Trends in Retail in Luxury Segment. The Party has just Begun!

The Indo-French Chamber of Commerce and Industry organized a one of its kind full day symposium, signalling a first time gathering of luxury providers and influencers in the capital. We bring select conversations in three parts, covering three sessions. The first was on trends in retail in India. Moderated by Dibirath Sen, MD and Head of Banking, North India, and India Lead for Sustainable Finance, HSBC, the session saw an exchange of views from Pushpa Bector, Senior Executive Director and Business Head, DLF; Gopal Asthana, CEO, Tata CLiQ; Ispita Das, MD, Moet Hennessy and Mevin Murden, Director Education, Istitut Marangoni.

Dibirath Sen: Pushpa, clientele for luxury goods or services in India have equal access to international destinations. These are very well healed, well-travelled travellers. What do you think will propel them to buy more in India?

Pushpa Bector: So, a country which is just about emerging a few decades back, going abroad was a big thing. And going abroad and coming back with a suitcase full of goodies was a big thing. That’s no longer the case. I think we as a country have evolved. We also as a country have got a certain pride of being Indian, which I wouldn’t say was the case a few decades back. These are the two macro issues that I see as a change. Today an Indian wants to wear something that they have bought domestically with pride.

Dibirath Sen

MD & Head of Global Banking,
North India, India Lead for
Sustainable Finance, HSBC

Strategic insights from our panellists on enablers that could propel the current Indian luxury market to its estimated potential of $200 billion by 2030.

The fundamental macroeconomic factors are having a very beneficial effect in terms of the rising affluence, the increasing internationalization of the Indian clientele. And of course, we always have had a very favourable demographics, and this all together is making India a magnet for luxury brands.

The second most interesting aspect as data bearers out is post the Covid re-openings. It seems that the Indian luxury market is inflation proof because we have seen a bit of a key shaped recovery, as we like to call it, as bankers, where the entry segments are definitely getting impacted because of inflation. But we have seen sweltering sales in the luxury segment of the market. And this in a sense, is actually drawing a lot of the international brand houses into India because this could be an antidote for some of the degrowth that they’re witnessing in some of their key markets.

Third, we are seeing some large strategic partnerships between Indian corporate houses and global luxury brands. And these have been very, very instrumental in evolving the overall shape of the market.

Fourth, what we call as India exclusive offerings. Now, India has always been a market which has required customizations from all brands, and we are increasingly seeing international brands customize or have some very exclusive India offerings.

And finally, I think also the focus to responsible luxury, which is driven by the consumers as well as the global corporate boards in terms of aligning themselves with sustainability.

While we talk about very often about the potential of the Indian luxury market at $200 billion within a certain period of time, however, currently the sales are pegged at about six and a half billion dollars for India. Comparing that with UK is about 14 and a half billion dollars. France is about 18 and a half billion dollars. China is $207 billion. So, the absolute size of the market is small, and it is felt that one of the factors constraining the growth of luxury in India is the high-end retail distribution infrastructure.

The second is the fact that as I alluded upon the fact that the pricing has also become so much more at par. We in India, of course, with the help of great training, we have to inculcate better customer service than what we have today. We, or all the time I talk to the brand say how do we improve the service at our shop floor? Because I think if we give the right kind of experiences, curate great events domestically within our properties, then luxury no longer becomes transactional. It becomes experiential. And the moment you make it experiential, you’re changing the game completely. Then it is so important for people to belong to a community and to be seen around in that community, which is what I would credit the designers from India. They have managed to do, they’ve managed to create communities, micro communities, which people feel very proud of.

And people will no longer really look at going overseas and buying. They would go walk into Emporio, go in for their trials and have a great experience within the country, within their own city to experience luxury. Beyond this, I think it’s also important to lay emphasis on the fact that the Indian designers, there are so many brands which have grown within the country, and there are luxury brands that are growing within the country, which is also sort of aiding to this cause of luxury consumption domestically.

Mevin Murden: I just comment on here? I think in terms of the service, yes, it is a problem, but then I think about luxury hotels in India. I’m sorry, but some of the hotels here have the most amazing service. What are they doing different?

Pushpa: So, around six years back we identified the same thing and we have got most of our cluster heads or operations people are all from five-star hotels. I’m from the Oberoi School way back, so I do believe that the hospitality in this country has always been way ahead. There are only two countries which are fantastic with service and luxury hospitality. One is Thailand, the other is India. And in India, we’ve got fabulous schools. So, we also are in fact, the person who is heading Emporium China care, sitting right there, he’s from Marriott, and right next to him is a person who is from Oberoi. So, we believe that hospitality inculcation at an early age is great, but what you did touch upon the fact that retail on ground staff don’t feel that sense of pride, that really is on us to work harder to make sure that that is not the case. We don’t want shop floor staff to be any different to the managerial staff.

Pushpa Bector

Senior Executive Director &
Business Head, DLF

In the preamble you had stated the fact that the Indian luxury market is growing and so is the consumer. We have done our own bit of studies. We’ve seen what BCG is saying, what Bain is saying, et cetera. The writing is on the wall that the moment for luxury has come in India, and we see not just luxury for retail overall, the next decade to be the year of retail for India. And as DLF, as a pioneer, we are obviously there right in the forefront in terms of expansion. And so, we are expanding and we do believe that luxury as a destination has to be curated, crafted very carefully. We got the first and dare say in North India, the only one Emporio and Chanakya, both of them are statement of luxury in the country.

We’ve tried to make sure that the experiences, the brands, et cetera, have only evolved as time went by. We see that within that Emporium district, we have enough space we are going be expanding. We are doubling the portfolio right there. So, you will see Emporio 2.0 emerge, which would be almost, you know, two times the size of current Emporio. The reason that we will be doing this is because during Covid and post Covid, even before Covid, we saw a lot of brands knocking on our doors. We have very deep relationships with most of the brands you know, both Italian, French, et cetera. And we think that with the right environment, the brands will also get enthused.

Important aspects that I’d like to mention is say LVMH or Dior etc, all of them want more space within the current Emporio. The reason they want is because their sales is more than doubled or tripled over the past three, four years. So obviously the things that have changed for luxury in India, as we have seen the journey is today, whatever is current in Paris is current at Emporio. So the merchandise is as relevant as it can be. We, on the other hand, have seen the consumers evolve. The consumers are now extremely savvy. They discover digitally and they come and they’re very planned about what they want to shop physically.

And if we curate it right, be it brands or be it merchandise we believe that the consumers are ready because they are highly exposed, they’re highly travelled, and they know what they want, what’s the level of luxury.

And the third aspect that I’d like to emphasize upon is millennials. Today, we all talk about millennials and Gen-Z’s being the next wave for luxury shopping. You can see it physically at an Emporio or a Chanakya because the demographics of people actually consuming luxury is lower. People come in from different parts of the country, especially in North India. It’s a great exploration. And people do have the money. They have discovered what they want and they’d like to see and touch, feel, and experience luxury.

So with that in mind, we are expanding our current one. I see that when I look at market as a whole in India, there are one or two key markets that interests us even beyond the Delhi NCR region. We think that in around four years time, we possibly can have an opportunity to do something in Gurgaon because infrastructurally DLF has expanded and created such beautiful homes. Now in Gurgaon, it’s a whole different city. One would never have thought that apartments can get sold at a hundred crore, but it has, so it shows disposable income.

If I may add one more. It is also the fact that luxury brands have adjusted their pricing now, and that’s a very important aspect to also emphasize earlier, the arbitrage between home country to India was as high as 35% to 40%. Today you get current merchandise, but you get it at a 15% difference, which the consumer is willing to pay for the superior consumer experience that they’re getting.

Dibirath Sen: Gopal, if I were to ask you to give us a sense of where do you see e-retailing for luxury five years from now in terms of the percentage share of the overall market, where do you see it, number one? Number two is also what are your asks from the policy makers and the brands themselves.

Gopal Asthana: I saw that the luxury market in India is supposed to be close to $200 billion. Give and take something here and there. Now what I see more is that the total number of smartphone users, the total number of internet users, and the total number of social accounts we have in this country individually, are more than the total population of this country,

We are getting into online now, we moved from, in last seven years, the total number of digital transactions as a percentage in this country moved from 10% to 20%. This year alone, till 31st of October, 84 billion transactions have been done on UPI. And it is expected that by 2025, you will have more than 220 million transactions rather on internet shopping. And you’ll be surprised to know if you already don’t know that India, which is a population of 1.4 billion, already has 900 million people who have wallets on internet. Now it’s very difficult to go and penetrate and say that how much of these will be luxury. And to a question which you asked and which I also ask my team members and everyone is that what is luxury actually, what do you call as luxury? Is it the price point? Is it the brand?

So, I think if we do everything, like I said, if you’re $200 billion overall, and if you see that say 5% is online, in a period of say, five, seven years, you’re still talking about $10 billion, which includes everything. I think one of the very important things which we go through and I’m sure everybody goes through is fake products. Fake and counterfeit products are of a big problem. Very big problem because that is where we lose the trust in online.

Gopal Asthana

CEO, Tata CLiQ

I actually have worked in physical retail for long. I think to my career in physical detail, I’ve opened close to about a hundred, 140 odd doors, standalones department stores for these luxury cosmetic brands. Just to take an example of beauty, I have seen how initiated these make-up artists are with their clients. They exactly know where, what foundation, what colour will suit you.

Now, from there, this shift into online now. Especially in online luxury, now you start adding a lot of other things like watches, sunglasses, fashion, apparel and all that. So how do you do it? And when you have to sell a product worth 500,000 rupees or 700,000 rupees of a watch, or 200,000 rupees of a Mulberry bag, which is sold in physical retail by gloved hands, you feel touch, you have people talking to you. And you come to online and what do you see?

When you get into luxury, any which ways, content plays a very important role, but in online content is the mother of everything. How do I show the same Cartier watch to the customer which actually when she sees at a physical shop is able to relate and doesn’t find anything that is missing? So, there is something called product page, right? It’s called Product details page in e-commerce, where you see all the details of the product, right? Creating fantastic content and fantastic imagery is extremely important, okay? I’m keeping it very short.

Second thing, is trust. So, you have to build trust in online. So being TATA, I’m very proud. If I want to take you to a particular product, I have to build my whole UI UX and the navigation accordingly, which is a big problem because two scrolls and three scrolls, customer is over. So we in online luxury, we build a lot of innovations and ensure that we take the best of technology, we take best of human interventions. And the last thing, personalization. The only way I can reach you is if I know who you are. So, your behaviour is being captured by some people in analytics department that I have.

Dibirath Sen: Ipsita, over the last few years, we have seen that increasingly the Indian subsidiaries of global corporations, including financial institutions such as us HSBC, have been some of the biggest PBT contributors in the bottom line. I mean, for example, we are the fourth largest PBT contributor for HSBC globally. In the luxury space do you see this happen with India actually contributing that significantly to some of the large global brands who has to be, say the top five markets, if so, anytime horizon that you see that happen?

Ipsita Das: Well, I would say for some of our brands within Moet Hennessy, it has already happened. Like Glenmorangie, which is our whiskey brand, we are in the top five markets in the world. So, it is a journey for a few categories. It is a journey for a few sectors. But the answer for questions like this is a resounding yes. And it’s going to happen not just because people are going to travel and get exposed to new brands. Like last year there were 10 million new passports that were issued, like post Covid India has issued 25 million new passports. So, people are travelling, people are getting exposed.

Mevin Murden: It being in India now for three years has really pushed me to understand Indian luxury in terms of craftsmanship and the rich heritage that India has. And we are pushing students from year one to go back and research local crafts and develop it in their designs or create business plans for engaging with craftsmen and social responsibility. I think this is super fascinating and we are working also with the European schools. So, I had a colleague who came here for research from the London School really looking at how we can help communities of craftsmen to innovate and go global because we’ve met a lot of craftsmen where the large generation of people are doing this type of craft and the new generation is working in IT. So really trying to do this as a social responsibility work as a school is, is personally satisfying for me.

Ipsita Das

Managing Director,
Moet Hennessy

We Indians love our whiskey and it’s an 80% whiskey drinking country. Interestingly, Moet Hennessy also has not just wines, but a very big brown spirit portfolio as well with Hennessy, which is in the name with cognac, and of course whiskeys. Well, the trailer that we have seen is a story that we have largely seen in the top most cone of the pyramid of the demographic of India, which is exposed largely to France and every other Western country and procuring their products, a lot of the consumption is happening as an imported product.

However, as we are seeing this demographic change, we are also seeing a very, very fast growing upper middle class with a huge aspiration. And then there is a marriage that is happening with this aspiration and the desirability that the brands are creating, not just globally, but also in India. this trailer I would build into chapters. I think the first chapter is around the two buckets of people or the segments of the demographics, who is consuming it. One is the ultra-luxury and one is more accessible luxury. And then the second chapter is around products which are coming from outside India and getting imported here. And then the products, the luxury products that are getting created in India. There is a story of luxury wines and spirits also getting made in India.

So, Moet Hennessy, of course has a winery in India that is called Chondon. And we are proudly putting a sparkling wine in the global map of luxury sparkling wines. So, the trailer has just begun to say that to reach out, not just to the ultra-luxury with our imported set of portfolio, but also to the fast growing middle class in India, we need to make our products very accessible and to a certain extent, while we create that desirability, we also make it affordable. And wines and spirits are known notoriously for having 150% custom duties, which makes it quite inaccessible. And hence the answer that we have found for now is to Make it in India, create a world-class product in India.

And in terms of the outlook, it’s amazing. I think we are training students here. We are sending them to finish in Europe. They’re fully exposed. They’re working every term on industry projects with executives from all the brands possible in different countries. They come here and they’re also exposed in the Mumbai School with speakers who come to school to teach them, to mentor them. Today, is the moment for India and all eyes are on India, and the school is here of course to supply the market with the right talent.

Closing Comments from the Panel

Mevin Murden: I think in terms of experiences, for me it’s as we were talking about staff working in luxury retail, understanding who they are working for and gaining that pride of working for such global amazing brands. Experiences such as Jio and Chanakya, the whole event I think made also staff understand better who they’re working for and what they’re working for. These types of events really educate the staff, but also our students to understand better these global brands and how important and beautiful they are and what they stand for. And this is the key to understanding what these brands are about. And then eventually, of course, working for them, but also attracting interest in terms of learning and gain, getting into this industry.

Ipsita Das: Well, I would say the evolving landscape of luxury in India, the lies in what we are doing together today here. 200 of us under one roof, pretty much all luxury brands that are present in India are here. And this is actually instilling the confidence of what luxury is going to do to India or rather, the prospects of luxury in India that we are going to see in the coming months and years to come. And I would not say it’s even a decade away. India’s time has come, luxury is here, and that’s what all of us have to do together and the driving forces sitting in the room today, and I’m glad to be a part of it.

Gopal Asthana: So, in the midst of all this applause, I want to say that, closing comments, please come and shop at Tata CLiQ Luxury. We all need to build luxury. We all need to build the confidence in the customers to buy online, of course, offline also. And we really want to work on customer service, customer excellence. We want to be the best in terms of customer service, retention, loyalty, and build luxury. That’s what is our ultimate goal is.

Pushpa Bector: Well, with the entire lot of us sitting over here, of course with come over and shop at the Emporio. This has set the platform for the fact that India, we are ready infrastructure is there. We just want more global luxury brands to enter the country because the consumer is ready. I think we are seeing the space the way say China saw 10 years or 15 years back. We are seeing that situation today and we believe that when we get in the newer brands coming in this will become a stronger market than what they had ever envisage because domestic consumption is happening in a big way.

Mevin Murden

Director of Education,
Istituto Marangoni

I think we have a happy stressed team at Istituto Marangoni at the moment, because five years ago when we opened the school, the situation was completely different. When I came back, now we are being bombarded by the industry to send CVs and even our students who go to study abroad, we have to beg them to come back to India because this is where the jobs are. So, they finish their studies in Europe, they’re looking for jobs. Europe, of course, it’s more difficult. And here we have so many opportunities. So, we are asking them to come back. So, they’re fully trained in Mumbai and in Paris for example. So, they’re fully well trained, ready for the industry exposed, but there is a problem.

So, the problem is they don’t want to start with retail. And what we think in terms of the career department is the pay first of all, and second is the prestige associated to working in retail in India. So, this is a big problem for parents because they don’t want to, after sending their students, their kids to study abroad, coming back to work in retail, it’s a bit of a challenge image wise. Luxury service needs retention and training. So, I think creating relationships with customers, long-lasting relationships in with customers in terms of luxury, needs a certain type of talent, and to be able to attract and retain this type of talent, something needs to change in terms of the pay the treatment and also the image associated to working in retail in India.

Dibirath Sen: I think you (the audience of global brands) are already in a market which is so colourful and vibrant, and you have heard each of our panellists being so upbeat about the potential of the market and the reality in the market is actually surprising most of us. We are in a great place. I know there have been some amount of skepticism about India having lost certain decades, but I think we are in for a great run.

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