LUXURY

The Luxury Cult Comes to India

Vinod Kaul
Director
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Defining Luxury

The basic Gucci or LV ladies handbag is a canvas bag selling for $1000.

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Defining Luxury

The emotionalism of luxury

“Purchase of luxury items gives the buyer an immense amount of joy

which surpasses the economic value of the product.”

“…it is bought to satiate an altruistic need and the joy of possessing a piece
of extreme luxury is an end in itself.”

Louis Vuitton CEO, Yves Carcelle

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Defining Luxury
Characteristics

Luxury brands live in people’s hearts & minds

Luxury brands have range

Can be teamed with many products

Luxury brands have permanence

Don’t go out of style/are classic

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Defining Luxury
Wealth & other forms of luxury

Luxury is most often associated with wealth & exclusivity. Other forms: Time,
Experience, etc

A recent US study (2000 affluent consumers by the CBC Research Centre

remarkable similarity in perspective around the world largest chunk (44%):
‘luxury is having enough time to do whatever you want and being able to afford it’.

Next chunk: ‘life experiences’ and ‘comfort, beauty and quality’.

Material products become just a tool or a toy for that greater ‘life experience’.

Exotic luxury packages:

A flight into outer space on the Virgin Atlantic?
Cont :-

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Luxury Defined
Values of Luxury

• Rarity/exclusivity
• Highest quality
• Know how
• History, roots, dreams
• Rewards: pleasure, status
• Emotion, experience
• Custom made

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Luxury Defined
Luxury defined today

The maker of dreams.

“The luxury industry sells a share of a dream to the customer”.

Madame Laggard, French Trade Minister

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The Ethics of Luxury
Downside
Opulent & decadent
Materialist & consumerist
Social segmentation & vanity
Exploitative - $1000 LV bag in canvas
Not essential
Conspicuous consumption

Upnside
Need not be vulgar but sophisticated
Aesthetic expression
Social positioning more democratic than ‘caste’ system
Can be genuine pursuit of excellence
Selling dreams/mystical experience

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Luxury Products & Services

Cars:
Jaguar, Mercedes Benz, Lamborghini, Rolls Royce, Bentley, Ferrari, Bugatti

Couture: Versace
Indian couture designers: Rohit Bal, Tarun Tahiliani May not include prêt designs

Hotels & resorts

Amar Vilas (Oberoi), Four Seasons

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Luxury Products & Services
Accessories

Footwear: Jimmy Choo

Handbags: Louis Vuitton, Aigner, Leiber, Hermes, Prada

Small leather goods: Dunhill

Watches: Piaget, Tag Heur

Eyewear: Armani, D&G, Chanel

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Luxury Products & Services
Perfumes: Channel

Jewellery & Gems: Cartier, Tiffany

Writing instruments: Mont Blanc

Luggage: Louis Vuitton

Liquor: Henessy (vodka), Blue Label, rare wines Art

Not Luxury: Mango

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International Powerhouses in Luxury
PPR (formerly Pinault-Printemps-Redoute), 1963
French luxury conglomerate
Chairman: Francois-Henri Pinault
Gucci, Yves Saint Laurent, Sergio Rossi, Bottega
Veneta
Alexander McQueen, Stella McCartney, Belanciaga
Turnover: 18 billion euros

LVMH Moet Hennessy-Louis Vuitton SA

Louis Vuitton founded in 1854 - luggage
Merger in 1987
Bernard Arnault, Chairman
Tag heur, Louis Vuitton, Fendi, Celine, Kenzo, Dior, Marc Jacobs
Turnover: 16bil euros, Employees: 72,000

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The Marketing of Luxury
Entry level items
Under $250
Cuff links, scarves, fragrances, ties
Bought by aspirational buyers.

Investment Pieces
Above $250
watches, apparel, figurines
Bulgari Aviator sunglasses $330
Burberry Classic Trench Coat $1,184
Omega constellation Double Eagle $3,450
Hermes crocodile Kelly bag $30,000
Bought by regular luxury buyers.

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Luxury sales & growth
World turnover in 2007: $233 bil
Powerhouses of luxury consumption
USA – largest, accounts for one third
Japan
China
Europe

Growth in luxury markets

North America 2%
Europe 12%
Asia Pacific 18%

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Luxury in Asia
Cult of the Luxury Brand

Inside Asia’s Love Affair with luxury

Radha Chadha & Paul Husband

Luxplosion rocking Asia

94% of women in Tokyo in their 20’s have something from LV
Asis is now the world’s biggest market for luxe
37% in Asia + 15% by Asians abroad
China will be the biggest in 7 years

Luxury in India has become more accessible. Bollywood is an influencer

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Luxury model for Asia
Stage 1: Subjugation, desire based
Stage 2: Start of money, India
Stage 3: Show off, new rich, China
Stage 4: Fit in, Conformity, Joneses, Taiwan/Korea
Stage 5: Way of life, Japan, Hong Kong

India has gone from old money to new money

India could be in top 5 consumers by 2025

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The story in India

Luxury is not new to India but the modern form is yet to evolve
Branding
Lasting customers relations
Signature look
Virgin market

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The story in India
Ermenegildo Zegna
First store opened at Crossrads in 1999. Closed in 2005
A 3000sqft store opened at Taj, Mumbai in 2007
Third store to come up at Emporio
Have taken a 51% ownership in Indian operations
Jimmy Choo
Name now synonymous with luxury shoes for women
Jimmy discovered, bought & guided by Tamara Mellon
Accessories editor at Vogue
Ten years later company valued at ₤185 million
Halle Berry, Hilary Swank and Helen Mirren on Oscar night
60 stores across the world
Launched India store through Murjani Group in Sep08
Located at Nariman Point, Mumbai
Worn by Aishwarya Rai, Preity Zinta
Internationally launching sunglasses, fragrances & handbags

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Louis
LV’sVuitton
association goes back to the Maharaja’s for
luggage
First store opened in 2003 at Oberoi Hotel, New
Delhi
Second store opened in Mumbai in 2004
Now opened at Emporio
Staying away from apparel for India
Have taken 51% stake

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Nielsen Survey on Luxury
Online poll in 48 countries covering 25,000
consumers
International
Gucci most coveted (one in five)
Chanel & Calvin Klein tied for second place
Followed by Louis Vuitton, Giorgio Armani, Christian Dior,
Versace
India
57% see labels as status symbols
Most coveted;
Gucci (41%)
Calvin Klein (31%)
Dior (26%)
Versace (25%)
Armani (22%)

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Promoters of Luxury in India
TSG International Marketing Pvt Ltd
The Sachdev Group – Priya Chatwal & Charu Sachdev
Brands: Lanvin, Alberta Ferretti, Jean-Paul Gaultier,
Moschino,
Stella McCartney
Genesis Colors
Sanjay Kapoor of Satya Paul fame
Brands: Aigner, Canali, Kenzo, Paul Smith, Just Cavalli
Murjani Group
Gucci, Jimmy Choo, Calvin Klein, Bottega Veneta
Brandhouse Retail (S.Kumar Group)
Escada, Dunhill

JV’s in the pipeline

DLF with Armani
Hermes with Neelam Khanna (PRS Oberoi clan)
Reliance Retail

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The Indian Luxury Market & Industry

Over one million luxury consumers

Potential new customers: eight million
With high disposable income
Target audience: 22-55 years
Currently worth: US$444mil/Rs2,400cr

KSA Technopak India Luxury Trends Report

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Retailing of luxury
The luxury mile
US: Fifth Avenue (NYC), Rodeo Drive (Los Angeles)
Germany: Konigsallee (Dusseldorf)
London: Bond Street
India
The Galleria (Mumbai)
Gucci, Bottega Veneta, Jimmy Choo
Emporio, Delhi
UB City, Bangalore
Taj Mahal shopping arcade, Mumbai
Louis Vuitton, Zegna, Fendi
Oberoi Hotel, Delhi
Louis Vuitton
Set to open:
Palladium (Mumbai)
at Phoenix Mills

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Emporio
The first Indian luxury destination:

Officially inaugurated: Sunday, 30th Aug

Developer: DLF
130 luxury brands
Apparel: Dolce & Gabana, Canali, Louis Vuitton, Chistian Dior
Jewellery: Cartier, Harry Winston,
Leather Goods: Tods
Men: Paul Smith, Armani
Watches: Piaget, Chopard, Jaegar
Indian designers: Rohit Bal, Tarun Tahiliani, JJ Valaya

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Issues facing luxury in India
Lack of appropriate space
Adjacencies important – nightmare McDonald’s
Started with use of hotel space
Makeshift space in malls/markets
Emporio – perhaps the first luxury mall in India
Expensive real estate
Lack of trained manpower
Specialized programs in Institutes
Lack of Indian products & brands
FDI restrictions

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Scope for Indian brands

Can you think of an Indian luxury brand?

India’s strengths: excellence in craftsmanship, heritage, business potential

Some suggested areas: hotels & hospitality, spas, jewellery, meditation
(Mahesh Yogi), art, Indian fashion

Acquiring Western brands: Tata acquires Jaguar from Ford in the UK

Oberoi hotels: Rajvilas, Udaivislas, Amarvilas

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Luxury Education
Essec Business School, France
Most prestigious international course in luxury
One year MBA program since 1995
Student size: 30

IIM, Ahmedabad
Tied up with Essec for new luxury program
Student size: 9
International University of Monaco
10month MSC program in management of luxury goods &
services
cost: 12,000 euros
Stern School of Business, New York
Since 2006

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Luxury Education

Columbia University, New York

Course in design & marketing of luxury goods

HEC Paris & Tsinghua Univ., Beijing

Six month module

Pearl Academy, Delhi

Luxury module as part of Fashion
Marketing

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Thanks

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