Time to roll out the red carpet for the Porsche and the Prada, and you can even throw in a twinkling tiara for good measure. Consumption of luxury
retail goods in 2009 is not going to take a knock, not by a long shot.
The new year is set to see top-end Italian, French and Australian retailers scurrying to set foot in the market, and marquee malls will vie for marquee brands. For a section of the cognoscenti, who would sniff at mingling with bargain-hunters at some luxe mall, special, private screenings are being organised to herald in the new year.
On show, among some of the ultra-huge gemstones, will be a single, stone-studded ring. Price tag: upwards of $200,000. A bracelet, which recorded brisk sales during Diwali, will have 20 such stones. And these items are literally flying off-the-shelf.
Did somebody say recession? For high net worth individuals (HNWIs), who own private jets and indulge in luxury vacations, there is no cutback on their spend. With net financial assets of at least $1 million, excluding their primary residence and consumables, HNWIs are shopping away like nothing has changed. “This one segment that has never felt the need to cut back,” says Nirmal Zaveri of Trendsmith, a luxury retail jeweller. “Compared to their net worth, these expenses are nothing, a trifle actually. And thanks to such sales, our Diwali has been extremely good. The new year promises to be even better.”
Figures back this trend. India led the world in HNWI population growth in 2007, rocketing by 22.7% and exceeding gains of 20.5% in 2006, according to the Asia-Pacific Wealth Report by Merrill Lynch and Capgemini, which reported that India had 123,000 millionaires in 2007 and showed the fastest pace of expansion. Though the new round of statistics are yet to come in for 2008, indications are that the figures would add up to a new total.
Luxury brands are growing at a healthy clip of 30% annually, and it is not jewellery alone that is showing the way. Apparel, watches and even perfumes are hitting a high note.
As Anjani Kasliwal, GM (luxury brands) at Brandhouse Retail says: “The year 2008 has been pretty good for us. The effects of the slowdown are yet to show.” Asked to comment on the luxury brand sale phenomenon going on in Bangalore and in some areas of Delhi, she maintains: “Internationally, brands are going on an early sale, but there isn’t as much distress as is being made out. We expect 2009 to go largely smooth as we see the sentiment going up again.”
Adds Charu Sachdev, CEO of TSG, which brings in brands like Stella McCartney, Lanvin, Jean Paul Gaultier and Moschino: “This year we opened four stores in Bangalore’s UB City and opened our first Kitsch store in Delhi. Although our Moschino store at the Taj in Mumbai was shut due to the terror attacks, we’re back on our feet. Customers have been very supportive.”
Trendsmith’s Zaveri says: “There are no discounts on offer here. There is no correction on these expensive pieces. It takes time to collect most of our pieces and we do not offer discounts. Most of our buyers are not looking for value, they are looking for something exclusive.”
Interestingly, luxury brands in India have also found new customers in an increasingly wealthy middle-class, the growing ranks of working women and a youthful population that is not afraid to splurge or quaff their daily dramof single malt. Notes Mahesh Madhavan, CEO at Bacardi Martini: “The spirits industry has been growing at a steady 7.2%. Within this segment, single malt whiskey has been growing at double digit growth, though on a small base.”
The imported spirits market is estimated to be about 1.1 million cases, of which 79% is whiskey. Within this, single malt comprises 30,000-35,000 cases, which has grown from 25,000 cases recorded in 2007. Post September, sales have not been impacted for single malt whiskey.
“These products are bought by consumers at the upper end of the income level, who appreciate fine whisky,” says Madhavan, adding: “They are well-travelled and are part of several malt clubs. They largely pick up their favourites from international airports. What we are noticing now is that people prefer to consume and enjoy their drink at home rather than at a five-star hotel or a fine dining restaurant.”
If home is where the action is, it is natural for consumers then to increasingly design their personal space for entertainment. As Himanshu Kumar, MD at HKMT Acoustic Designs says: “We continue to get enquires from our private clients for designing their personal space for entertainment.” Kumar designs home theatres for both corporate and individuals.
“The demand is such that we don’t accept more than four orders a month,” Kumar elaborates. “Last year, the demand was around two mini theatres a month. This has obviously been pumped up. I am optimistic that the trend would be better in 2009.”
On an average, a home theatre costs Rs 20-25 lakh. A tiny diamante ring from Italian Damiani jewellers cost as much. Upscale brands need to do something to keep their customers buying and though it may seem counter-intuitive to host lavish parties, for luxury marketers, this is one of the most cost-efficient ways to woo their customers.
