COVER STORY LUXURY BOOM

INDIA IS GOING TO RESHAPE THE VERY LUXURY

COUNTRY WHICH WILL BECOME
INDUSTRY ITSELF IN THE TIMES TO COME; IT’S THE FIRST TROPICAL
SUCH A BIG & SIGNIFICANT MARKET — RADHA CHADHA

BOOM
■ By ONKAR PANDEY THE INDIAN AFFLUENT

V
ISIT ANY SHOPPING MALL OR AN AIRPORT
lounge in our metros and you get to see a new
breed of young and mobile Indians wearing an
Armani or Prada suit, flashing Rolex or Tag
Heuer watches, proudly flaunting their latest
Jimmy Choo shoes. As they hurriedly walk
past you, leaving an intoxicating whiff of the latest Chanel
perfume, still their Gucci or Louis Vuitton bags dangling
leisurely over their shoulders may keep you under capti-
vation for a while.
PYRAMID
1 MLN LUXURIENTED
Source of Affluence traditional and
inherited wealth, they are exposed
and aware of the world-class living
6–7 MLN VERY AFFLUENT
This Neo-rich segment has enough
spending power. It is quickly
acquiring Orientation to luxe.

9-10 MLN MID AFFLUENT

The getting-there ilk, spends mainly
on highend goods, child-education,
better housing and larger cars.

14-15 MLN UPPER

MIDDLE CLASS
They are also acquiring orientation
towards Luxe, but unlikely to indulge
beyond a limit.

April 2008 ❘ Pitch ❘ 47

COVER STORY LUXURY BOOM
Luxe Brands Ahoy!
This leading brand
offers men’s and
women’s ready-to-
wear collections,
handbags, shoes,
watches, sunglasses, jewellery,
and small leather goods.
India Strategy: Gucci started its
operations in 2007 with boutiques
in Mumbai and New Delhi. Murjani
Group is the master franchisee for
this brand in India. Gucci plans to
have four more stores by the end
of 2008.
Mercedes Benz, for-
merly Daimler
Chrysler, entered
India in 1995. It has
been the bellwether
for luxury automobile here since
then. It recently launched
Mercedes Benz CL and S Class
models. Its Maybach, priced
around Rs 5 crore is hot pick for
the rich and famous.
India Strategy: Its Pune plant will
be operational in 2009. With
20,000 Mercs on roads, it’s grow-
ing at 15 percent.
The connoisseurs of luxury have
arrived in this part of the world with a
bang and the likes of Gucci, Venini,
Louis Vuitton, Prada and Missoni are
making a beeline for hawking their oh-
so-uber luxury products to the high-
flying, well-heeled, and globally
evolved nouveau-rich Indians of the
post-reform era.
Though the domestic luxury market
still commands only less than a per-
cent of the global luxury pie, experts
believe that the country has a huge
potential in coming years as it develops
and stabilises its retail market further.
The fragmented retail industry is val-
48 ❘ Pitch ❘ April 2008
Started in 1912,
Gabrielle 'Coco'
Chanel rose to
become a force in
the fashion world.
Essentially a women’s brand, it
offers suits, dresses, trousers, per-
fumes, costumes & jewellery, sun-
glasses, cosmetics and bags.
India Strategy: Launched opera-
tions in 2005 with one boutique at
Imperial Hotel in Delhi. Also pres-
ent at select Shopper's Stop,
Lifestyle and Pantaloons outlets.
This iconic Italian
brand was founded
and owned by the
fashion icon Giorgio Armani. It
designs and manufactures several
fashion categories and runs cafes,
bars, restaurants and nightclubs
globally.
India Strategy: Armani has just
entered into JV with DLF. It would
be retailed at two stores in DLF's
Emporio Mall. It is also planning
four other stadalone stores in New
Delhi and Mumbai.
ued around $350 billion, with forecasts
of it nearly doubling by 2015. Currently,
only three percent of the retail market
is organised, a tiny portion compared
to other large economies and if an AT
Kearney report is to be believed, this
can touch over 20 percent by 2010.
AT Kearney pegs the domestic luxu-
ry market at around $3.5 billion today,
the 12th biggest in the world. Growing
at 25 percent annually, it is expected to
leapfrog to $30 billion by the turn of
2015.
But, as the saying goes, there are still
many slips between the cup and the lip
for international multi-brand retailers
This French conglom-
erate is the biggest
luxury brand with
around 50 brands in
its stable. LVMH's
leading brands are Fendi, Christian
Dior, Tag Heuer, Dom Perignon etc. LV
bags start above Rs 15,000, while
watches are above a lakh of rupees.
India Strategy: Entered in 2003 with
a store in Delhi, and in 04 opened
one in Mumbai. Also has a leather
shoe-sole factory in Pondicherry. It
plans to open three boutiques in
2008 in new cities.
Since 1960,
the Italian
designer
has been creating luxury gowns
with intricate detailing and
tastefully body-conscious sil-
houettes.
India Strategy: Opened its first
store in Aug 06. Looking for
space to open stores in
Ludhiana, Bangalore by 2009,
also in Mumbai. Sells above 200
items a month and is growing at
above 50 percent annually.
like Wal-Mart, Carrefour and Tesco
which are not allowed to set up shop
under the prevailing FDI norms, which
allow only 51 percent FDI in single-
brand retail. But some good news
could be on the way for them, especial-
ly for the single-brand retailers, with
the government hinting at raising the
FDI cap. "India has now become a real
market and no more a test-market for
luxury brands. In the coming years, it
will be a boom market for luxury
goods,'' commerce and industry min-
ister Kamal Nath said opening the HT-
Mint luxury summit in the Capital
recently, which was attended by over

Gianni Versace
was founded in
1978 in Milan.
Besides premi-
um men's and
women's wear, it offers jewelleries,
watches, fragrances, cosmetics,
home furnishings, and other
accessories.
India Strategy: Set to launch its
latest collection of jeans and
accessories for men and women in
2008 through its franchisee Blue
Clothing Company.
This
famous
French jew-
ellery and watch brand came to
India first in 1911 to serve the
Maharajas. it had an office in
Delhi between the two world wars.
India Strategy: Looking for suitable
location in Delhi/Mumbai to open
a boutique. Currently retailing
from Delhi’s Maurya Sheraton. Its
eyewear comes for Rs 34,750,
watches (Rs 1.88-16 lakh), pens
(Rs 25-Rs 35,000) and lighters at
Rs 21-38,600.
400 international delegates, many
being top luxury brand honchos like
Gucci chief executive Mark Lee and
Andrea Illy of Italian Illy Café group,
among others. "You are at the right
time and at the right place, so welcome
to India," the minister told them.
A BOOMING MARKET
For the third consecutive year, AT
Kearney put India at the top of the
emerging markets for global retailers in
its 2007 report titled ‘Global Retail
Development Index’ ahead of China
and Russia. The report presents a rosy
picture primarily because of the large
young population with high dispos-
able income, who are well exposed to
This Spanish lux-
ury porcelain
brand has pres-
ence in over 120
countries. A
small Ganesha figurine comes
around Rs 15,000, while a Niagara
Falls chandelier comes for Rs 24
lakh apiece.
India Strategy: Entered in partner-
ship with SPA Group and opened
its first store in 01. Lladro plans
to open 10 stores by the end of
this calendar year.
The British marque
Bentley's glorious
history has been
associated with the
world’s leading heads of state. The
British queen has a bullet proof
Bentley that is used only for her
public appearances.
India Strategy: It introduced Azure
and Continental GTC brands in 2007
in Delhi; aims to open its second
outlet in Mumbai in 08. It is hoping
to sell over 25 cars annually. Azure
and the Continental GTC cost Rs 3.8
crore and Rs 2.1 crore, respectively.
Western culture and way of living—as
many as 60 percent of the population
are below 30. An ACNeilsen study ranks
the country at third position in the lux-
ury sweepstake with over 35 percent
respondents being eager to own
designer brands, just behind Greece
and Hong Kong. A KSA Technopak sur-
vey titled ‘India Luxury Trends 2006’
says the profile of the new affluent
Indian who is the target of the Guccis
of the world and its gang reads like: ‘A
company CEO in his 30s/40s. The IT,
manufacturing or services entrepre-
neur with deep-pockets or the foreign-
returned prodigal children exposed to
these brands and Western culture.’
The Technopak study goes on to say
the luxe target group is normally a
Post-Graduate or above. He normally
resides in a city and has a disposable
income of Rs 8-9 lakh, owns a premi-
um or luxury saloon car like Honda
Accord or a Toyota Camry. The survey
further says that the country has over
1.6 million households with annual
income of over $100,000 and this seg-
ment is growing at 14 percent annually.
These high-end consumers are prima-
rily spread across the 12 major cities of
Delhi, Mumbai, Chennai, Bangalore,
Kolkata, Ludhiana, Kanpur, Nagpur,
Surat, Hyderabad, Coimbatore and
Kochi. These people have also been
beneficiaries of the highest salary hikes
(15 percent) in Asia for some years now.
India has also seen the second fastest
growth in the number of high networth
individuals in the Asia-Pacific region
(20.5 percent) last year and the number
of its millionaires were growing at 20
percent during the period. All these
prepare a perfect platform for luxury
brands here. Ask Altagama executive
director Armando Branchini or fashion
designer Suneet Varma, they will be
just a few of the lot who will swear by
the love for luxury in the country.
A LUXE INDIA IN THE MAKING?
Most of the luxury experts say India is
embedded to luxury historically. Our
erstwhile maharajas were connois-
seurs of luxury often importing them
from France, Italy or wherever they
originated. Describing luxury as "bal-
ance, harmony and beauty of human
race," French ambassador to India
Jerome Bonnafont told the luxury
summit, "because of lavish Indian
weddings, media advertisements,
maharajas and Bollywood stars, I feel
the art of luxury is alive in India."
So, even as the Tatas and Infosys
spread their wings across the globe
acquiring auto marquees like Jaguar
and Land Rover, many international
luxury brands like LVMH, Gucci, Rolex,
April 2008 ❘ Pitch ❘ 49
COVER STORY LUXURY BOOM
Chanel, Tommy Hilfiger and Brioni are
opening boutiques or in the process of
doing so, in Mumbai and Delhi and
those already present have mega plans
for further expansion in near future.
Many others like Canali, Edmund
Frette, Altagama and Missoni are
studying the market or scouting for
local partners to start their operations.
Gucci with two stores already in
Mumbai and New Delhi, in partner-
ship with the Murjani Group, is plan-
ning to open two more in New Delhi
and Bangalore by the yearend, accord-
ing to its chief executive Mark Lee. "In
the coming few years, India will
become one of the important luxury
markets and a key market for Gucci.
Customers here are as sophisticated as
our products," says Lee.
The famous lingerie brand La Perla,
which is donned by many a perfect-
bodied Bond girl, is planning to open
two stores in partnership with the
Murjani Group in Mumbai and New
Delhi. Its managing director Andrea
"ANYONE WHO COMES TO INDIA WITHOUT TAKING CARE OF ITS CULTURE
SUCCESSFUL. ALLOW YOURSELF TO BE INFLUENCED BY THE CULTURE."
Bonardi says, since the Indian market
has good medium- and long-term
potential. His company is even toying
with the idea of roping in Bollywood
stars for promotion. The French luxury
conglomerate Louis Vuitton-Moet
Hennessey (LVMH) has two stores in
New Delhi and Mumbai and it is plan-
ning to open one each in Delhi and
Bangalore. According to reports, LVMH
has invested Rs 58 crore for picking up
stakes in two companies. While Louis
Vuitton has invested Rs 26.5 crore into
LV Trading, Fendi, an LVMH enterprise
has pumped in Rs 32.2 crore in Fun
Fashion India. Fendi, that already has
one store in the country distributing
fashion clothing, bags, accessories,
watches, jewellery and shoes, is plan-
50 ❘ Pitch ❘ April 2008
ning to open six more stores. Leading
Italian fashion brand Versace has
already opened its first boutique in the
country. Chanel, present here since
2005, and Christian Dior since 2006,
have a boutique each in New Delhi.
Luxe leather accessories brand Judith
Leiber is also opening its first store in
Delhi this year.
Leiber creative director Frank
Zambrelli, who defines luxury as being
not about locations but being more
about people, says, "Leiber is going to
open its first store in Delhi this June
and then will look at other cities." The
famous menswear brand Brioni has
opened its second store in the Capital
this month, after its 2007 launch in
Mumbai. Surprisingly, Brioni has not
yet opened a store in China, which is a
much bigger market.
Accessories and apparel maker
Valentino, represented here by Mafatlal
Luxuries, has been running a boutique
in Delhi since 2006. It is scouting for
suitable places to expand to Mumbai,
Bangalore and Ludhiana, says its Delhi
boutique assistant manager Prasshant
Mehta. Valentino sells over 200 luxury
items like belts, bags and menswear
items. Domestic textile major SKumars
has brought Alfred Dunhill, the British
menswear label that claims Ratan Tata
as one of its customers, with a bou-
tique in Delhi, and it has plans of open-
ing another one at the city’s Emporio
Luxury Mall shortly. Bollywood direc-
tor Karan Johar is Dunhill's Indian
brand ambassador.
Many luxury watch brands like
Rolex, Cartier, LVMH’s Tag Heuer,
Omega and Longines, and Fossil
among others have opened franchise
showrooms across major cities and are
doing good business. In fact, Louis
Vuitton plans to increase the number
of Tag Heuer showrooms from 12 to 30
by the turn of the decade.
There is a growing market for luxury
cars too. Daimler Chrysler’s Maybach,
with a price tag of Rs 5 crore, the
German marquees Audi, Porsche and
Mercedes have already launched sev-
eral luxury cars here.
The premium linen maker Frette,
with its products ranging 200-10,000
euros (its table linen was used in the
banquet halls of the Titanic) is looking
for local partnership and hopes to seal
the deal by the yearend to set up stores
in Delhi and Mumbai. Its president
Enrico Marinelli says that his company
plans to set up two-three stores here in
the next three years. Stating that he isn’t
thinking short-terms, he says with the
huge young population, high aware-
ness level and growing incomes, India
is a huge potential market for Frette.
Luxury yacht makers, Princess
Motor Yacht expects to sell over 50
yachts by 2011 from the measly three to
five units currently. Royal Caribbean
Cruise India representative Gautam
Chadha says cruise industry is growing
over 10 percent annually here with over
90,000 Indians taking to the seven seas
every year on its cruises. But due to lack
of proper ports and tax policies, in spite
of a fantastic coastline, the potential is
not fully explored.
Many others are also looking for var-
ious options to enter the market soon.
Italian fashion group Missoni is scout-
ing for local partners to open two
stores in the next two years. Similarly,
luxury art-glass makers Venini, and
home and kitchen furnishing compa-
ny Driade are also looking for partners
here to exploit the huge potential.
Even academic bodies are sensing

AND HERITAGE WILL NOT BE
FRANK ZAMBRELLI, Leiber creative director
this luxury boom. The IIM-A, in associ-
ation with the Paris-based ESSEC busi-
ness school, has started a course on
luxury retail. ESSEC associate professor
and the programme coordinator
Ashok Som, says, “ESSEC has world-
renowned expertise in luxury brand
management programme , we have
been recruiting from India for 10 years
now. I conceptualised the programme
because, I thought there were no
courses on luxe management here, but
there was lot of interest in it.”
HOT LUXE SEGMENTS
Though the domestic luxury sector
consists of many categories like men
clothing, accessories, watches,
footwear, fragrances, jewellery, cos-
metics & skincare, high-end digital
and electronic gadgets, intimate wear,
wine & liquor, travel & leisure, health
and wellness, fine dining, and home
décor among others, expert say the
accessories and gourmet food seg-
ments will be the sunshine categories.
In line with the global trends, the
accessory segment consisting of hand-
bags, high-end gadgets, designer
shoes, jewellery etc will lead this busi-
ness due to their durability, good-
value-for-money and regular useful-
ness. The Technopak survey says, jew-
ellery will grow by 27 percent while
clothing will go up by 16 percent.
Digital accessories (13), luxury watch-
es (8) and cosmetic and skincare (8
percent) will be the other drivers.
Radha Chadha, the author of The
27%
JEWELLERY
16%
CLOTHING
13%
D I G I TA L
ACCESSORIES
8%
W AT C H E S
8%
COSMETICS &
SKINCARE
Cult of Luxury Brand: Inside Asia’s love
affair with luxury brands, and a lead-
ing marketing and consumer insights
expert, says women bags and watches
will do well, followed by clothes. For
men, watches and suits will do well,
while luxury jewellery will take some
time to gather base.
On a different track, Mumbai-based
partner of Boston Consulting Group
Abheek Singhi says it’s important to
disaggregate the luxury categories, as
the behavior across different luxury
categories like jewellery and spirits is
different. The mass luxury market can
be of higher interest to companies as it
is already significantly large and there
are categories where the size of the
Indian market is interesting.
April 2008 ❘ Pitch ❘ 51
COVER STORY LUXURY BOOM/INTERVIEW RADHA CHADHA
“India’s going to reshape luxury bizz”
An IIM-A alumni, Chadha
Radha Chadha is one of Asia's
leading marketing and consumer
insights experts. While working
with JWT, O&M, and Bates Asia,
she has held senior strategic posi-
tions, and led the thinking on
brands like HSBC, AmEx, BA,GsK
etc. Later she set up her own brand
consultancy in 2000 in Hong Kong.
In this interview with Senior
Correspondent Onkar Pandey, she
talks about the past, present and a
glorious future of the luxury brands
in the country. Excerpts:
What are the aspects of Indian
luxury market that you have
focussed in your book The Cult of
Luxury Brand?
There’s a chapter called ‘India: The
Next China'. In the coming six-seven
years China will become the single
biggest luxury market; luxury brands
didn't expect that China will become
such a big market. A lot of luxe
brands think that India can also
deliver the same results. So they are
keen on entering this market even
faster than they did in China.
Currently, India is at an early stage
of the luxury brand culture. Typically,
it starts when a country goes through
a rapid economic growth and that
has been happening in our country
for the past few years. It puts money
The cult of the
Luxury Brand
Radha Chadha &
Paul Husband
Published by:
Nicholas Brealey
International
52 ❘ Pitch ❘ April 2008
into people's hands, at some point
they want to demonstrate that. The
third stage is what I call the 'show-off'
stage, where China is today and some
of India is moving towards. Then
comes the 'fit-in' stage where we see
a large scale adoption of luxe fuelled
by the need to conform. The last
stage is 'way of life' where people are
habituated to luxe product; they
become confident and discerning
buyers, like in emerged markets.
What is so hot about India when it
comes luxury brands?
It's the 'new money' that is being cre-
ated. Because of economic growth a
huge number of people have money
now and they can afford luxe brands.
This is what attracting everybody.
How India is different from emerged
markets and why it is important?
Mainly in two ways. The first one
stems from the fact that it's an
emerging market and so different
from emerged markets. Second is the
cultural. Since it is an emerging mar-
ket, luxe brands don't have a signifi-
cant presence here yet. So it's
about most of them being at a
stage of launching, educating
consumers. So the challenge is
how can luxury brands meet the
needs of Indian customers.
India is a very very important
market as it’s going to be one of
the largest luxe markets soon. If
you are looking for growth then
India’s right up there. My guess is
that in 10 years, it will certainly be
a very significant player.
What is the ideal time for a luxu-
ry player to enter India?
It’s now, because if you come in
early you are able to establish an
impression with people; also
since there is less clutter you are able
to communicate who you are. You
can set the rules and you have a bet-
ter chance of doing well. For
instance, some brands that went
early into China have done signifi-
cantly better, and for some of them
China is their biggest market today.
What are the challenges that a luxe
brand would face here?
Personally I don't feel there is any-
thing different here than any other
new market. Wherever luxe brands
have gone, they always set up shop in
five-star hotels because you can't
expect a luxury mall to be there with-
out any brand. So it's a chicken and
egg problem. India’s going through
that phase and when the luxe culture
spreads more malls will come up.
What is the ideal way to enter here?
Some enter through JVs, and some
via franchisees. And I don’t see any
right and wrong about either of the
approaches. I guess the difference is
if you have a JV and you have your
own management then you have the

ability to drive your business yourself.
In the franchise system you’ve to make
sure that your partner understands
what the brand is all about; you guide
and influence him enough so it's ren-
dered in the same way. Because the
worst thing that can happen to a luxe
brand is that it if not executed properly
the store can’t live up to the aura of lux-
ury. This happened in some markets.
How can luxe brands attract new cus-
tomers as we don't have a luxe culture?
Give it some more time, let the malls
come up, let communication rave up,
and more fashion mags hits the stands.
All of this is happening now but needs
more saliency. India is at the second
stage of luxury development now, as it
successfully crossed the first stage.
How important is localisation?
Not entirely; a part of the attraction is
the brand itself. I’d say it's not as much
about localising as about understand-
ing the local consumer and tailoring
your offerings to meet their needs.
What is your advice to those planning
to enter this market?
Spend time and effort in really under-
standing the Indian consumer, as cul-
turally, India is different and more
complex than any other Asian country.
Chinese adopted the Western culture,
and clothing very easily, hence it was
very easy for them to spread the culture
of luxury. But India has a lot of its own
tradition and own ways of doing things.
So you need to have very different
mindset if you want to succeed here.
What’s your outlook for this market?
I think, its going to be very exciting,
very colourful, very vibrant and very
different. India will reshape the luxury
industry itself in many ways. It's the
first hot-weather country that’s so huge
and going to become so significant. ■
COVER STORY LUXURY BOOM
LUXE MARKETING IS A FINE ART
A luxury brand has more to do with the
art of marketing than the science of it.
This does not mean that the 4Ps of the
marketing rule book are neglected.
What is more different here is that
there is a fifth P—for people. After all in
the luxury business, no marketer can
afford the luxury of treating its con-
sumers as a loose bunch. That is why
many a luxury brands are associated
with high-profile men or women who
move in elite circles and promote the
label among their coterie. Like, Louis
Vuitton is represented by Tikka
Shatrujit Singh for the last 10 years,
while socialites and Page 3 regulars like
Ms Mafatlal who represents Valentino,
and Christian Dior’s Kalyani Chawla,
promote these brands at these hi-par-
ties of rich and famous.
ISSUES & CHALLENGES
Luxury is not just about selling an
emotion but also delivering an experi-
ence. Therefore, getting the right space
is critical. So, even though, most
experts agree that India will be a
booming market in coming years, they
also say the single biggest issue is the
lack of proper infrastructure for luxury
retail in the country like the high-end
fashion streets as in London, Paris or
Milan, and non-existence of luxury
malls. Retailing through boutiques in
five-star hotels is not always a finan-
cially viable option. The government
policies also don't support luxe retail.
Unlike China, where Gucci opens one
store every six weeks, it is far more cau-
tious here. Canali sales and marketing
director Paolo Canali, says has plans to
set up eight boutiques by 2010, but he
may go slow if the right ambience is
not available. A latest CB Richard Ellis
report pegs India at 44th in the best
market for modern trade, while China
is way ahead at No 9. According to
experts, the skyrocketing rental means
that high fashion companies find it
cheaper to penetrate other Asian mar-
kets like Thailand as the rentals in India
are on par with London and Tokyo.
Besides, government policy often
struggling under coalition pressures
and populist goals deter many of the
players to move in, as Murjani points
out. Altagama’s Carlo Rivetti is more
direct when he says, "open your mar-
kets to us; we do beautiful things and
we’re ready to sell our dreams to India."
Bureaucracy and high market-regu-
lation are another bother. Altagama’s
Armando Branchini says India is high-
ly regulated and isn’t a fair market too.
Comparing India to China, he says
India imposes 45-65 percent taxes on
luxury goods unlike China's 20 per-
cent, going on to suggest that only
profits should be taxed and rest should
be left to the market forces.
In the meanwhile, many small but
popular luxury brands are playing a
wait and watch game, they say it is a
different market with completely dif-
ferent cultural ethos and a huge rich-
poor divide, and they don’t want to
miss on a very important future market
by entering in a hurry and making
wrong partner choices.
But are there enough customers for a
Cartier or a Louis Vuitton or a Gucci?
Not many now, going by a KSA
Technopak survey, as many of the TG’s
priorities are more towards housing,
travel, education, high-end home
décor, electronic goods and autos; and
less towards accessories and clothing.
India is still a small player in the global
luxe market with just under one per-
cent of the global pie. ESSEC’s Som
says, “the main problem is the vast
nature of the market itself. For exam-
ple, I know of millionaires in
Vijayawada, Vishakapatnam and in
other parts of Andhra. They spend for-
tunes in gold and diamond jewelleries.
Would they be willing to shift to luxury
brands or even think of them as equiv-
alents? And how do luxury brands tar-
get these customers or bring them
April 2008 ❘ Pitch ❘ 53
COVER STORY LUXURY BOOM
closer to their products, educate them
by sitting in a Delhi or Mumbai hotel.”
IPR and piracy-related issues are also
high on the minds of many luxe play-
ers. Allain Coblence, one of the top IPR
global attorneys, estimates counterfeit-
ing trade at $700 billion with luxury
goods piracy accounting for 50 per-
cent. China that accounts for over 70
percent of global piracy and counter-
feit market, is the major culprit. Many
luxe brands don't want to have anoth-
er China experience in India. So they
want to be ensured that the legal arms
of the country are strong
enough to handle piracy and
counterfeiting which has seri-
ously dented their profits.
But Genesis Colors manag-
ing director Sanjay Kapoor
says India protects intellectual
property rights better than
China and with the right gov-
ernment help fashion/luxury
industry can further grow here.
However, some legal experts
point out that still the country
"INDIA WILL BECOME A KEY LUXURY MARKET FOR GUCCI.
CUSTOMERS HERE ARE SOPHISTICATED” MARK LEE, chief executive Gucci
lacks a good investigation mechanism
to back the laws. Also in case of dis-
putes there are very few legal choices
here with only five out of over 500
courts being IP-friendly. Legal firm
Anand and Anand's Pravin Anand says
IPR conviction rates are as low as two
percent in the country at present.
Some luxury brands say they had to
face brand-awareness problem when
they started off. Valentino which
opened a boutique in 2006 in New
Delhi's Shangri-Laa hotel says for the
initial six months few visitors came to
them but slowly things started picking
up. For Menswear brand Dunhill, ini-
tially many people mistook it for ciga-
rette brand of the same and so had to
educate customers.
54 ❘ Pitch ❘ April 2008
WAY FORWARD
There are many rich Indians who are
not adequatley aware of luxury, thus
promising more room for growth to
both those who are already in the fray
and those waiting to walk in. Educating
customers, making enough research to
capture the imagination of this trendy
lot and cautioning on localisation will
be among the vital points before them.
As the French ambassador
Bonnafont puts it, "to stay in India, for-
eign brands have to adapt to India and
they have to localise their wares as
European and Indian tastes are not
alike." Illy Café chairperson Andrea Illy
says, "the change will be slow, but it will
be happening in a very sustainable
way, because the economy is growing
rapidly. Indians are intelligent and they
wouldn't buy any product just for its
label. Indian tastes need to be taken
care-off."
BCG's Abheek Singhi says cost and
availability of high quality retail need to
be taken care of; there is shortage of tal-
ent, quality infrastructure is also a chal-
lenge, though not as much as it is in
other categories but it can increase cost
of operations. He adds that integrated
retail experience would play key role in
creating and sustaining the brand
experience. Hence, the marketers
should consider maintaining tight con-
trol over the retail experience which
would require high degree of discipline
and adherence to tight s procedures.
While, luxury expert Radha Chadha
advices brands to spend time and
effort in really understanding the
Indian consumer, because India is
both a different and complex market
with lot of cultural traditions than
other Asian markets.
So, as luxury brands enter new mar-
kets expanding their operations, they
have to identify customers in layers like
pure luxury—afforded by the
rich for whom luxury is a way
of life, aspirational luxury or
neo-luxury which necessarily
doesn't imply costly products
and normal luxury like certain
food and beverages like Illy
Café, Starbucks, Italian or
Japanese food etc which help
people breathe in a certain
culture and being aware of a
certain lifestyle.
PWC’s Shiv Kumar says,
"you have to stay here as this mar-
ket has many dynamics. There are ben-
efits in the long-run and one has to be
prepared for a long-haul." Leiber's
Zambrelli probably captures the over-
all sentiments well when he says, "any-
one who comes to this market without
taking care of its culture and heritage
will not be successful. Allow yourself to
be influenced by the culture."
The oft-repeated adage from history
that of India being a ‘Golden bird’ has
started making some sense again. After
decades of frugal socialistic model of
nation building, the proverbial golden-
bird, it seems has started rising again to
reclaim her place amongst the world's
best and most luxurious.■
—onkar@pitchonnet.com