Looking back, looking forward

The high-end Indian consumer has never had it better. If you thought 2007 was the year of luxury brand launches, Ruchika Mehta says things are set to get bigger and better in 2008

Pierre Cardin may have kick-started the entry of Western luxury brands in India nearly a decade ago, but no one could have predicted the potential the country holds for luxury goods and services today. The new darling of the luxury industry, India is at the threshold of a veritable 'luxeplosion' with 2007 becoming synonymous with the year of luxury brand launches.

If 2006 was the year of the (proverbial) bottom of the pyramid, 2007 was all about the realisation of opportunity at its summit. Some evidence of that legitimising of self-indulgence came in the form of ten luxury brands (no less) like Fendi, Escada, Alfred Dunhill, Gucci, Ermenegildo Zegna, Bruno Magli, Jimmy Choo and Bottega Veneta marking their entry this year. Italian super luxury sports car maker, Automobili Lamborghini, launched two models of the car, while Rolls Royce arrived at a Mumbai mall and ‘officially’ sold 10 Phantoms.

However, 2008 is the year to watch out for, as things will get bigger and better for the Indian luxury consumer. Brands like Hermès, Just Cavalli, Emporio Armani, Dolce & Gabbana, Jean-Paul Gaultier, Alberta Ferretti, Tod’s and Tiffany, among many others, are waiting in the wings.



It is no longer inconceivable to spot a Bentley Continental GT zipping down Mumbai’s Marine Drive, or fashion forward women walking out of salons in Cavalli jeans and Hermès handbags. According to a recent study, there are over a million luxury consumers in India, but this is just the tip of the iceberg. This number is only a fraction of eight million plus consumers who have high disposable incomes but are unfamiliar with luxury brands. The growth rate of the Indian luxury segment is 14.6 per cent, and the target audience is 22-55 year olds. It is currently worth US$ 444 million (or Rs 2,400 crore according to KSA Technopak’s 2006 India Luxury Trends report) and is set to expand with a new firm to facilitate process by bringing together buyers and manufacturers.

But shopping for luxury brands is an experience in itself, and not merely buying goods. Until this year, appropriate real estate, space and ambience were a sore point with most Western luxury brands. Five star hotels were the only, and necessarily limited, option. Developers soon saw the potential in this segment, and the country’s first luxury mall, The Galleria, currently houses Gucci, Bottega Veneta and Jimmy Choo at its swanky Nariman Point address in Mumbai.

Delhi too is set to get its very own luxury shopping destination with India’s largest realtor, DLF, launching Emporio early next year. Emporio will be India’s answer to London’s Bond Street. Four floors of only high-end luxury brands will lend another dimension to the Indian luxury retail market.
No doubt, there’s a lot for the aspirational Indian to look out for. After all, the future looks nothing short of luxurious for the conspicuous consumer!

Ruchika Mehta is editor Hello! and Grazia. Views expressed in this article are her own

This article is part of Luxeletter.

Hermès feels the heat

The Luxe Chronicles has an interesting post on how the weakening dollar is affecting the luxury industry. In fact, no less than Hermès president Patrick Thomas has voiced his concerns about the repercussions for the sector.

Writes Helene:

It's estimated that the Euro could potentially reach $1.50 USD in 2008. This represents a double whammy for European luxury houses. French and Italian luxury houses are particularly vulnerable as both countries have stringent regulations which require substantial proportions of a product to be manufactured and assembled on their territory to qualify for the all-important "Made in France" or "Made in Italy" label that warrants the hefty pricetags. Many such as Hermès produce their goods entirely within their own borders at significantly increased costs as compared to competitors who often subcontract production in whole or in part overseas. To compound the problem, the weakness of the US Dollar and the Japanese Yen vis-a-vis the Euro translates into reduced spending power for American and Japanese clients.

The measure of the pressure facing European luxury houses can be surmised by a statement made recently by the usually discreet House of Hermès. Indeed, Hermès' President Patrick Thomas called upon the European Central Bank to adopt measures to curb the Euro's climb. In fact, the term being uttered from the lips of many French CEOs is 'delocalisation': A euphemism for moving production to cheaper overseas venues. In other words, "outsourcing".

Mr Thomas was quick to rule out this option where Hermès is concerned. The mere fact that Hermès has joined its voice to the chorus of French industrial leaders on the currency issue, however, is telling.

Doing it for the boys

While India is still grappling with shortage of space for luxury retail, Hermès has gone ahead and opened its second store in New York, this time targetting the men on Wall Street. So while the people who live in the financial district of Manhattan do not have a major supermarket to shop in, they can easily slip into the new Hermès store across the New York stock exchange to get a $47,000 limited edition alligator briefcase or a $4,700 custom made leather dressage saddle. And article in the New York Times says:

The traditional arrangement of merchandise has been reconfigured to bring men’s clothes and accessories to the front of the store and to the attention of potential male shoppers. The silk twill scarves and signature handbags for women that are usually right inside the door have been edged aside by colorful rows of neckties.

"We sense a lot of potential with that clientele and we want to be able to serve them quickly with shirts, ties, suits and shoes," said Robert B Chavez, the president and chief executive of Hermès USA.

Hermès Wall Street is the first of several high-end retailers coming to the neighbourhood. They include Thomas Pink, which opened within the last month, as well as Tiffany & Company and the Italian menswear companies Canali and Brioni, which are scheduled to open in the next year.

Image courtesy: nytimes.com

Fashionistas rejoice

Mint is reporting that Hermès is finally coming to India. The Paris based luxury group has applied to India's Foreign Investment Promotion Board (FIPB), the government agency that regulates foreign investments in the country, for permission to sell Hermès products through retail and wholesale outlets.

The company has formed an alliance with Khanna Specialty Retail and Distributors Pvt Ltd, a firm promoted by Ashok Khanna, the entrepreneur behind the Rishikesh-based luxury spa, Ananda.

Hermès will hold a 51% stake in the venture and Khanna Specialty Retail the rest, according to a person close to the development who did not wish to be named. Indian laws currently allow 51% foreign investment in single-brand retailing.

Hermès is the latest in the long line of luxury brands including Louis Vuitton, Chanel, Valentino and Ermenegildo Zegna that have been lured to India by the promise of a large and growing market.

Hermès is currently scouting for space in New Delhi and has talked to East India Hotels, which runs the Oberoi chain of five-star hotels, about renting space in the company's New Delhi hotel.