Embracing versus Embarrassing the potential Customer;

Changing the way the Luxury business is done in India

- Author: Joseph Sam

Statistics don’t lie but what’s underlying is always food for speculation and so it summarizes why even though the luxury market in India shows positive indices is still less than 2% of the global luxury market.  The number of High Net Worth Individual’s ( defined as those with more than $1 million in onshore liquid assets) in India grew 200 per cent from 2006 to 2013 and households with an annual disposable income of over $100,000 increased 60 per cent, from 700,000 in 2006 to 1.1 million in 2013. Expected to grow at over 20% to reach $14 billion by 2016 (ASSOCHAM-KPMG study )owing to rising number of wealthy people, aspiring middle class and affluent young consumers the intangible barriers to luxury consumption far exceed issues such as the distribution of the target luxury consumer across various markets in India.

So why are Indian consumers reluctant to let their guard down in embracing luxury in the manner consumers have done in other emerging markets which have evolved? The key answer is in exploring the background of ‘the target luxury consumers’. Most of the new wealth in India has been added by virtue of entrepreneurs from the aspiring middle class, SME’s and the trading community which has been expanding their footprint. Even high net worth individuals with a professional background (investment bankers, techno-preneurs, engineers etc) are those who have established their credentials in developed markets and reverse migrated to ride the great India economic wave. What is common to all these classes of the new luxury consumer is their ‘cultural backgrounds and upbringing’, where they were taught to ‘save and be apologetic about spending’. Since the  late 90’s to early 2008 a large number of mid level brands and products established their presence in the Indian market while luxury struggled getting a foothold primarily because of lack of partners, shortage of quality retail space and the difference in pricing Internationally & India, courtesy high duties and overheads. It’s only in the last 5 years, especially with the opening up of FDI, that brands have understood the need to be present directly in the market to access the dispersed pockets of wealth as well as transform this regressed cultural ethos from apologetic purchases into an unabashed frenzy of being ostentatious on opulence & personal indulgence.

So how do you get to provoke these new maharajahs to indulge in luxury be it apparel or accessories or food services or cars & bikes or even products like real estate when there is this constant cultural impediment which is far more significant a reason than what most luxury brand owners have been resonating saying that luxury isn't growing the way it should be because Indian’s are price conscious. The key is ‘Price-Value-Equity’ (try getting it on an X Y Z graph to see it place marked right at your face) and how as pre qualified reverse engineers we are able to give value to the content without having the requisite lineage or culture to quantify the legacy of a brand. Yes the Indian consumer is brand struck, but not every brand has struck it out well in the market and with the influence of social media on mindsets, opinions and perceptions, verdicts are out by the day, making or killing brands overnight.

The first step to engaging the potential luxury client in the background of the cultural paradox is to adhere to the ‘global positioning of the brand’ as luxury brands are uniquely positioned and respected for the ability to conform to a vocabulary that differentiates them, so localization at the cost of distorting brand & product DNA should be avoided at all costs. Second is to make the brand ‘relevant’ to the target customer and how the acquisition of its offering adds perceptible and tangible value to the customer in a way that the value of owning it far outweighs its perceived cost. The third step of the way is far more kaleidoscopic than what it implies, ‘accessibility’, which is a spirited combination of physical access (retail, eCommerce, luggage sales, concierge....), price & payment access and the access to experience. The last factor, in our studies, is the most vital considering that it is where cultural barriers are broken, comfort/ the excitement of owning the product is created or enhanced AND luxury is matured as a concept in the mind of the target or repeat customer. The final step is to disseminate the various facets of the brand beyond its product and service offerings into ensuring that it communicates to its patrons that their engagement & relationship is symbiotic in a meaningful manner that is lasting. The ‘relationship enhancement’ step is about going beyond the tokenism of espousing ‘causes’ and zooming into the resolution of issues that would directly impact ‘the way we live’.

Brands are akin to people with distinct and powerful personalities and being a global brand is more about engagement than the distortion of its DNA by compulsive localisation. With luxury brands where mental roadblocks are normally higher than a potential client’s self pride, the challenge of meeting the brand’s business objectives would be best served by the localization of the method of engagement. In markets like India luxury brands have to go the extra mile especially as they are saddled with a legacy of regressive cultural disposition towards spending on indulgences. In conclusion while tendencies are changing it has to go hand in hand with a sense of respect for the brand as well as a methodical evolution of the patron qualifying them for the more privileged products and services.

Author:               I.Joseph Sam

Designation:   Business Director, Tasteful Living

Email:                  jsam@tastefulliving.in