Last week, the world’s most expensive men’s suit, priced at a neat $113,000 — that’s a whopping Rs 51 lakh — was launched in India. In London, its designer, ‘luxury architect’ Alexander Amosu, was already armed with a list of high-net worth Indians to reach out to personally after the event. Two prospective customers, we are told, have got in touch with Amosu’s office. The suit, made from gold and platinum threads and embellished with nine 18-carat gold and pave-set diamond buttons, is the latest acknowledgement that luxury marketing has finally arrived in India.
Indian princes had patronised the top luxury brands in the world before Independence, especially during the Great Depression: Louis Vuitton bags, Rolls-Royce cars, Cartier watches, Van Cleef & Arpels jewellery et al. The recent rise in wealth has seen the return of several luxury brands. The Asia-Pacific Wealth Report of Merrill Lynch and Capgemini said there were 123,000 dollar millionaires in India in 2007, up almost a quarter from 2006. The 2008 edition of the report said that the worth of the average Indian millionaire was $3.6 million, higher than the Asia-Pacific average of $3.4 million but lower than the world average of $4 million.
At the recent Luxury Goods Forum, Minister of State for Commerce and Industry Jyotiraditya Scindia estimated that the $5 billion market will grow five times in size in the next five years. There are clear indications of this. Porsche Design, the German maker of accessories, tracks 10 brands such as Louis Vuitton, Mont Blanc, Prada, Ferragamo and Dunhill; if eight of these set up shop in a city, it follows suit. It has opened one store in Delhi, and could look at a second one, as well as one more in Bangalore.
The personal touch
So how does luxury sell in India? Normal rules of sales and marketing do not work. The customers are well-informed and do not hunt for value-for-money. The luxury experience, therefore, has to be superior and personalised. Take the example of the Rs 51-lakh suit which uses ‘Vanquish II’, the most expensive fabric from Dormeuil made from blends of extremely soft and rare fibres like Himalayan Pashmina, Qiviuk and Vicuna. The suit is only made to order. Once the order is placed, “Amosu and his team will visit the clients wherever they want, anywhere in the world, for fitting,” says Dormeuil Mode SAS Commercial Director Frédéric Dormeuil. “Our target customers include businessmen, grooms, socialites and industrialists.”
Ermenegildo Zegna sends the customer’s request straight to its experts in Italy for Made To Measure suits, jackets and coats. All for a price, of course, that begins at Rs 1.20 lakh and can go well beyond Rs 10 lakh. Here’s how it works: the customer has to choose from over 450 exclusive fabrics, patterns and colours, and zero in on a style. Trained staff at the store then take the measurements which are codified and transmitted to a central computer in Italy. The computer simulates and reproduces the pattern and design, which is then sent to the sewing department. At this stage the artisans enter. The finished suit bears more than just the brand’s label — it also carries the customer’s name inside. The process takes about six weeks, after which the suit is delivered at one of the four Zegna stores in Mumbai, Delhi, Bangalore and Hyderabad.
Convenience is an integral part of the luxury experience. Last year, when premium automobile brand Porsche introduced a 24x7, 365-day helpline service, this was an aspect it addressed. But it went beyond offering the conventional roadside assistance and towing facility: It also decided to arrange and pay for “hotel stays or flight tickets back home if a Porsche owner happens to get stranded,” says Porsche India Director Ashish Chordia. For the record, it sells models ranging from the Rs 59.22 lakh Cayenne Diesel to the Rs 2.9 crore 911 GT2 RS. Some have gone a step further and started to customise luxury for India, like Cavalli and its Nehru jacket.
The right address
The challenge is to find the right address to retail luxury. Only, there aren’t too many such locations in the country. And whatever there is, is prohibitively expensive. The Porsche Design store in Delhi at 44 sq m is, therefore, its smallest store anywhere in the world. The Emporio mall in New Delhi (it has 74 international luxury brands) and the Palladium (65) in Mumbai are visited by about 80 per cent of the potential consumers in the country!
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The other option is to go to luxury hotels, which is what Mont Blanc and Louis Vuitton have done. Hermès of France, for instance, has come to India in a 51-49 venture with Neelam Khanna, the wife of Ashok Khanna of Ananda in the Himalayas and Ista hotels and the granddaughter-in-law of M S Oberoi. The first Hermès store opened at The Oberoi in Delhi, and the second is slated to come up at the Ista in Pune. But this is not an option exercised by all. Current rules do not allow single-brand overseas retailers more than 51 per cent equity in the country. So, most luxury brands operate through dealers, though with tight control over display and promotion.
To get over the problem, many luxury brands have started to market directly. It’s a simple concept traditionally followed by jewellers who would carry ornament samples to customers’ homes during special occasions like weddings and festivals. Only now the samples include high-end clothing and lifestyle products, even premium watches. And the customer is often a rich industrialist or a business tycoon.
Epoca, a new multi-designer store that retails Dolce & Gabbana, Ferre and Trussardi at its Delhi outlet, claims it has seen success through the personal viewing of merchandise — which is considered far more convenient by its rich clients — than shopping at the store itself. Here, the choice of partner becomes important. Porsche Design, for instance, has partnered with Bird Group which is also a dealer for luxury cars. It thus has a ready database of rich people and also contacts in big companies that could buy Porsche Design gifts for their employees.
A pricey issue
In spite of the high real estate prices, luxury brands know that they need to write their price tags carefully. They know that the Indian buyer travels all over the world and is conversant with prices in Dubai, Singapore, London and New York. They cannot charge higher in India, the import tax of 112-127 per cent notwithstanding. “We understand that buyers who come to Alfred Dunhill stores are well-travelled. You can’t fool a customer about the fact that what he pays in India is more than he would in a European store,” says Anjani Kasliwal, director of S Kumars Nationwide which retails Alfred Dunhill in India.
By and large, most of them know the price points that sell. Jay Makhijani of Mumbai-based Dia Precious Jewellery, which retails brands like Chopard, says that while watches priced between Rs 50,000 and Rs 3 lakh are bought regularly, it’s the price tag of Rs 1 crore and upward that scares people away. Dinesh Dayal, COO of L’Oreal India, believes that price is not a barrier. “Our skincare serum, Secret De Vie from Lancôme, has fiercely loyal customers willing to pay Rs 14,500 for a 50 ml bottle,” he says.
Making contact
The promotion strategy, too, is different. Conventional media which are consumed by the masses are a strict no-no, there is too much wastage. (Some Swiss watches are so exclusive that they do not advertise at all!) What works, apart from niche lifestyle media, is direct customer contact and word of mouth. Abhay Gupta, executive director, Blues Clothing Company which retails brands like Corneliani, Versace and Cadini in India, says, “Brand associations, social networking clubs, promotional events and media created events will encourage audiences to venture into luxury malls.” Adds Chordia: “A major portion of Por-sche’s marketing budget is aimed at direct communication and driving events.” The Porsche World Road Show at Aamby Valley near Pune was an example of this. Certified instructors took prospective customers through test drives and courses specially designed to highlight “the Porsche experience”.
Iconic motorcycle manufacturer Harley-Davidson goes a step ahead with a multi-media 360-degree approach that has a clear focus on experimental marketing. The one-point aim is to spread the Harley culture and further expand the global HOG (Harley Owners Group) family that currently has about 1.4 million members. For a bike whose owners share a bond not only with their motorcycles but also with each other, this hasn’t been too difficult to achieve. Marketing strategies include “regular riding events and boot camps across dealership cities, where a prospective customer can come, test ride the bike and experience the brand,” says Harley-Davidson India Director (marketing) Sanjay Tripathi. This year, Harley Rock Riders, an annual rock music property, was also kickstarted in India with a three-month tour across the five cities that Harley-Davidson has ridden into with its dealerships: New Delhi, Chandigarh, Hyderabad, Mumbai and Bangalore.
That leaves one gap: trained customer-facing staff. Since India had blanked out luxury for several decades, there isn’t enough talent available. Every member of the Porsche staff — technicians, sales staff and customer care — has to undergo three to four training sessions every year. Some of them are sent to Germany and West Asia for training. Recently, a session was also held in India. Porsche also has an online training module which every employee has to study and is then quizzed on.
Clearly, the rules of the game have started to evolve.