Indians prefer jewellry over luxury brands

By Julien Bouissou LE MONDE/Worldcrunch NEW DELHI - Advertising campaigns for luxury brands in India usually feature Bollywood actors or fashion models. Mahatma Gandhi, the embodiment of monastic life, barefooted and draped in white cloth, was for a longtime off limits. But in 2009, the German company Montblanc engraved the silhouette of Indias most famous political and spiritual leader onto the nib of a limited edition pen. It retailed at $25,000. After years of austerity, has India finally converted to luxury? The country now has some 126,000 millionaires, and this number increases each year. But very little is known about them. Their habits and consumption patterns were at the heart of a conference on luxury at the end of March in Mumbai, organized by Mint newspaper in partnership with a group of Italian brands. The local market, estimated to be worth three billion dollars, could become the fifth biggest in the world by 2025, says Laxman Narasimhim, director of the McKinsey consulting group in India. The forecast is an optimistic one, because while Indians are turning to luxury, the presence of big brands in India remains limited.

Louis Vuitton has 35 stores in China, against only three in India. Just recently, a LVMH manager visiting the country noted, in despair, that potential customers living in northern Mumbai would be better off flying to Dubai rather than spending three hours in the traffic jams to buy a bag in the Louis Vuitton store in south of the city. In India, the development of the luxury sector is stymied by the lack of infrastructure. There is no equivalent of Rue de la Paix in Paris or Fifth Avenue in New York. Luxury brands have no choice but to open stores inside famous hotels or shopping centers protected by security guards. The products sold there are more expensive than elsewhere because of tariffs and tax. The Internet might save the day "Contrary to what happened in Western countries, the luxury industry in India could best develop on the Internet," suggests Amit Dutta, director of the Luxury Hues consulting firm. Indias large cities do not have the monopoly over the market: it is the small town of Jalandhar in northwestern state of Punjab where the highest number of Rolls-Royce per inhabitant is sold. In India, the brands have not yet cannibalized the luxury market. The jewelry market accounts for 30 percent of spending, in comparison with nine percent on average for the rest of the world. Half of the jewelry is purchased for weddings. The luxury industry here is only just beginning, says Dutta. Rich Indians didnt want to flaunt their wealth for fear of tax adjustments, for example. But little by little customers, and especially the newly rich, arent scared of ostentation and have started to use luxury as a symbol of social success." The only question is whether luxury brands are recognized as a symbol of success by the more affluent. This is not yet the case, says Santosh Desai, director of the Future Brands marketing firm. India has many other social markers beyond consumption." A Ferrari or a Mercedes is thus considered a far safer bet than a discrete luxury item. Thanks to the media, brand awareness has lately been improving. More and more magazine supplements dedicated to luxury have been published, and explained in a very didactic way how to appreciate a good whiskey or cigar. Vogue magazine even organizes workshops on how to dress. But foreign luxury companies are holding back from launching into the Indian market, put off by the fact they are not allowed to own their retail outlets 100 percent. The maximum limit for foreign ownership is currently 51 percent. Indian partners are known to prefer concentrating on driving up sales rather than investing in a brand that could be one day out of their reach. Vogue tried some years ago to popularize the concept of luxury throughout the country and in the process make its readers feel less guilty- by publishing pictures of toothless villagers wearing luxury clothes. The images sparked a scandal, just like the sale of Montblanc pens bearing the image of Gandhi. India may be getting richer by the day, but its spirit remains closer to that of the modern Mahatma than to its legendary maharajah kings.

EW DELHI, India When one of India's largest real-estate developers opened DLF Emporio an exclusive shopping mall devoted to fashion designers and international luxury brands the mall charged would-be patrons a stiff fee just to get through the doors.

The charge was about the equivalent of a week's salary for many Indians. The customers poured in anyway. These days, the mall doesn't charge admission. But from the looks of things, it could still get away with it. Even as the government debates whether 32 rupees a day (or about $0.65) is enough to survive on, the sellers of the world's most expensive and ostentatious brands are doing a booming business in India a land whose most cherished idol once dressed in a loincloth stitched out of cotton thread he spun himself. The traffic in the mall has increased incredibly, because it's one of its kind in India, said a salesman at Louis Vuitton's Emporio outlet. We have all the luxury brands in a single location. That's a big advantage. Read more: Blood diamonds in India Louis Vuitton, Ermenegildo Zegna and company aren't just for socialites and Bollywood stars anymore. Luxury retailers in New Delhi say that in India's major metropolitan cities, the market has expanded to include people from all professional backgrounds, and India's growing, and aspiring, middle class. We have a number of customers who come in to experience the store, even buying a belt or a shirt, said a saleswoman at Ermenegildo Zegna. We have a mix of customers. Yes, we do have lawyers who are looking for a business suit, but there are also people who need formal wear for social occasions. Clearly, the days when Mohandas Gandhi urged Indians to spin their own yarn and sew their own clothes are long gone.

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Check the membership site in mid-October for a link to completed piece. Despite the economic downturn of the past year, India's market for luxury goods grew 20 percent last year to reach around $5.8 billion as top brands penetrated second-tier cities like Gurgaon, Pune, Chennai and Hyderabad, according to a new study conducted by the Confederation of Indian Industry (CII) and the global consultancy AT Kearney. As the Hindu festival of Diwali approaches, and India enters the busiest shopping season of the year, CII and AT Kearney forecast that the country's luxury market will grow to $14.7 billion by 2015, despite continuing problems with infrastructure and curbs on foreign investment, the report said. Read more: India's take on the US-Pakistan bond That's because even though the economy has slowed somewhat as the central bank works to rein in inflation, consumer confidence in India remains at an all-time high. In a recent survey conducted by Mastercard, for instance, more consumers in India were planning to buy luxury goods over the next year than in any other country in the Asia Pacific region, apart from Singapore where the percapita income is more than ten times higher. The kind of spending power people have is expanding, so Armani and Gucci is no longer a dream, said Bhauya Nagpal, a salesman for Jimmy Choo. According to CII and AT Kearney, jewellery, electronics, cars and fine-dining grew faster than expected, while apparel, accessories, wines and spirits have continued their strong growth. The market for jewelry, for example, grew 30 percent, compared with an expected 20 percent jump, while the fine-dining segment grew 40 percent versus expectations of a modest 10 percent blip. That makes India the surprising darling of retailers combatting flagging sales in their traditional cashcow markets in Europe and the U.S. Already, nearly all of the world's luxury brands are competing for a slice of India's new wealth, though currently the law limits foreign investment in single-brand retail businesses to 51 percent. Retailing experts say global brands will launch some 200 stores devoted to luxury brands by 2020. Rolls-Royce sold 80 cars here last year, while Ferrari entered the market in May. Zegna has tapped the haute Indian wedding market with a special guru collection of Nehru suits named after Jawaharlal Nehru, India's first prime minister and the architect of its socialist economic policies that run around $3,500. French apparel-maker Hermes unveiled a new range of limitededition saris starting at $6,000 a pop over the weekend. And even Paris Hilton recently visited the country to launch a luxury boutique that will sell her personal line of fragrances, handbags and apparel in Mumbai. So what would Nehru think of the country's enthusiastic embrace of ostentation? Not so much, one expects. With more than 3 million wealthy households, India now has more affluent families than any European country, but the annual average income remains around $3,500. That's just enough for Zegna's take on Nehru's signature suit. http://www.globalpost.com/dispatch/news/regions/asia-pacific/india/111010/india-customers-wantthe-luxe-life