Like Marie Antonette once said: “If they can’t have bread, give them brands instead!”…
Diamond dripping & air kissing Indians can sip their champagne in peace, now that the Indian government has introduced a porthole for foreign direct investment (“FDI”) in single brand retail. In January 2006 the Indian government gave upscale retailers a further boost by allowing foreign companies to own a controlling interest of 51% in joint ventures operating “single-brands” stores. India has been pushing for enhancing FDI inflow, the FDI inflow into India stood at 5.5 billion in the financial year 2005-06. The Louis Vuitton Moet Hennessy group, the French luxury goods conglomerate that owns, Christian Dior, Givenchy, Donna Karan and Dom Perignon are in talks to invest 500,000 euros in India over the next five years.
Brand consciousness is suddenly on an all time high. While shopping for luxury brands more than its sensory gratification, the social approval is what most people try to buy. A higher price implies a higher level of quality and a certain prestige. For this, brands invest a lot of time and a lot of money in advertisements. They constantly need to have a certain sex appeal to attract consumers, this is quite evident while flipping through a perfectly photo shopped magazine or browsing the net. The urban Indian consumer wants to own products that inspire, awe and envy. Whether its drinking Pellegrino water or decking up in brands like Manolo Blannik, uber trendy, super sexy, extremely rich Indians are cashing in on luggage from Louis Vuitton, jewellery from Bvlgari and fur coats from Fendi.
Luxury is derived from the Latin word “Luxus” which means indulgence of the senses irrespective of its cost. Luxury brands are those whose ratio of functional utility to price is low while its intangible utility to price is high. What really makes a brand a luxury brand? Is it its heritage of craftsmanship, its exclusivity or its fashion intensive uniqueness? Its premium pricing, highly customized and limited editions creates an aura which make these brands desirable and luxurious. Whatever be the reason, the
debate on whether luxury products sell if so how much, who its buyers are and whether its market will grow has comfortably ended. There are an estimated 73,000 multi millionaires in the country, number of households with an annual income of more than 1 crore.
Till a few years ago rich Indians would shop for their fixes of luxury items while they went globe trotting, but now with many brands from all over the world deciding to open stores on Indian shores, one really doesn’t need to go across the Atlantic to indulge. It stands correct to say that India has come of age; in as far as the luxury goods market is concerned. Though most brands function from the confines of five star hotels they not only had a very limited footfall but also inadequate visual impact. Major Indian cities lack the concept of high fashion streets which else where provides a symbiotic cluster of posh retailers. While New York boasts of Fifth Avenue, Paris the Avenue des Champs Elysees and Hong Kong the Causeway Bay the luxury shopping experience is missing. The Indian market is fragmented and rather disorganised.
But with malls sprouting at an incredible speed things are about to change Indians can do retail therapy at high end malls and not have to depend on their next vacation or that invitation to the Milan fashion week. The Gitanjali group are investing in high end luxury and wedding malls in eight cities across India. Delhi and Mumbai have their high end malls and selected areas where one can shop comfortably. So apart from raising a toast to such sparkling growth it’s safe to say its passé and so last season to be seen in domestically made shoes and clothes, now its Jimmy Choo and Hermes all the way.
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