Walk into the DLF Emporio in New Delhi, inarguably India’s only luxury mall, and chances are you will find more traffic on the Tarun Tahiliani floor than say Salvatore Ferragamo. It’s not like the Indian consumer follows the ‘be Indian, buy Indian’ maxim, it’s probably just the way a north Indian consumer is wired.
Or as Atul Malhotra, managing director of multi-brand fashion retail house Evoluzione and Evolv, says: “The north Indian [Delhi] customer is more traditional in her fashion and luxury shopping choices.”
The Indian luxury market at $4.8 billion (Rs 25,440 crore) in 2010 is minuscule. Sample this: on last count, Gucci and Hugo Boss had three stores in India as opposed to 35 and 86 respectively in China. The math done by a 2010 CII and AT Kearney Report is indicative of the low penetration of luxury brands in India. And in this not-so-level playing field, Delhi and Mumbai account for nearly 25% of the stores.
Whenever a brand comes in to the Indian market it talks of localising, customising to appeal to the local customer. But in this case, the challenge becomes even more interesting, as they have to adapt to the two markets to change the game.
“Though both Delhi and Mumbai are very cosmopolitan they have different influencers in terms of neighbourhood and activities,” says Pradeep Hirani, managing director of multi-brand retail Kimaya.
Hirani identifies the Delhi-Mumbai luxury customers on the basis of their popular culture. Delhi is the city of power and opulence, while Mumbai is the film city more exposed to international influences. Delhi was always ruled by more opulent maharajas and Moghuls. Mumbai has always been a commercial city of trade and travellers, inducing more international influences in the choices.
And this reflects in the way they consume luxury. Meaning? While an embellished sari has higher chances of getting picked up in Delhi than in Mumbai, in Mumbai clients will ask for more subtle jackets and interesting-cut garments. Or bling and logos work better in Delhi, Mumbai is more subtle.
Malhotra points out that in Delhi, the shopping is more centred around the family, with the family. “Luxury shopping is more occasion wear in Delhi,” he says.
Capital Trumps Commercial
Even though there are no direct estimates, Delhi outpaces Mumbai in terms of luxury sales. “North Indians are more flamboyant and ostentatious in their display of wealth, hence they shop for luxury items more openly,” says Sanjay Kapoor, managing director of Genesis Luxury that has brought in brands like Paul Smith London, Canali, Burberry and Jimmy Choo to India.
Main Consumers: Old Money
Constitutes: 50% of India’s luxury market in sales
What Works: The centrepoint for the whole of north India, especially towns in Punjab, Haryana and Uttar Pradesh, the centre for New Money. Not price sensitive, so the ‘real’ luxury brands work here
Why Buy: Luxury is status symbol
Key Sales: Jewellery and accessories
Luxury Hub: DLF Emporio, but markets like Khan Market, Mehrauli Gurgaon Road and complexes like The Crescent at the Qutub can be a luxury shopping hub
Main Consumers: Fragmented. North Mumbai (near the airport) and Central is New Money, while South (Nariman Point, Malabar Hill and Colaba) accounts for the Old Money
Constitutes: 30% of India’s luxury market in sales
What Works: Being the centre of Bollywood, movies and filmstars define street style and the city has a higher sense of fashion. It’s a hub for high-street brands as it is price sensitive
Why Buy: Luxury gets you noticed
Key Sales: Clothes, accessories and jewellery
Luxury Hub: The Palladium, Phoenix Mills
Kapoor says that the Delhi — which includes new money hubs like Punjab, Haryana and Uttar Pradesh — customer shows a preference for brands with visible logos and distinguishing patterns. “In its appetite for luxury, Delhi definitely outweighs any other city in India,” he says. For most luxury brands, Delhi accounts for 40% of total sales, while Mumbai clocks in around 30%.
In The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury, writers Radha Chadha and Paul Husband identify the capital as the hub for Old Money. The book states how Mumbai loses out in luxury stakes as it doesn’t have the advantage of a large consumer base from satellite towns.
It points out the further fragmentation of Mumbai luxury consumers based on purchasing trends: the north (near the airport) and the central part where most of the New Money lives, and the south (Nariman Point, Malabar Hill and Colaba) which accounts for the Old Money.
But Kapoor points out, “Delhi is the largest market so far but Mumbai has shown a faster growth over the past two years.”
Luxury Mall vs High Street
For Malhotra, Delhi works better as it has better options for real estate available. “There’s more space available,” he says. Ten years back, when he started Evoluzione, Mumbai was not on the radar.
It’s only now that he’s planning to set up shop in the market through Evolv — the more high-street brand as “the Mumbai buyer is still partial to affordable luxury”.
But Hirani begs to differ: “While Delhi gave us the first luxury mall, the only high-street in the country is Bandra Linking Road.”
While the overall market for luxury is looking up, the real change will be visible in 2014 as more real estate options come up. But the real game-changer, according to Hirani, is the the rise of the Tier-II and southern cities like Hyderabad, Bangalore and Chennai as the new hot-spots for luxury and fashion retail.
( Originally published on May 20, 2012 )