also for
companies are somewhat satisfied with their employees. Entrepreneurs who are ready to disrupt the Industry with their
A big chunk i.e. close to 40 per cent is still struggling to own luxury brand.
hire trained professionals who understand the business.

32
 I truly hope that this ebook will help and guide you in

your journey as a #LuxuryIndustry aficionado or even

an #Entrepreneur. Additionally, you can access my blog

at abhaygupta.in/blog and find out more about how the

luxury industry is making strides in India. For any further

queries or questions, I welcome you to get in touch with

me at contact@abhaygupta.in, or connect with me on

any of my social media channels and I would love to hear

your thoughts.

LinkedIn: /abhayg

Twitter: /abhaygupta36