By Vaibhav Parekh
Indias luxury goods market has been burgeoning since the last couple of years and has been growing at an average annual pace of 21.8 per cent, according to the CII-IMRB report, 2013. There are new trends and new consumer segments that are driving the enthusiasm of makers of all expensive products from Italian fashion houses to German automobiles. The term luxury itself has evolved in the last couple of years. While earlier luxury meant buying products with a huge visible logo and extra bling, now the trend has been to term bespoke items. Bespoke tailoring means that the garments are tailor-made for an individual. It gives a feeling that the consumers are the owners of a limited edition product, something that has been crafted for them individually and this allows companies to charge hefty amounts. Consider this, a bespoke garment involves an appointment with a made-to-measure specialist flown in from New York. The photographs of the fittings are taken and sent to a tailor in Italy. Almost all mens luxury brands offer bespoke service.
In New Delhi, a study conducted by DLF Emporio reveals that 51 per cent of shoppers in the mall in 2013 were men, up from 35 per cent in the previous year. And while a bevy of women can still be seen walking in and out of the luxury stores in the mall, many people are opting for brands with discreet logos for the sake of experimentation, or just to avoid the herd mentality. Here, there has been a substantial shift in mind-sets regarding the perception of luxury. Buying an expensive suit with a conspicuous logo is being a part of the tribe and not unique. And thus bespoke orders are on the rise.
[su_pullquote align=”right”]People who can spend on such items are generally self-employed professionals, middle or senior level corporates, first generation entrepreneurs and people from business families.[/su_pullquote]
The luxury brands are now catering to the new class of luxury goods buyers the upper middle class demographic. The people of this class spend enough to indulge in their interests. While some rake in profits from businesses, others draw huge salaries and bigger bonuses to shell out the cash. Simply put, luxury buyers in this class are young, upwardly mobile and aspirational. And the brands have tweaked their marketing strategies to woo this class. For instance, India is the market with the youngest population for German carmaker Audi, with the average age of the buyer being 30-35 years. To connect with its audience, Audi uses its YouTube channel and has a healthy following of 3.6 million fans on its Facebook page. It also organises events like Ice Drive, Womens Power Drive, Q Drive and live screening of major racing events to build rapport with the target customers. The International Hotel Group (IHG) which owns brands like Holiday Inn and Crowne Plaza did a study on the next decade of customers and found that it will have to serve the younger breed of laptop and latte workers. Vivanta By Taj is conducting a series of experiences, ranging from art and installation projects to music. It also started music talent contests especially for women performers called Divas of Rock by partnering with Blue Frog and Sony Music.
The spike in demand from this growing class of affluent consumers is more due to a cultural shift and a shift in spending patterns. While the previous generation believed in saving, the present one splashes money on opulence. The household savings rate has fallen from 37 per cent to 30 per cent. Professionals and first generation entrepreneurs earning between ?40 lakh to ? 60 lakh are early adopters to modern trends and have an exposure to the globalized world. While Delhi and Mumbai continue to be the biggest markets, a substantial number of consumers lie in non-metros. About 45 per cent of the ultra-high net worth households are in non- metros, according to a Kotak report.
The youth have always had unique tastes; its time they have the means to realize them.
Parekh Vaibhav is pursuing a B.Tech in Electrical Engineering from IIT (BHU), Varanasi and is in his penultimate year. His hometown is Ahmedabad and is a thorough gujju at heart! He has a new-found interest in economics and likes to explore the impact of economic theories in normal, day to day lives. When he is not in the real world, he is most probably dreaming of a tour with friends to explore Europe. He can be reached at- vaibhavparekh12@gmail.com.
Edited by Madhavi Roy, Senior Editor, The Indian Economist