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I n d i a’ s L u x u r y I n s i d e r
Donald Trump’s India Debut
Think Big and Kick Ass
CEO’s Note Bollywood was built on oodles of glam and cricket on skyscrapers of cash. It’s no surprise then, that we have a few million with a luxe lust! The Indian luxury industry, still juvenile when compared to other BRIC countries, is fast gaining a swagger of its own. Yes, we have an enviable population of overflowing wallets, with an insatiable appetite for pampering and gifting, which the Indian, Swiss, French, Italian and many other luxury brand producers in every other country want a slice of — the thicker, the better. We now boast of imported consultants that can rapid-fire numbers of watches sold in Surat last month! And tribes of uber specialists — trainers, lobbyists, number-crunchers, gatecrashers, brand-protectors, middlemen (and women), editors and their generous publishers, perfumers, linguists (Marathi to Milanese), PE sharks… and more, many more. What works in Chennai works in Coimbatore, too? Wrong. Wrong? How come? If Ludhiana offers a better ROI, why open in Mumbai?
India’s Luxury Insider Easier hiring an aeronautical engineer in India than a behind the counter saleswoman who looks good, is customer friendly, knows her brand and will not jump ship at the end of the bonding conclave in Lake Como!
Parlez-vous francais? Parlate l’Italiano? Sprechen Sie Deutsch? English in English accent? India is now equipped to serve you your favourite luxury brand in whatever language you desire, right here. Hello luxury industry. Welcome to BlackBook. We promise to document, archive and spill the beans on your successes (and failures) and hope to offer you a forum to debate and share. Above all, we promise to be around when you grow up.
ETERNITY - THE ULTIMATE LUXURY In 1774, after La Chaux-de-Fonds, Pierre Jaquet Droz opened his second factory in London, in order to meet growing international demand and push back the frontiers of trade. Which is why London is part of the eternal legend that is Jaquet Droz. The Eclipse, ref. J012633202 - MAJESTIC BEIJING Collection
Marzban Patel marzban.patel@publicitas.com
W W W. J AQ U E T- D RO Z . C O M - Contact: +91 (11) 46092943 Bangalore-Ethos Luxury Boutique, Tel (080) 4113 0611 / Chennai The Helvetica, Tel (044) 2846 4095/96 / Kolkata-Prime Watch World, Tel (033) 2283 7185 New Delhi: Johnson Watch Co, Connaught Place - (011) 41513110 - Johnson Watch Co, South Extension - (011) 2464 2299/55
DEcember 2011| blackbook | 1
Editor-in-chief’s Note
Glossary A.T. Kearney p08 Alain Ducasse p09 Ananda in the Himalayas p27 Aquascutum p24 Audi p06 Berluti p09 BMW p06 Bradford License India p14 Burberry p20 Canali p10
Inside BlackBook’s debut issue
Capriani’s p09 Christian Louboutin p06 CII p08 Corneliani p26 Courtyard by Marriott p26 CoutureLab p24 Creed p09 Debailleul p07
India is one of the most complex luxury markets to understand due to the widespread presence of old money, a category that includes, besides Indian royalty, old business families and the doyens of Indian industry. For them, luxury is
DLF Brands p08 Dom Perignon p09 Donald J Trump p14
beyond the mere brand name, as our expert Selvane Mohandas Du Ménil writes in his perceptive column in ‘The Last
Ernst & Young p24
Impression’. In the lucidly written piece, the luxury consultant argues that international brands will have to adhere to their
Fabergé p24
core values of heritage and handcrafted rare products, if they want to win over the discerning moneyed Indians. In our debut issue, our cover story features flamboyant American luxury entrepreneur Donald J. Trump’s bid to
Fondazione Altagamma p08 Galerie Isa p07 Genesis Luxury p10
lead the Indian luxury market with his franchise business and his glamorous real estate projects. Like in the other markets
Gucci p20
across the globe, Trump hopes to leverage his glitzy image and his extravagant lifestyle to spearhead his India venture.
Hermès p07
We also interview Genesis Colors’ Sanjay Kapoor on his perception about the Indian luxury industry and the future
IHHR Hospitality p29
of his company; dissect the luxury industry’s new found love for the digital medium across the globe and how India scores on that front; investigate Pune’s transformation as the new destination for luxury; and trend track the growth of
Jimmy Choo p07 Judith Leiber p22 Kenzo p22
uber-chic concept stores in India as an effective platform for showcasing international brands in the absence of any real
Koh by Ian Kittichai p07
luxury retail infrastructure.
L Capital Asia p11
Our attempt with BlackBook is to understand and report on the shape and direction the luxury market ultimately takes in India. We hope you enjoy reading the issue as much we enjoyed putting it together.
Le Cirque p06 Le Meridien p07 Louis Vuitton p24 Luxxe Box p11 Marcello di Milano p09 Megu p06 Mercedes-Benz p28 Neiman Marcus p22
Deepali Nandwani deepali.nandwani@publicitas.com
At Publicitas Digital we know where they are!
Ladurée p09
Publicitas Digital offers powerful ways to connect and engage the affluent business decision makers in India. For higher brand recall align your brand message so that it engages India’s premium audience. By creating custom made solutions you can interact with 11.8 million* affluent Indians. Publicitas Digital offers you a premium audience solution -- 73.1 millionpage views* and 11.8 million unique visitors*.
Net-a-porter p23 Oscar de la Renta p24
*Source - comScore Media Metrix 2010 / A C Nielsen 2010.
Panchshil Realty p29 Qvendo p23 Saks Fifth Avenue p22 Salvatore Ferragamo p25 Sea Lounge p09 Six Senses Spa p29 The Advantage Raheja Group p28 The Leela Palaces, Hotels & Resorts p07 The Oberoi Hotels & Resorts p06 The Westin p28 Trump Home Brand p15
2 | Blackbook | December 2011
Cover Credit Donald Trump
UB City p22
Courtesy Corbis
Versace p30
Unity Marketing p22 YooPune p29
To know more about our services visit us at www.publicitaspremier.in or write to us at rahul.parekh@publicitas.com or call on +91-9702290757
Contents The Big Stories
10
20
Rendezvous
The Digital Revolution
Sanjay Kapoor on Genesis Colors’ success story and why India’s luxury industry needs investors like L Capital Asia
Globally, luxury brands are trying to make the best use of the online space. But what about India?
08
14
30
Bureaucracy
Cover Story
How will raising the FDI cap for single brand retail by the government impact India’s luxury industry?
Donald Trump plans to tap India’s luxury market by going beyond his real estate ventures into luxury retail
The fine art of selling Concept stores could be the answer to the growing retail space shortage that luxury brands face in the nascent Indian market
In Focus
6
25
26
28
32
News & Views
GrassRoots
Haute Property
Destination: PUNE
The Last Impression
— CEO — Marzban Patel — ED — Anita Patel — CFO — Manish Mehta — COO — Indu Joshi
— Editorial — Editor-in-Chief Deepali Nandwani
— Art — Creative Director Faruqui M. Jaan
— Marketing Manager — Ritcha Verma
Chennai (09841091288) J V Naveen
Managing Editor Nishant Bangar
Art Director Unmesh Kuttan
Jaipur (09828150706) Peeush Gupta
Senior Editor Sujata Dugar
Senior Designer Shamkant More
— Advertising Sales — Mumbai (022-22850188 / 61377200) Lamont Dias Mallika Jamsandekar
Letters to the editor Write in with your comments, suggestions and ideas to blackbook@publicitas.com
Contributors Selvane Mohandas Du mÉnil
Image Editor Atul Jangam
Delhi (011-23730873/74) Asha Augustine Nikhil Mehrotra
Production Manager Elidio Fernandes
Bangalore (080-25592714/82514) Yogeesha A
Ankit Gupta Ruby Mehra
Kolkata (09831131395) Subrata Mazumder Pune (09850086865) Shailesh Amonkar — Admin. Department — Manager Mktg. Services Salim B
This Magazine is printed by and produced by Mediascope Publicitas (India) Pvt. Opinions herein are the writer’s and do not necessarily reflect the opinions of MSP. Editorial enquiries concerning the reproduction of articles, advertising and circulation should be addressed to: BlackBook, Mediascope Publicitas (India) Private Ltd, 51 Doli Chamber, Arthur Bunder Road, Colaba, Mumbai 400 005, India. Email: nishant.bangar@publicitas.com. Material in this publication may not be reproduced, whether in part or in whole, without the consent of the publisher. BlackBook is printed at Colorpoint, A-2, 436, Shah & Nahar Industrial Estate, Lower Parel, Mumbai – 400 013.
4 | Blackbook | December 2011
News & Views Hermès MEETS TRUMP
Q&A
Century Properties, the project developers of Trump Tower Manila, have managed to rope in Hermès for the home décor of the condominium project. Interestingly, the understated French fashion house will work with the American bling brand, Donald J Trump Organisation on this project. Hermès plans to give buyers a choice of three interior design themes, each with a unique New York feel — Downtown/ SoHo, Fifth Avenue and Park Avenue. In true Donald Trump and Hermès style, the Manila outpost of the famed series of residential condominiums is sure to be the most upmarket address in capital city of Philippines.
Gucci’s new Pre-Fall and Fall-Winter advertising campaign, has been shot in Palazzo Taverna in Rome by London-based fashion photographer team Mert and Marcus. The campaign displays the brand’s most sought-after pieces in photographs that looks like pieces of art in bold bright colours.
Documenting an iconic journey
luxury cars sold in India in 2010
6,246 bmw
3,
3 Audi
Twenty years after launching the famous red soles, the French designer, Christian Louboutin, documents his iconic collections in his new book simply titled Christian Louboutin. In true Louboutin style, the book is bound in pink faux leather and has a five-piece fold-out cover. It documents the designer’s biography, noting his early works for Chanel and Yves Saint Laurent; the cutting-edge interiors of the label’s various international stores; 20 years of Louboutin design; the intimate photographs of his Paris and Egypt homes, and an earlier collaboration with director David Lynch for the exhibition titled ‘Fetish’. The book also features contributions from some of the designer’s favourite models and famous friends, including Dita Von Teese, Kristen Scott Thomas and Mika. In 2012, as a follow up to the book, London’s prestigious Design Museum will host the first Christian Louboutin retrospective exhibition, marking the designer’s fashion journey from 1991 to 2011. The show will look at the designer’s creative process of designing his most exquisite pieces from influences picked up whilst studying architecture, art and film, and during his travels around the world. And to woo Indian fans, Chirstian Louboutin finally launches his epynomous brand in the country, early next year. christianlouboutin.com
We have two valuable pieces of land: in Bangalore and Goa, which we plan to develop, in all probability, with Reliance. We plan to develop projects jointly within and outside the country also P.R.S Oberoi, on his tie up with Mukesh Ambani’s Reliance Industries, for the new development of hotel properties 6 | Blackbook | December 2011
The new age business traveller is very comfortable dining at world renowned restaurants that they are familiar with when they come to India. Hakkasan in Mumbai, and Le Cirque and Megu from New York at The Leela Palace New Delhi, are able to provide the same standards of cuisine as in their other restaurants. All the meats, provisions and wines are imported using the zero duty SFIS licenses that the restaurants are eligible for when foreign guests pay using their foreign exchange credit cards. Further, Indians who patronise these restaurants abroad, experience similar ambience and quality of cuisine at substantially lower prices in India. Vivek Nair, Vice Chairman The Leela Palaces, Hotels & Resorts The trend is in response to the economic growth. Growing incomes in metropolitan cities means there is a larger disposable income in every household. These concepts are only offering people new avenues to enjoy their wealth. Those who have travelled, concepts like Debailleul provide quality, taste and an atmosphere similar to what they may find abroad. For others, it means discovering new tastes, new designs and new creations. Karen de Souza Business Manager of Food Concepts, Writer Lifestyle
I don’t know if it’s a trend...there have been luxury signature restaurants in hotels earlier. I think India, in fact the entire world, is veering towards the idea of international brands of restaurants that are chef-driven and lifestyle-driven. With globalisation and an increased ease of travel, people want what they can have in another place — they want their favourite sushi roll from a restaurant they frequent in London, a Thai curry like the one they ate in New York City, a Peking Duck from Hong Kong, etc. The trend is the result of desires and experiences like these. Chef Ian Kittichai Koh, Hotel InterContinental Marine Drive-Mumbai
Get an in-depth analysis of India’s growing fine dining sector in our next issue.
In Print “Anyone who knows me knows there will be a new venture afoot; this is not the end. My passion is creating things, and I have a big vision.”
Why are international luxury restaurant chains becoming a trend in India?
Gucci
15,
The Southern Star
Tamara Mellon after her resignation as the Chief Creative Officer of Jimmy Choo (Financial Times)
Starwood Hotels & Resorts Worldwide launched the 100th Le Meridien in Coimbatore on November 11. Owned and developed by the Chennai-based Appu Hotels Ltd, the group has invested approximately INR 300 crore in the 254-room property, built on 6.75 acres of land. The first international luxury hotel to open in the southern city, Le Meridien Coimbatore features a wide range of cuisine and bar options, including the brand’s signature all-day dining, Latest Recipe; the signature Italian restaurant, Favola; a pan-Asian restaurant, Ponzu; an Indian restaurant, Peacock; a bar, Latitude 11; and an Illy Café. The hotel incorporates the signature Le Meridien arrival experience, curated by the brand’s global cultural curator, Jérôme Sans. Designed to make the first 10 minutes of the guest’s stay at the property memorable, the experience includes four elements: largescale artwork in high impact areas to reset the mind and stimulate dialogue and curiosity; the sensory experience, illustrated through the Le Méridien signature scent, sound and use of light; the Unlock Art programme, which features an artist designed collectable key card; and the music and nature sounds in the elevator, which transforms the event of riding an elevator into an ‘elevating experience’. lemeridien.com/coimbatore
Of Japanese Aesthetics and Flavours
“Fashion stands for new, glamorous, daring and sophisticated. The thing about H&M that makes me very happy is that I can reach an enormous crowd of young people, because they are looking for inspiration. They are not looking for a dress.” Donatella Versace on the Versace for H&M collection. (The New York Times)
International artists on Indian shores On December 16, Mumbai’s art lovers will have another reason to celebrate. Galerie Isa launches in the city with an exhibition by Berlin-based artist Anslem Ryele. Known for his large-scale abstract paintings and found-object sculptures, Ryele is being brought to India as the
After the launch of the highly appreciated iconic restaurant Le Cirque at the The Leela Palace New Delhi, this December the luxury hotel brings another celebrated New York-based restaurant to the country — the 144-seater Megu. Meaning ‘blessing’ in Japanese, Megu presents modern Japanese cuisine, sushi and sumibi aburiyaki — a grilling technique that uses binchotan, a special charcoal found only near Kyoto and prized for its superior purifying properties. theleela.com
first exhibitor of the new art space being launched by art collector Ashwin Thadani. The gallerist’s concept of introducing Indian art lovers to international art will see solo exhibitions by artists from around the world, every quarter. The debut artist Ryele has shown at celebrated galleries like Kunsthalle Tübingen, Tübingen; the Modern Institute, Glasgow and Galerie Almine Rech, Paris. The artist is primarily represented in private collections such as The Saatchi Gallery, London, the Daimler Collection, Berlin, Fondation Pinault, Venice, and Rubell Family Collection, Miami. galerieisa.com
December 2011| blackbook | 7
Bureaucracy
T
hursday, 24 November proved to a game-changer for the Indian luxury industry. The government decided to allow 100 per cent FDI in single brand retail and up to 51 per cent in multi-brand. According to Anand Sharma, the Union Commerce and Industry Minister, “We were aware that the cap works as a barrier. Foreign brands were unhappy about sharing such a huge proportion of ownership with outsiders. They felt that this could adversely impact their brand name and business models.” The Indian luxury industry is next only to China in terms of its growth and consumption patterns. The Indian economy is fast clambering up the ladder to become the largest and the most viable investment opportunity for luxury brands. A recent CII–A.T. Kearney report, India Luxury Review 2011, quotes the Indian luxury market to have grown by 20 per cent in the past year; it is now valued at USD 5.75 billion, with real estate and yachts as the only two market segments that recorded negligible growth. Despite robust growth, over the last few years the luxury industry has faced several roadblocks to the growth – among them the 51 per cent cap on Foreign Direct Investment (FDI) in single brand retail, which often deterred foreign investors and luxury brands from entering the market. So the move to increase the FDI limit to 100 per cent in single brand retail is expected to radically transform the luxury industry. It will offer brands enough impetus to enter India, which is displaying a never seen before love for luxury. For luxury brands struggling to gain a foothold in the market, this is fabulous news. “If we have the possibility to control 100 per cent of the company, the return on investment would be more favourable. So, we could be keen to invest more in India,” says Michele Norsa, CEO, Salvatore Ferragamo, a brand that retails through a partnership with DLF Brands. Norsa says that Salvatore Ferragamo is experiencing a 40 per cent growth, year after year, in India. “We are planning to expand to almost 10 stores from the four we have, and liberalising the market will only help firm up our plans. Our next stop would be smaller towns, beyond Mumbai and Delhi.” According to Sanjay Kapoor, MD of Genesis Luxury and
8 | Blackbook | December 2011
The Details
Raising The Bar The radical move by the government to liberalise retail by raising the FDI limit in single and multi-brand retail will smoothen the road for big ticket brands looking to enter India’s nascent luxury market. The luxury industry, however, says that it will tread with caution till the retail infrastructure catches up By Ruby Mehra
Chairman, CII Task Force on Luxury & Lifestyle, “The move would work if it is coupled with the reduction in tax structure. It would help bring in more brands and would make India the next shopping destination for luxury, right next to say, Singapore.” However, this doesn’t mean that luxury brands are just yet ready to jettison their local partnerships. Joshua Schulman, CEO, Jimmy Choo says that while the brand is, “very
enthusiastic about India and will increase our investments here as soon as the environment is good enough to do so,” he does admit that he is extremely happy with the brand’s present partnership status and may not opt for the single route. “I think it is not the right time to go alone in India. We are very happy with our partnership with Genesis since they understand the Indian market quite well,” says Schulman,
who is all set to launch the brand’s fifth store in the country. He adds that Asia contributes almost 15 per cent to their revenues. “I think beyond the FDI cap, the government should look at the retail infrastructure in the country. We would like to work on the availability of the brand.” The raise in FDI cap will help open the floodgates, feels Tikka Shatrujit Singh, chief representa-
tive for Moet-Hennessy in Asia and an advisor to Louis Vuitton. “Indian luxury industry’s biggest problems have been poor infrastructure, high real estate costs and Foreign Direct Investment (FDI) regulations, which create an atmosphere that is unattractive to many high-end brands. A lot of brands have withheld investments,” he says. Blues Clothing Company Executive Director Abhay Gupta adds, “Allowing 100 per cent FDI would expedite the growth of the retail market and the luxury segment would be a clear beneficiary. There is always a mismatch between a brand’s vision for expansion in India and the execution by a local partner.” Besides, more funds would be available for expansion. Right now, the level of investment by global players is closely linked with the arrangement they have with a local partner. Most luxury brands that have entered through partnerships, however, emphasise that the FDI cap was merely one among the several factors that deter the growth of luxury retail in India; there are others — such as excessive custom
duties on luxury goods. Internationally, custom duties on luxury products range between 15 and 20 per cent, while in India they are between 35 and 40 per cent. The duties increase the eventual price points at which products are sold, making them far more expensive than anywhere else in the world. “The government must also bring down the custom duty and countervailing duty on luxury products. Only then will the European brands think about entering India in a big way,” says Armando Branchini, Executive Director, Fondazione Altagamma. Sharma says that besides having raised the FDI cap, the Indian government is also considering other moves to promote and back the luxury market in India. It is, for instance, speaking with the European Union to sign a broadbased Trade and Investment Agreement, which aims at liberalising trade in goods, services and investments. Having already undergone 13 rounds of talks, the agreement could come into effect over the course of the next year. “It would encourage the European luxury industry to take India a bit more seriously,” he says. •
Gaurav Bhatia Marketing Director, Moët Hennessy India
Free-spirited and a bon vivant, he is either travelling the globe or collecting antiques, if not doing both at the same time. An opinion leader of the luxury industry, his love for exotic gastronomic experiences and of Champagne is never ending. Which is the product that best signifies your personal style? Champagne. It has character, is celebratory and is a party starter. Is there an object that you would never part with? My bottle of Dom Pérignon Oenothèque 1975, which, incidentally, is also the year of my birth. Pour it in a flute and you are drinking the stars. What grooming staples are you never without? A moisturiser and some hair wax. And, of course, Tabarôme by Creed for the night. The books on your bedside table right now… Mr. Mischief that I am reading to my boys, Capri – an Assouline title and Wallpaper magazine. A recent find that you are gung-ho about. The Saint-Ouen flea market in Paris. It is candy land for vintage finds. And old Jamini Roy sketches. The one brand that you will always have in your wardrobe. Marcello di Milano hand-made shirts – they are more perfect than perfect; mul kurtas from Riddhi Siddhi in Jaipur and Berluti Olga III lace-ups because they are pure art.
We are were that the FDI cap works as a barrier. Foreign brands were unhappy about sharing such a huge proportion of ownership with outsiders. They felt that this could adversely impact their brand name and business model Anand Sharma
Union Commerce and Industry Minister
We are planning to expand to almost 10 stores from the four we have, and liberalising the market will only help firm up our plans
I think beyond the FDI cap, the government should look at the retail infrastructure in the country. We would like to work on the availability of the brand
Michele Norsa
Joshua Schulman
CEO, Salvatore Ferragamo
CEO, Jimmy Choo
The government must also bring down the custom duty and countervailing duty on luxury products
Armando Branchini
Executive Director, Fondazione Altagamma
The Indian luxury industry’s biggest problems have been poor infrastructure, high real estate cost and Foreign Direct Investment (FDI) regulations, which create an atmosphere that is unattractive to many high-end brands. A lot of brands have withheld investments Tikka Shatrujit Singh Advisor, Louis Vuitton
Which are your favourite shopping destinations? Rome for menswear and shoes, and just about anything that’s got style and Jaipur for Brigitte Singh’s fabrics, art and anything India luxe. Which restaurants do you eat at around the world? Daniel in New York, Alain Ducasse and Ladurée on Rue Royale in Paris, Cipriani’s in Venice, Komuro in Tokyo, and Trishna in Mumbai. It is all about great food in sublime environs. But, above all, my mother’s Lucknawi cuisine. Where do you regularly holiday? Côte d’Azur, Tunisia; Capri; Cuba and Goa — for the sun, the sea and the people! Name little luxuries that make you happy. Hand-embroidered handkerchiefs; dahi batata puri at the Sea Lounge in the Taj Mahal Hotel and Tower, Mumbai; the Amar Chitra Katha series and fresh mogras.
Interview by Karan Kapoor December 2011| blackbook | 9
Rendezvous Rendezvous
B
y all accounts 42-year-old Sanjay Kapoor, the managing director of Genesis Luxury, is conservative in his fashion choices. His favourite suit is from Canali, shoes are from Bottega Veneta, perfume from Armani, and he loves working on his MacBook. However, when it comes to bringing down luxury brands to India, he has pushed his frontier to include both the classic and the blingy brands in his portfolio. Kapoor entered the luxury market when India wasn’t even on the radar of most brands. He is credited with having successfully introduced brands like Jimmy Choo, Paul Smith, Canali, Etro and Bottega Veneta to India. With L Capital Asia, a private equity fund sponsored by the LVMH Group and Groupe Arnault, acquiring 25.5 per cent stake in Genesis
By Sujata Dugar
Luxury in the recent months, and planning to pick up an additional 14.5 per cent, these are exciting times for Kapoor and his company. A firm believer in product customisaton as the key to the Indian market, Kapoor says that “tradition plays a big part in our purchase decisions,” which is why brands such as Canali, Jimmy Choo and Bottega have created ‘India Special Products’. An avid art collector — his collection includes works by Alex Kersis, Sujata Bajaj, Ravinder Reddy, Ganesh Haloi and Senaka Senanayake, for Kapoor, investing in art is not just about luxury but also about passion. Here, he shares his views on the changing Indian luxury market and gives a blueprint of the way forward.
10 | Blackbook | December 2011
How will L Capital Asia’s investment in Genesis Luxury help the company? We are looking to gain access to L Capital’s vast global network and its rich experience with international luxury brands and companies with this investment. They (L Capital Asia) will help us strengthen our strategy, network and vision. We continue to run the business operation ourselves as before, but we gain immensely from the fresh knowledge and process insights that they bring in along with their global perspective. The money will be used in expanding the domestic and international lifestyle brands into Genesis’ existing portfolio. What impact would a tie-up with L Capital have on the luxury industry in India?
great stimulant. Besides, the industry gains overall from better overseas practices and global business processes, which such partnerships bring with them. Genesis Luxury recently launched Luxxe Box in Chennai. What prompt-
His smart marketing moves have made it easier for global luxury brands like Jimmy Choo, Paul Smith, Canali, Etro and Bottega Veneta to break through in India
Carving a Legacy The interest of global investors such as L Capital Asia in the Indian luxury market will offer a huge impetus to the growth of the industry. Investors not only bring in cash inflows to expand businesses, but also knowledge from other successful and mature markets. Is this the way forward for companies that want to acquire funds to expand in the luxury space? There is a lot of interest globally in the luxury market’s development in India. We are, right now, at an inflection point, where the big boom is waiting to happen. It is the right time for private equity players to step in and be a part of this success story. Competition is always a
ed you to open the first multi-brand concept store in Chennai? Chennai has a very well-travelled clientele, who are exposed to international luxury brands. We have just brought the same brands to their doorsteps, a move the fashion aficionados of the city have appreciated. It is our strategy to explore the smaller metros in India, which are on a growth path. We also have Pune, Ludhiana and Kolkata on our radar. Luxury brands are largely confined to metros. What strategies are you using to cater to the aspiring and affluent customers residing in the emerging towns? One of the ways by which we have
Canali spring/summer 2012 at the Milan Fashion Week
tried to reach luxury consumers in tier two and three towns is through trunk shows hosted by key influencers in those towns. We also reach these clients by keeping them updated on our latest collections through direct mailers and home shopping for big clients. With the government looking at permitting investments in multibrand retail, how will such a move impact the Indian luxury industry? The easing of FDI norms in multibrand retail would open doors for iconic multi-brand stores in luxury retail, who are hopeful of gaining entry into the Indian market. That, in turn, would imply more choice for the consumers and greater aware-
December 2011| blackbook | 11
Rendezvous Insight. Information. Interviews.
There is a new category of buyer, the urban educated professional, for whom luxury is becoming a lifestyle choice What sort of risks have you taken with Genesis Luxury? In 2007, when Bottega Veneta’s Indian partner exited, we decided to sign up with them. People said the brand was premature for the Indian market. The products don’t have large logos or the bling factor. But my gut feel was that it was the right brand to have in the Genesis Luxury portfolio. Now, all are happy with the deal.
Burberry autumn/winter 2011 campaign
ness of international luxury brands, which is all very good for the market ultimately. The bigger need, however, is to ease out the duty structure, which would surely go a long way in making the market more globally competitive. Entering a market like India has its own set of constraints. How does a company like Genesis ease things out for their international partners? One of the key challenges that any international brand faces in a new market is understanding of the local nuances, the customers and their preferences. Genesis has an advantage of being in the premium fashion retail business for the past decade with its own brands such as Satya Paul and Samsaara. We have an in-depth understanding of the Indian consumers in the premium and luxury space. Luxury brands in India have many takers – from the well-informed to people with newly acquired money. How difficult is it to communicate a brand to different segments? Luxury is about exclusivity and hence, it has to be a little aspirational at all times. Brands would not dilute their communication messages to reach different segments. The communication
12 | Blackbook | December 2011
tools used are standard, in keeping with the global image standards of the brand. With the world of luxury going digital, does India have the technology and infrastructure to move ahead? We’ve just set out on the path and we do have sufficient technology to support digital initiatives. What is really lacking at the moment is people’s awareness and willingness to embrace luxury through the digital route. Most luxury buyers are still into the concept of touch and feel of the product. Traditionally, we are not big online shoppers and luxury is not an exception to this rule. At this stage, digital initiatives are good to supplement traditional marketing and create brand awareness. How do you stay updated on the global luxury market? I am constantly on the move for work and at each destination I travel to across the globe, I make it a point to visit the key luxury fashion establishments and see how they operate. For instance, how different is the customer experience at a Canali store in China vs. India or Milan. I also read a lot while travelling and browse the Internet very frequently.
Most international luxury brands in India focus on selling fashionwear for men and accessories for women. Why? Women’s luxury shopping in India traditionally revolves around jewellery and accessories such as bags and shoes; it is not focused on fashion clothing. Men predominantly spend more money on luxury clothing brands. The Indian woman is also far more sensitive to pricing than the Indian man. With Hermès opening the first onstreet stand-alone luxury store in the country, is this going to quickly develop as the next phase of luxury retail? The Hermès experiment is an interesting move, but I am not so sure if this will become the norm. At this stage, real estate on the high-street is very fragmented. For instance, Connaught Place in New Delhi has some great heritage buildings that would provide an iconic ambience for luxury brands, but the rent agreements are so dated and legally tangled that it is not easy for new entrants to develop the area as a shopping destination. Overall, the effort to reward ratio is better in new malls versus high-streets. Also, in India, especially in cities such as Mumbai, the weather is not very conducive to luxury shopping environments on streets as opposed to malls. What is the most interesting change you’ve witnessed in the luxury
Everything you wanted to know about the Indian Luxury Industry sector in India ever since you stepped into the domain? The biggest change has been the entry of an entirely new segment, that of the aspirational luxury buyer. With increased overseas travel and exposure to brands, a new category of buyer, the urban educated professional, is a fast developing segment. Luxury is becoming a lifestyle choice for the urban elite population and it is no longer just a domain for the old wealthy families. Besides, the target audience is getting younger each year.
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What is the future looking like for Genesis Luxury? Any new brands and expansion plans in the pipeline? Yes, we have a very aggressive expansion plan for existing as well as new brands. We are in conversation with several brands at the moment both in the premium and luxury space. We should have some announcements to make in the coming months. What are the roadblocks to the growth of the luxury industry in India? How do you think these roadblocks should be dealt with? The right retail infrastructure for expansion is the only major roadblock that most luxury brands are facing today. There are not sufficient luxury spaces available to expand outside the main metros. That’s proving to be a major impediment to rapid expansion. Being at the helm of one of the country’s biggest groups, do you feel any sort of pressure of building not just an empire, but also India’s luxury industry? No, I do not feel any pressure. It’s been a great experience for me, being part of this journey. India is now on the global radar for luxury brands, and it is the joy of creating something new that keeps me going. •
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Cover Story
Donald Trump’s Bid for India American luxury entrepreneur and real estate tycoon, Donald J Trump, is making his first serious bid for India’s luxury market by thinking beyond the obvious. His maiden venture will include the winning twin combination of luxury retail and real estate, a first for any Asian country By Deepali Nandwani
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onald J. Trump — flamboyant luxury entrepreneur, real estate impresario and the man whose personal image is synonymous with his glitzy brand — has created several successful brands that reflect his carefully nurtured image: chocolates; fine teas; furniture and homeware; lighting; crystal; eyewear; cufflinks and tie clips; leather goods; men’s apparel and, not to forget, high-end real estate. They’re all an integral feature of his licensing business, including a few luxury real estate projects that he is building across Asia, starting with Manila, the capital city of Philippines. According to Trump, his company began licensing about 10 years ago. “It started with buildings, and then it went over to many other products,” he has said. And one of the world’s most audacious pashas of luxury, often referred to as a shrewd marketer, is making his maiden bid for India’s fast-growing luxury market. Not just through extravagant, opulent real estate, but also through his licensing business which will introduce his range of men’s apparel, style and home accessories and more to India. The New York-headquartered Trump Organization has teamed up with Delhi-based Bradford License India, involved in brand licensing, to introduce a bevy of products from the Trump brand into the country which, he says, “is on the verge of huge growth in areas of luxury. These products will reflect the Trump brand’s signature attention-to-detail and high quality standards.” The products will represent “affordable luxury”, the notion that one can live like a modern-day Maharaja by spending just a high premium. The two collections that he brings to India include Donald J Trump Signature Collection (men’s suiting, dress shirts, neckwear, jewellery, small leather goods and eyewear) and Trump Home Brand (furniture, room décor, lighting, crystal and bedding). On sale will also be a signature collection of gourmet chocolates, teas and spirits. Aaron Smith, staff writer of CNN.com, the online portal of CNN, who has extensively covered the Trump Organization, writes, “Trump believes his name is synonymous with luxury. He released his Signature Collection in the US in 2005, piggybacking on the success of his television show, The Apprentice. Since then, the Trump Organization has ventured into several other products, including home accessories and more.” Till now available just in the US and Canada, India is the first Asian country that would play host to stand-alone Trump brand stores retailing the product range, which include men’s shirts and suits, neckties, cuff links and jewellery, leather goods and glasses, and home range products such as furniture, lighting and room décor. The stores will most likely be located in Mumbai and Delhi, though nothing has been firmed up as yet. Trump Organization’s next stop is Dubai and interestingly, Scotland. The Trump Organization encompasses global real estate development and licensing, sales and marketing, property management, golf course development, entertainment and product licensing, brand development as well as restaurants and event planning. Cathy Hoffman Glosser, Executive
The Book Shelf
Donald Trump, often referred to as the “world’s biggest salesman”, had to struggle pretty hard to achieve success. His biography, Think Big and Kick Ass in Business and Life, co-authored by Bill Zanker, provides littleknown details about him and his early struggles: from his business and his personal life, his first big real estate deal while he was still in college and his casinohotel ventures, which are being developed around the world. It’s full of ‘Trump-isms” including stuff like, “Get going. Move forward. Plan a takeoff. Don’t just sit on the runway and think that someone will come along and push the airplane. Change your attitude and gain some altitude.” Or even, “Sometimes your best investments are the ones that you don’t make.”
I love my life. I really do. I wake up every morning, and when I read about Donald Trump in the papers, it hits me later on that the really awesome guy is me
Vice President (Global Licensing) for The Trump Organization, who is spearheading the venture in India says, “Our brand message of affordable luxury resonates very well in India, which is a country very conscious of the idea of value-for-money even where luxury is concerned. We will also be creating specialised products that will appeal to the sensibilities of the Indian consumers.” This statement is crucial if we need to understand how the franchise business will work. Trump Organization ties up with local partners in countries in which they introduce the brands. The local partner, in turn, finds partners to create, distribute and market Trump products. The same kind of set-up will work in India, too: BLI will find partners to create, distribute, and market Trump products for the Indian market. Already, they are in talks with a few companies that are being evaluated for a licensee agreement, but no details are available as yet. What we do know, however, is that some of the product range will be specialised for India, created and crafted within the country, keeping in mind the tastes and sensibilities of the Indian consumer. The price point of these products, according to Trump, will be very specific to India and will be worked out in association with the manufacturers.
FACING PAGE: The Donald J. Trump furniture line
December 2011| blackbook | 15
Cover Story Significantly, India could be a manufacturing base for many of these customised products, which, in turn, would bring down the price points. Experts believe that the control of price points will help Trump lead the race in the luxury market. Debashish Mukherjee, director at consulting firm A.T. Kearney, which does an annual luxury report, says that the biggest growing segment falls in the ‘affordable luxury’ category and anyone who taps it will ultimately take the lead. The brand, however, will have to look at the Indian market in the long term. And, invest in marketing. The Trump Magic Sixty-five-year-old Trump, who claims to be a “frontrunner in the extreme luxury business”, shouldn’t find that difficult. He has carefully constructed his franchise business in the US and Canada by cashing in on his own image as a brilliant marketer and a flashy, swashbuckling American real estate tycoonturned-luxury purveyor who lives life king size. What he offers through his luxury custom-made franchise business is an opportunity to experience a bit of his glitzy, glamorous life, if only through the products created for his brand. Trump, a multibillionaire who began life as a real estate tycoon, lives in what is believed to be one of the most expensive apartments in New York. The penthouse, which extends over three storeys, almost 40 floors above his expansive office, has an ornate marble fountain that reports say “rivals the Trevi” (the baroque fountain in Rome that stands 26 metres high) and is decorated partly in Louis XIV yellow damask. “Many of my products are inspired or even draw references from my real estate projects – the kind of buildings I build and homes I construct,” he has
Donald Trump, in his own words
• “I don’t think people know how big my business is. Somehow, they know Trump the celebrity. But I’m the biggest developer in New York. And I’m the biggest there is in the casino business. And that’s pretty good to be the biggest in both. So that’s a lot of stuff.” • “In Mumbai, while we don’t expect to get high premiums like the 400 per cent we got for our condominium project at Panama, the focus would be on building apartments for the niche luxury segment. As India’s young continue to grow wealthy, they are going to appreciate and pay a premium because they want a better product.” • “The world is noticing China and India. Market surveys show that India is growing in all dimensions and will overtake China by 2020. Even here, in the US, we see lot of Indians (who are) so successful.” • “Our real estate entry has to be in Mumbai and that’s where everything is going on right now in terms of the high-end real estate…That’s the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments.” • “I love my life. I really do. I wake up every morning, and when I read about Donald Trump in the papers, it hits me later on that the really awesome guy is me.” • ”My brand alone, the Trump brand, is worth over $5 billion. My personal stakes in the Trump Organization, and in several other companies, are worth over $3 billion. So do the math.”
said. Much of Trump brand’s home accessories and furniture, for instance, has the same baroque quality which you see in the real estate tycoon’s several homes. The Luxury Real Estate Market Trump’s bid for India, however, goes much beyond retail. It includes his traditional sphere of business – real estate, which is being spearheaded by his son, Donald Trump Jr, the executive vice president of development and acquisitions at the Trump Organization, who believes that “the Indian real estate market is worth US $12 billion”. Trump Organization has set up a venture fund of $1 billion to develop projects for the Indian market – the first two of which will be in Mumbai and Bangalore. Each of the residential projects might be spread over 250,000 sq ft to 1 million sq ft. Trump Organization has tied up with Mumbai-based developer Rohan Lifescapes, which has constructed over 20 million sq ft of homes and offices in the city, to develop the luxury Trump Tower. The 65-storey high residential
16 | Blackbook | December 2011
towers, spread over 300,000 sq ft, will be situated on the plush Hughes Road and will feature a luxury spa, gymnasium and a mini-theatre. The Bangalore project is a 47-storey high luxury residential development, located at the intersection of the fashionable Brigade Road and Residency Road. There will be 16 condos, each about 7,000 sq ft large, and three penthouses, each about 9,000 sq ft in size; the first will be on the 25th floor. On the lower floors will be parking, a signature Trump restaurant, a spa and a health club. The penthouse will come attached with a beautiful sky garden. Although Trump feels property prices in India have risen sharply, he believes they are not much when compared with global realty prices. “The key challenge in India would be to build properties that meet the expectations of high net-worth global investors. They need to be of the same quality as any other luxury property anywhere in the world,” says Trump Jr, whose company’s portfolio includes several prominent projects in New York, Los Angeles, Las Vegas, and in countries like Mexico and Dominican Republic. Somewhere down the line, the Trump Organization may even tap India’s burgeoning luxury hotel business. “There is a huge opportunity in the tourism business with hotels and resorts in places like Goa and Bangalore,” he adds. “We feel it is now time to invest in Indian realty projects as the quality has moved up and we see the emergence of some high-end developers with a product level that will support our brand.” Though Donald Trump has been looking at entering India over the past three years, it is only now, when the US is going through an economic downturn that he has begun pushing his retail licensing and real estate business in a market which is increasingly being seen as the next big growth area for luxury over the next decade. There couldn’t have been a better time. •
FACING PAGe: Trump Tower, Toronto; An artist’s impression of Trump Tower, Mumbai; Dressers from Trump Home ABOVE: Interiors of Trump’s Palm Beach home; suit, shirt and tie from the Donald J Trump Signature collection
The Trump collection
The Donald Trump Organization will bring to India a rather varied portfolio of products. The suits, for instance, which are part of the Donald J Trump Signature Collection, sport fine details like silk lining and gold piping on the inside. The anti-wrinkle dress shirts have wide collars in an array of solids, patterns and stripes, and are complemented by an assortment of French cuffs. The collection of cufflinks and tie clips complement the Donald J. Trump Signature Collection suits and dress shirts, and feature pieces in silver and gold, highlighted with touches of crystal, enamel and semi-precious stones. They come packaged in beautiful lacquered wood box with a burl finish and black trim. The leather goods collection includes belts accented with solid brass hardware. Trump Chocolates will be available in three flavours — milk, dark and deluxe nut, packaged as bars of gold, silver and copper and embossed with his name. Among the most successful of these flavours, at least in the US, is the milk chocolate, which has a good caramel note and a smooth melt. Trump Tea will be available in four flavours, interestingly named after upscale American neighbourhoods: Union Square, Park Avenue, Westchester and Mar-A-Lago. This is where India may come in: the ones available in the country may be sourced from within India itself and have desi names. The Trump Home Brand encompasses bedroom, dining, home office, home entertainment and an upholstered product line. Westchester, a grand furniture line, is opulently scaled with designs that are inspired by the magnificent mansions and historic properties restored by Trump. The line, Central Park, reflects metropolitan New York roots and his many real estate properties in the city. The group offers a more contemporary take on cutting-edge designs, accented with Art Deco influence. “These two stunning style directions appeal to a wide audience,” Trump has claimed. “Both Westchester and Central Park offer a look of success and status, proving that you can live richly without spending a fortune.”
December 2011| blackbook | 17
Promotion
Vivanta by Taj, Kumarakom
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Motif s @ The Vivanta by Taj Hotels & Resorts offer soulful experiences that are off the “stayed” road
Vivanta by Taj - Fisherman’s Cove, Chennai 18 | Blackbook | December 2011
xperience the Wazwaan at Dal View Srinagar; watch tower dining at Fisherman’s Cove; take a spice walk with legendary Chef Rego at Holiday Village Goa or enjoy a breakfast cruise on a yacht at Malabar Cochin. At Vivanta by Taj, each of these signature experiences defines your stay and makes it a memorable one. A stunning result of the brand architecture exercise undertaken by the Taj, the Vivanta by Taj is a contemporary, cutting-edge, informal yet charming chain of hotels that appeals to the cosmopolitan world-traveller. The name Vivanta has its moorings in ‘bon vivant’ (a connoisseur who appreciates the good things in life) and ‘Viva’ (Latin-Spanish word that symbolises life and being alive); it speaks of style, sophistication and vivaciousness.
The jungle dining experience at Vivanta by Taj — Sawai Madhopur Lodge is equally memorable. You can visit the hunting lodge on the outskirts of Ranthambore wildlife sanctuary and enjoy a private dinner for two against a star-lit night sky, while you are served drinks and a tantalising barbecue just off the coals. Listen to folk story-tellers weave a tale of yore even as you sip on your after-dinner cognac, just like a maharaja. An indulgent aphrodisiac food journey awaits you at the Vivanta by Taj — Whitefield, Bangalore. Cupid flavours permeate the air even as meticulously crafted meals with a repertoire of aphrodisiac ingredients like ménage-a-foie, crusted oysters, chocolate and avocado mousse kindle a passionate desire in you.
Vivanta by Taj addresses the well-heeled, urbane sophisticates, who are seekers of beautiful luxury experiences. The Vivanta by Taj guests are global travellers. The thin line dividing work and pleasure often blurs for them, as they travel through time zones, seeking to savour every moment. They lead opinion amongst their peers, and have a keen personal sense of design and style. They seek experiences that are soulful and inspired by creativity, imagination and the culture of the destination they are heading to. Vivanta by Taj addresses the different personas within today’s connoisseurs — sophisticated and urbane travellers who appreciate contemporary luxury and have an evolved aesthetic sensibility. Welcome, then, to Vivanta by Taj’s cool luxury getaways and their Vivanta Motifs. At the Vivanta by Taj – Coral Reef, Maldives, you can take a thrilling speedboat ride to an exotic sandbank, armed with a bottle of sparkling wine; snorkel in the clear blue waters, or spend an afternoon feeding the Sting Ray fish that visit the shorefront every evening.
At the Vivanta by Taj – Holiday Village Goa, Chef Culinaire of Goan Cuisine, Urbano de Rego will take you on a spice tour along the colourful bazaars of Mapusa. Your stay at the Vivanta by Taj — Holiday Village Goa will offer you an opportunity to explore the state’s culinary history through this exotic spice trail. End the day on a high note with a memorable meal prepared by Chef Rego himself. There are innumerable such experiences that will make your stay at the Vivanta by Taj a truly fulfilling one. Like, a villa dining experience at Vivanta by Taj — Fisherman’s Cove, Chennai; a signature lamp lighting ritual at Vivanta by Taj, Kumarakom; a cocktail making experience (be a master mixologist) at Wink, the high energy bar at Vivanta by Taj — President, Mumbai; and a striking Rain Tree experience at the Vivanta by Taj — Connemara, Chennai, where, seated under a thick canopy of rain trees, you can enjoy an authentic Chettinad food cooked in clay pots over wood fire. Each of these signature experiences is sure to uplift your mood and soul in more ways than one. •
Above Left to Right: Vivanta by Taj - Sawai Madhopur; Feeding the Sting Ray fish at Vivanta by Taj - Coral Reef, Maldives; Chef Urbano de Rego at Vivanta by Taj - Holiday Village, Goa december 2011| blackbook | 19
The Digital Revolution
Just A
Click Away
Luxury brands have finally logged on to the rapidly expanding digital world and are exploring the growth potential offered by the internet by launching e-retail stores or purely online campaigns By Sujata Dugar
Courtesy: dreamstime
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oing digital’ are the two most exciting words for marketers of luxury brands these days. After years of eschewing the e-retail route to sell their coveted, limited edition products on the web for fear that the move would damage their exclusivity, luxury brands have finally realised the potential of the online medium. The perception that selling products on the Internet projects ‘find a bargain’ reputation, no longer holds water with reputed luxury brands. Take, for instance, the British luxury fashion house Burberry, which has invested in online multi-channel technology to enhance its retail experience, both as a brand and at a transactional level, allowing customers to browse and purchase items online that might not be available in their nearest Burberry store. The iconic brand rolled out its online store, burberry.com, in the fourth quarter of 2010-2011. Accessible in over 45 countries and in six languages (English, French, Italian, German, Japanese and simplified Chinese), the site allows customers globally, in many cases for the first time, to connect with all its aspects, from heritage, to music and video, to the full product offer. Through the use of dynamic audiovisual content the site has become a space to engage, entertain and interact, as well as provide the ultimate online luxury shopping experience through a personalised customer service application. It allows you to click and chat, and click and call in real time in
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14 languages. The site provides a powerful locus for ongoing efforts to build the Burberry community around the world. And going by to our infatuation with smartphones, the site is also customised for iPhone and android devices. Digital activity has been at the core of Burberry’s strategic plans in recent times, as is obvious in many of its recent activities. It live-streamed its Spring-Summer 2010 womenswear show directly from the runway in London; online viewers worldwide were able to share personal comments on the collection in real time — a first for any fashion brand. It also live-streamed its Autumn-Winter 2011 show onto the iconic 32-metre Coca Cola screen at Piccadilly Circus, viewed by an estimated 1.2 million people a week. In fact, Burberry was the first luxury brand to win the Digital Innovation award in 2010 at the British Fashion Awards. In February 2011, the British brand was voted the 13th most innovative company by Fast Company magazine, due to its pioneering digital initiatives. Following close on its heels is another iconic brand — the Italian Gucci, world leaders in luxury fashion and leather goods. It opened its new luxury digital flagship store at the Milan Fashion Week 2010. This new online retail destination takes advantage of the most innovative technologies and seamlessly integrates rich content, shopping and social networking to provide the site’s 2.5 million visitors per month with an aesthetic and customer-
According to a recent report by Forrester Research, online retail remains the most profitable channel
oriented experience that replicates the kind offered by Gucci’s signature flagship store in Rome, New York, London or Shanghai. “Through the use of new technologies, we have created a digital flagship destination, where our customers can truly experience the beauty, quality and craftsmanship of Gucci’s collections in a truly luxurious way,” says Frida Giannini, Creative Director, Gucci. “It is also very important to me that social networking capabilities are an integral part of the new site, as shopping for fashion is almost always an experience that is shared and enjoyed with friends.” Gucci.com, the digital flagship store allows online visitors to travel through the experience of a physical Gucci retail store. Products are displayed against a backdrop of gold and light beige rosewood and other sophisticated materials, adding a sense of three-dimensional richness to the site set against contextual video and photography that narrates the story behind the products. Patrizio di Marco, Gucci’s President and CEO, says, “Gucci is a company with a deep respect for the past, yet with an eye firmly focused on the future. We see technology as offering a means to an end. It is not the end itself. The customer experience is what counts, and that has to be the focus. With the ubiquity of broadband today and the widespread adoption of social
networking, we have aimed to develop a rich and connected online experience that reflects the height of luxury and service one experiences when entering our flagship retail stores.” He adds, “Our strategy online is clear: all paths lead to our digital flagship, whether you are seeking out Gucci through a search engine, are one of our near one million Facebook fans, are one of the over 600,000 people who have downloaded our Gucci App or are one of our 18,000 Twitter followers. The destiny of the gucci.com digital flagship store is that it will become our highest volume store in the world.” According to a recent report by US-based Forrester Research for Shop.org, online retail remains the most profitable channel, beating in-store and mobile purchasing. It stated that e-commerce is up by 20 per cent over the last one year. Luxury marketers, who have typically been reluctant to get on-board with new technology such as e-commerce, are seeing the benefits of this tactic. In fact, some retailers such as Ralph Lauren, Saks Fifth Avenue and Elie Tahari are revamping their sites to entice customers. Till a few years ago, many observers believed that luxury brand owners had low ambition for their websites. In fact, many luxury brands didn’t use the Internet to sell products online, most had nondescript design and were low
December 2011| blackbook | 21
view point
The Digital Revolution
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few years ago, when shoppers in India desired to buy the most recent minaudiere launched by Judith Leiber or the coveted IT shoes by Jimmy Choo, they had to take a rather circuitous route to satisfy their desire. Flying, if not to Europe then to Dubai or Singapore, the nearest luxury destinations, was the only way out. This did change with a number of brands opening up brick-and-mortar stores in the country, and some others opting to retail out of multi-designer stores. The other option, of course, was to go digital, which many are opting for, though the luxury of click and buy is still at a nascent stage in India. New Delhi-based entrepreneur Aakanksha Sharma chases after luxury fashion literally “as though it’s going out of fashion”. Her closet boasts of trophies from all the chic brands that you can think of — Louis Vuitton, Prada, Chanel, Bulgari, Gucci, Sergio Rossi, Tod’s, Jimmy Choo, among many others. Conveniently for her, she doesn’t need to travel abroad to get her hands on the new collections. In fact, she doesn’t even have to leave her home. “I never thought one could have the same experience of shopping for luxury online
Although orders from Indian shores are still miniscule as compared to other countries, they are definitely on the rise. “Most shoppers from India are based in the metro cities; these are intelligent people who buy very specific items,” says Julia Bentley, the spokesperson of Saks Incorporated, the parent company of Saks Fifth Avenue. The story is the same with Neiman Marcus (neimanmarcus.com)where, too, business from India is on an upswing, with buyers looking for those very special buys rather than bulk purchases. Burberry is the only brand that has an India-focused webpage: in.buberry.com and offers its clientele a choice across all products — apparel, beauty, fragrance and home. The portal also offers a dedicated customer service phone line and has an excellent returns policy. Even Indian luxury brands like Good Earth have joined the digital world with the upcoming launch of their ecommerce website, however, catering mostly to their international clients. Despite the growth e-retail is still in a nascent stage in India because of the broadband bottleneck, which hampers growth, according to Anand Ramanathan, Manager, Business Performance Services, KPMG. “It (e-retail) is a good complimentary service to most brands, but it doesn’t make a large contribution to sales. The same is true for luxury brands, too.” It doesn’t help that most luxury brands aren’t yet ready to indulge the demand for online orders from markets like India, which are still underdeveloped. Take, for instance, the French fashion house Louis Vuitton, a brand that sells only its accessories online, and that too only in hand-picked regions of the world — Europe, US, Australia and some parts of Asia. More interestingly, Marc Jacobs, the eponymous designer who is also the Creative Director at Louis Vuitton, sells none of his own labels on his brand’s website. But run a search on Google and numerous websites selling Marc Jacobs pop-up. Luxury brands argue that virtual stores do not have the capability to add that personal touch to customer service, which a brick-and-mortar one can. However, according to a study released by Google and Unity Marketing as way back as October 2008, in the United States of America, designer clothing topped the list of purchases for online shoppers, reason enough for luxury brands to let go of the insecurities of a channel that is leaping ahead of its time. As the modern luxury consumer gets used to the idea of buying online, perhaps more brands will go virtual. Especially for markets like India where lack of physical infrastructure hampers the growth of brick-and-mortar stores.
The Underdeveloped Digital India
Much like everything else is ‘luxury’ in India, the e-retail scene, too, has been a slow starter. But luxury brick-and-mortar stores like Saks Fifth Avenue and online sites like the upmarket Net-a-porter are increasingly delivering to the country By Ankit Gupta as one does in New York or London. Some of my favourite stores like Neiman Marcus and Saks Fifth Avenue now deliver goods in India,” she says. There are several reasons why luxury brands are looking at e-retail seriously where India is concerned. Till about a decade ago, the brands were put off by the unsophisticated retail environment within the country. The last two years, however, have seen a massive growth, and the luxury market has doubled in size. It is now valued at USD 5.4 billion. Even then, the presence of luxury labels is limited to malls like DLF Emporio in New Delhi, Palladium in Mumbai and UB City The Collection in Bangalore. The other choice to preferably set up a retail outpost continues to be five-star hotels and, in case of Hermès, a stand-alone store in Mumbai’s Ballard Pier with several colonial-era buildings. Most retail formats in the country, unfortunately, dissuade the ultra-rich, the extremely-well known and the real consumers of the brands from walking into a brick-and-mortar store because of the sheer lack of infrastructure and the right ambience in which they can buy luxury. There is also the larger question about limited collections that are brought into the country by the brands; sometimes, the most exclusive and desired pieces stay clear of the Indian coast. Fortunately for luxury lovers, the digital revolution has opened up avenues that weren’t really available earlier. When Net-a-porter, the much-celebrated luxury e-retail website (net-aporter.com), listed India as a shipping destination in 2008, luxury retailing took a turn for the better. Today, not only is it one of the most talked about and convenient e-boutiques, but also a market leader that has paved the path for others to follow. International chains like the New York-based, multi-designer department store Saks Fifth Avenue and its archrival Neiman Marcus not just have an India delivery option, but also display prices in INR. Launched in 2000, Saks.com, the online store of the iconic Saks Fifth Avenue offers an enhanced, personalised, online shopping experience. Saks. com currently retails to over 90 countries and in 42 currencies, India being one of them. The website’s 24/7 personalised customer service enhances the entire shopping experience, making customers feel like they are actually inside a brick-and-mortar store. The idea is to make the user experience as friendly and real as it can be while surfing a virtual world.
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Reema von Quadt
CEO, Founder of Qvendo on functionality pages, while some were stuck in the ‘skip intro’ time warp which turned off web users. In fact, a look at their e-retail site shows how little care has been taken to add value to their web content vis-a-vis their investment in retail outlets and attention to detail for heightening the consumer experience. “For long, luxury brands and renowned fashion houses believed that the web is too impersonal for their products, which need the human touch. For them, the concept of online is a new-age phenomenon which didn’t go with the ethos and the heritage of their brand,” says Rahul Narvekar, co-founder, Fashionandyou.com. An invitationonly online destination for shopping genuine clothing and accessories from luxury labels across the world, his site has eight lakh visitors and receives 2,500 orders every day. Narvekar adds, “It is only now that luxury brands have woken up to the concept of having an active, functional website for selling products online.” This phenomenon, according to Narvekar, could be due to the fact that luxury market in the United States and Europe has reached saturation point, while in
Case Study Net-a-porter: Revolutionising Luxury Retailing
If there is one thing that has remained constant at Net-a-porter, through their 10 years of existence, is the high level of care that they take in delivering products to their customers. Hard black matt boxes with clothes and accessories inside, neatly wrapped and cushioned with fine pink tissue paper. In the business of luxury there can be no excuse for exquisite service and Net-a-porter believed in this strongly enough to make it the founding value of the brand. Today, ordering from the e-store, for many, is more than just buying a product. It is the convenience, excitement and ease of being able to order that particular product with a surety that it will be delivered not just on time but in a condition to be worn straight from the box. Starting with a team of just 15 members, in the year 2000, the company today employs over 200 people, with each one of them working towards maintaining the same quality and standard of service that was envisioned by founder Natalie Massenet. Today, a part of the Geneva-based Richemont Group, the average order value on Net-a-porter is approximately only £500. Though this average value is of a small amount for the brand’s one per cent VIP customers, they represent 20 per cent of the sales. No wonder that deliveries to these customers are shipped the same day in Net-a-porter vans, driven by a fleet of men hired in part for their politeness and etiquette. With a distribution scale servicing over 170 countries, including India, in 2010 Net-aporter launched a new e-retail site, The Outnet, for its promotion shoppers, stocking previous collections at a discount. And once again, targeting the male shoppers, in January this year the brand started Mr Porter. The company, valued at £350 million, capitalised on the large network of women shoppers that they already have to reach out to the men – 100 per cent of Net-a-porter customers have a man in their lives in some capacity and 59 per cent are married or living with a partner, a survey revealed. Nishant Bangar
‘‘Online stores eliminate the problem of physical space’’
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here are three main reasons luxury online retail is on the rise in India: increased selection, cheaper prices and easy accessibility. While India’s wealthy are steadily increasing in numbers, the access to luxury goods in the country is still substandard, compared to other emerging markets like China. Lack of adequate retail infrastructure and tight business regulations make it hard for brands to open stores in the country. Stores are also opened at very high costs, which is passed on to the consumer. Consumers in India want access to the same selection offered in Europe and US, and at equivalent prices. This is where e-retailing comes in. Online stores eliminate the problem of physical space and the costs associated with building and maintaining a store. This not only saves the customer’s money, but also opens up a portal for many more brands with an increased selection. Besides, you cannot ignore the time saved by shopping from the comfort of your home. You can view hundreds of different brands and items with the click of a mouse instead of driving from shop to shop. Compared to countries like the US and Japan, e-commerce in India is still in the early stages of development and brands embarking on e-retailing need to take into consideration a few key factors. Indian shoppers are still coming to terms with trusting websites to deliver quality products that they have not experienced before purchase. When you start a luxury e-retailing business for India, it is important to assure your customers that the items you stock are high quality originals and not factory rejects or, worse, a complete fake. E-retailers must also have the most secure and up-todate payment systems that build a sense of security and assure that to the customers. In the luxury e-commerce market, reliable and speedy delivery is a prerequisite. It’s unacceptable for the customer to get excited about a purchase and then have to wait five to six weeks for delivery.
December 2011| blackbook | 23
OPINION
The Digital Revolution
Tarun Tahiliani Designer
“It will take a while for Indians to get used to shopping online”
Japan, it is on a decline; China and India are the emerging new markets. Showcasing the brand and acquainting the market with its heritage becomes imperative in countries like India and China, which has a number of young buyers of luxury. For instance, in a market like India, where economy is scattered and the younger generation is the biggest spender, e-retail becomes a great tool to sell. Narvekar feels that e-retail also provides an alternative method of liquidating the excess inventories and saves real estate cost. “For this generation of buyers, who are global jetsetters, love to flaunt brands and are not too aware of the heritage value associated with luxury brands, an online portal proves to be just right. They find it easy to buy. Besides, the site provides them the anonymity and also gives them a platform to research and learn the history of the brand without looking stupid,” he adds. However, luxury brands are using e-retail not just to reach out to young customers in new markets like India and China, but also retain web-savvy customers in established markets like the US and Europe. “While the Indian luxury brand consumer still wants to see, touch and feel before buying a luxury branded product, in the west people are far
I
t will be a while before Indians take to shopping online. For one, we like to touch and feel things before we buy. That is part of our culture. Luxury involves big bucks and a luxury purchase in India would generally not be impulsive. Also, we are not quite taken up with the idea of value-formoney, even when it comes to luxury purchases. Indians like to look at things, think things over and then buy. The entire culture of value-for-money combined with the sensory need to touch and experience a product before we buy it, makes us reluctant online shoppers. Also, shopping for us is a means to go out with friends and family and bond over buying a thing. Many of us, while buying a luxury product, would take along two or more family members for advice. Some look at shopping as therapy, and online shopping does not feel therapeutic; it just feels convenient. Besides, the broadband speed in India doesn’t lend itself to effective and interesting online shopping. I think e-retail will catch on only once the younger generation, used to the internet, matures and the internet infrastructure gets better. Till then, we will stick to our tried and tested methods.
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busier and for them, e-retail is a convenient way to buy,” says Ram K. Agarwal, Director, Ernst & Young India Private Limited. For instance, when the American fashion house Oscar de la Renta launched a transactional website a few years ago, it expected people to buy smaller items such as perfumes and belts. However, it wasn’t equipped to receive an online order one spring for a $80,000 sable coat from a customer in New Hampshire, who couldn’t travel to New York to purchase from the store. Customising the online experience Most luxury brands have grappled with the notion of compromising with the snob value associated with their products; the fear of losing their exclusivity tag, perhaps, was one of the key reasons that iconic brands were not selling online. However, in September 2009, Fabergé, the celebrated high-end jewellery brand launched a website, faberge.com, as its global flagship store, followed by
Grassroots
Illustration: Atul Jangam
the physical flagship in Geneva in December 2009, and changed the game. For a brand that launched its collection of 100 pieces of jewellery with a price tag ranging from $58,000 to $10 million, going online highlighted a shift in the activity of the high-net-worth individuals who preferred buying online. Unlike other sites, Fabergé has maintained its exclusivity by not involving shopping carts. Once the client has chosen the piece, a personal sales advisor from Fabergé offers the client a detailed account of the jewels, synchronises his computer to create a virtual showroom and, if necessary, flies in from Geneva to display the jewels. After all, when luxury is taken out of the store and put online, the brands have to go that extra mile to ensure their customer the same level of service that they would if they were sitting in its store. Other instances of brands going online: Aquascutum Corporate Gifts (aquascutumgifts.com), the 150-year-old shop on London’s Regent Street that sells a range of archetypal British goods, also went online and set an example that going the internet does not hamper the exclusivity of the brand. Louis Vuitton (louisvuitton.com), the luxury maker of leather goods, has also prospered online. UK-based CoutureLab (couturelab.com), an online site that showcases the best of talent in fashion, design and luxury, is a business that goes beyond seasons. Entrepreneur Carmen Busquets set up the virtual space for the demanding global clientele she had developed during her retail operation in Caracas, Venezuela. She recognised early the digital opportunity for luxury goods and started CoutureLab. She went on to set up her first luxury boutique in London, in November 2009. These are signs that buyers of luxury goods crave the convenience of online shopping and companies are being forced to adapt. However, Narvekar warns, the challenge for luxury brands is to know how to exploit the digital medium judiciously and use it in such a manner that it adds to their client base without hampering their exclusivity. A brand needs to treat its website as a master boutique designed to educate and extend the in-store experience. •
A Salvatore Ferragamo store window
Photograph Bajirao Pawar
Shop Floor Secrets Tushar Kundekar, Operations Manager at Salvatore Ferragamo’s Mumbai store on the intricacies of luxury retailing in India and how he makes it work • Luxury, for me, is an indulgence; anything that pleases the senses and is difficult to obtain. It is an expensive rarity. Luxury must also be comfortable, otherwise it is not luxury.
• There is a very thin line that divides keeping open the communication channel with our top clients and invading their privacy.All our staff members are trained in Customer Relationship Management.
• My job is very dynamic. There is something new happening every day — new clients, new ways to make the store look different, etc.
• While cross-selling to a customer, you need to understand his or her needs and problems, provide an honest solution, and ensure that the customer gets 100 per cent value out of the product sold.
• The key skill required in a job like mine is people management. One must be a pro at managing both internal and external resources. • The design of a luxury store is about balancing efficiency with appearance, quality and customer satisfaction with creativity. You have to pay attention to each and every detail to create the right ambience. • The Indian consumer has always been value-driven and the luxury consumer is no exception. The product could be worth a lakh or a crore of rupees but, “Does it add value to my life?” is the first question that comes to their mind. • The real Salvatore Ferragamo shopper is sophisticated and will buy a luxury product that is both comfortable and adds value to his life. • Indian consumers indulge in watches, shoes, handbags and ready-to-wear. The other growing categories are accessories and luggage. • Infrastructure is the biggest challenge in India. We don’t have luxury malls or one-stop destinations for luxury retail. We need a few more luxury malls in major cities. • At the operational level, we face a great difficulty in getting the right manpower. In India, we need an institute that can nurture a talent pool and offer a ready set of manpower customised for the luxury industry.
• The best place to network with clients is the store. You can understand and cater to their specific needs. We also host events every season to launch our collections. Outside the store, social dos and luxury conferences are a good place to network. • Clients must be given every possible information about the product that they are buying, be it a shoe or a handbag. Our customer service starts when the client enters the store and we ensure that they are escorted back to their car. • Indian customers love products being delivered to them at their residence. But beyond that, we have to ensure that the after-sales service takes care of the product as long as the customer owns it. • Indians indulge heavily in impulse buys. In fact, I have observed that the Indian consumer is more impulsive than international buyers, even when there is a hugely expensive product involved. • Every staff member must be a brand ambassador and understand what the brand stands for. • The biggest perk I enjoy? I get to sport some of the exquisite Salvatore Ferragamo products. •
Interview by Nishant Bangar December 2011| blackbook | 25
Haute Property
Emerging City Contemporary mixed-use complexes like Bangalore’s CityView, which will house the exclusive Four Seasons Private Residences and Hotel, might be the next destination for luxury brands to set up shop By Nishant Bangar
26 | Blackbook | December 2011
“Mixed-used developments cater to a stratum of customers who are connoisseurs of the fine things in life; luxury is part and parcel of their lifestyle and cannot be overlooked.”
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nce it comes up in 2013, CityView, Bangalore’s most recent attempt at recreating a multi-use luxury complex, will sprawl across 6.5 acres of prime land north of the tony Palace Grounds and will feature the city’s first hotel-branded residences. Housing a Four Seasons Hotel, Four Seasons Private Residences, an upmarket office complex and a high-end retail space, CityView will seamlessly synergise the experiences of its various principle partners, Westcourt, which has been at the forefront of developing some of the world’s largest landmarks — like the World Financial Center in New York, Canary Wharf in London and Torre Mayor in Mexico City, and Four Seasons, the luxury hotel major with properties in chic destinations around the world. More importantly, it will catapult luxury real estate in the garden city to an altogether new level. This isn’t Bangalore’s first luxury mixed-used complex though. The UB Group actually transformed the city’s sluggish real estate into the hot property it is right now when, in 2006, it threw open the doors to its mixed-use UB City — a massive project spread over 13 acres of land on Vittal Mallya Road, which added one million sq ft of highend commercial, retail and service apartment space to Bangalore, besides boasting of a luxury mall and open air cafes, all within the same sprawling complex. It was the first sign of transformation of the city, once variously known as India’s
— Rajendra Kalkar garden or pub city, into an epicentre for luxury in the south of India. Bangalore’s large IT sector has attracted younger people with an aspiration to a luxurious lifestyle. The influx changed its very character — small stores and little cafes now stand next to massive malls, exquisitely planned luxury residential complexes and elegant five-star hotels. The classic, exclusive Four Seasons hotel-branded residences bring with them the perks of living in uber-exclusive apartments that are part of a hotel chain considered synonymous with luxury. Residents will have the privilege of using the facilities of the hotel, including concierge services, the spa, pool, etc. “With a hotel and private residences within the complex, we look forward to welcoming Indian and international guests and owners to experience life the Four Seasons way in this vibrant city,” says Scott Woroch, Executive Vice President, Worldwide Development for Four
Seasons Hotels and Resorts. CityView also brings to Bangalore the city’s second luxury mall. UB City is already a huge success; brands that wish to enter the expanding Bangalore market will now have another option they can explore. The retail infrastructure space in India is fast expanding if one goes by a CB Richard Ellis and The American Chamber of Commerce report, The 2010 India Real Estate Overview. “In 2010, India witnessed the addition of more than five million square feet of organised retail mall space across various primary and secondary locations,” it stated. However, it is not news that most of these retail spaces are not really favourable options for luxury brands to set-up shop. With service quality and brand mix not quite right, a majority of luxury brands are stuck between compromising either on the retail space or on entering the Indian market with a single-brand store. “With five-star hotels losing their sheen as ‘preferred’ luxury
destinations, and high streets still to emerge as a credible alternative, luxury brands are jostling for space in premium malls,” reports India Luxury Review 2011, a recent CII-A.T. Kearney study on the Indian luxury market. The solution to this conundrum, perhaps, lies in mixed-use real estate spaces, a phenomenon that has seen wide success in international markets. “Most of the successful mixed-used developments have a luxury component as an integral part of the development. Generally, mixed-used developments cater to a stratum of customers who are connoisseurs of the fine things in life; luxury is part and parcel of their lifestyle and cannot be overlooked,” says Rajendra Kalkar, Sr. Centre Director, High Street Phoenix, Mumbai. High Street Phoenix can be considered a successful mixed-use development project in India. With a premium mall, a luxury mall called Palladium, an upcoming luxury
hotel, Shangri-La, a popular theatre and a mix of fine dining and street style food kiosks, it is a complete entertainment zone that attracts a quality mix of shoppers, which range from the middle class to High Net Worth Individuals. The under-construction CityView in Bangalore aims to introduce the concept of a highend mini-city to the well-heeled — a prime luxury destination in the south of India. To its advantage is India’s first luxury hotel-branded residences, the Four Seasons Private Residences that will offer residents, “the opportunity to experience Four Seasons lifestyle all year round”, says Vinay Kapoor, Founder and CEO, Westcourt. Mixed-used luxury complexes could be the route that Indian high-end real estate will take in the next couple of years. “The concept of mixed-use development when combined with retail, entertainment, shopping and accommodation, all under one roof,
helps diversify the tenant and also de-risks the developer’s investment,” says Subhranshu Pani, Managing Director, Retail Services, Jones Lang LaSalle India. If mixed-use real estate concept works extremely well for the developer, it works even better for the consumer. “Mixed-use complexes evolved as a response to urban India’s growing need for selfsufficient city-centric destinations that allow for seamless integration of living and working, leisure and services,” says Snehal Mantri, Director (Marketing), Mantri Developers Pvt. Ltd., among Bangalore’s largest property developers. However, “an ideal mixed-use development must combine the elements of residential, retail, office, hospitality, education and entertainment areas,” she adds. •
Clockwise from far left: Four Seasons Residences lobby; Apartment bedroom; Four Seasons Hotel swimming pool; Apartment kitchen; CityView North and South towers; Apartment living room
CityView, the new chic complex by Westcourt, is the next big step in revolutionising the Bangalore property market. Designed by New York-based luxury interiors atelier Yabu Pushelburg, architectural design practice, Studio u+a, and the high-end hospitality and residential landscape specialists, P Landscape, CityView will occupy a space of over one million sq ft on Bellary Road. The landmark project will be an interesting mix of three spectacular buildings, which includes two 30-storey high towers, probably the tallest in the city. The South Tower will accommodate a Four Seasons Hotel with 230 luxurious rooms and rise up to the 21st floor, while the Four Seasons Residences will be housed in the South Tower, beyond 21st floor, and also within the North Tower.
December 2011| blackbook | 27
Destination: Pune
Luxury’s New Address
The Advantage Raheja Group. Capitalising on this demand, the group is taking the lead in creating residential projects, high-end commercial complexes, luxury villas and five-star hotels in the city of the erstwhile Peshwas. A case in point being the Courtyard by Marriott Pune, City Centre, which opened in July 2011. Though not really a luxury brand from the Marriott International chain, this 179-room chic business hotel, strategically located in the heart of the city at Bund Garden Road, is in response to the burgeoning demand for business hotels. It is the third Marriott International hotel and the second Courtyard in Pune in the last two years. “With the influx of IT, ITES, manufacturing and automobile industries, we are seeing tremendous potential in Pune in the coming years. This third offering from Marriott International continues the growth story here,” says Rajeev Menon, Area Vice President-India, Malaysia, Maldives and Australia, Marriott International.
The city has its share of scions, the second generation of industrialist families who are consumers of luxury
Hermès, Six Senses Spa, Montblanc, Hyatt Regency, the Mercedes-Benz plant, BMW, residences designed by Philippe Starck… some of the largest luxury brands have a presence in Pune, which is emerging as the alternative capital for the rich and the famous to shop, spend and live in By Sujata Dugar
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ixie Jain, 40, a businessman’s wife in Pune, did not take her spa vacation to Kerala or Jaipur this summer. “I can enjoy the ultimate pampering right up the street at the Ista Spa. So why go far?” she says. She has already availed the services of the well-trained masseurs who have kneaded out every sish of stress from her tired body. After two hours of treatment at the spa, Jain feels as rejuvenated as she would have after a week-long vacation elsewhere. For 43-year-old travel consultant Asha Bapat, organising hotel stays for her ever-demanding business travellers to Pune is now a breeze. From just a handful of five-star hotels and guest houses to accommodate business travellers coming to the city, she now has a wide variety to make a choice from — many of them absolute luxury. “Earlier, it was the location of the hotel and cost that were the primary criteria for selecting the best deal for our business guests to stay at. Now, even preferences like a particular restaurant, spa facility or MICE facilities are looked into as the choices are vast,” says Bapat. Anecdotes like these reveal how Pune is evolving as the next big destination for luxury brands. It has a new-found position as a global business hub, one that competes with the most developed cities in India in terms of entertainment, luxury and lifestyle facilities. Over the past five years, Pune has evolved from a sleepy pensioner’s paradise to a city on a drive, suffused by world-class facilities for leisure, shopping and more. Hermès, the ultra-luxe French brand, opened its second store in Pune on January 24, 2011, even before it had made its way to the shores of the megapolis next door, Mumbai. It is housed in the plush Ista hotel Pune. Pune was already a hub for huge automobile giants like Mercedes Benz and BMW, which have corporate offices and manufacturing bases in the city.
28 | Blackbook | December 2011
Now, the opening of malls like the Phoenix Market City and Inorbit Mall, which are not really luxury, will pave the way for bigger and better brands. Luxury brands like Corneliani and Versace are gearing up next to launch their stores in Pune. Then there is yoopune, the world-class residential property developed by Panchshil Reality in association with Yoo, the UK-based designer real estate firm set up by luxury property giant John Hitchcox and maverick interior and product designer Phillipe Starck. It is, perhaps, the largest luxury real estate development that this part of the country has seen and the six-tower designer residential project will redefine luxury living in India. It will be a condo with 228 flats, each 5,100-5,900 square feet. Located at Hadapsar, next to Magarpatta, the four-five bedroom apartments will cost around `7.5 crores each. Also housed within the property will the country’s first Six Senses Spa. Hotels like Courtyard by Marriott Pune Hinjewadi, the Courtyard by Marriott Pune City Centre and The Westin Pune Koregaon Park, besides Ista hotel Pune, have the first-move advantage of players who have recognised the immense opportunity offered by the city. The transformation is but apparent when you drive down from Mumbai to Pune via the Expressway. Never before would you have come across a plethora of hoardings showcasing luxury condominiums and real estate properties. Miles before you cross the tunnels and bends and even begin to approach the outskirts of what was once Maharashtra’s ‘second tier city’, you begin to realise that Pune may no longer be ‘emerging.’ “The city is a hub for young well-salaried IT professionals, businessmen and global citizens wanting a better lifestyle and looking at investments in real estate as the city expands rapidly,” states Aditya Raheja, Director,
Pune in December 2009, and gave the city yet another five-star hotel after a gap of almost seven years. Located at the upmarket Koregaon Park, The Westin Pune, Koregaon Park stands out for having the most spacious rooms in Pune city. “We have at least 67 per cent room occupancy in our hotel and facilities like the wellness spa, boardroom, lawns, coupled with exemplary services have drawn repeat clientele,” informs Megha Ajgaonkar, Director (Sales), The Westin Pune, Koregaon Park. The Ista Pune, which opened in January 2011, is the latest to join the bandwagon of luxury and premium brands looking at Pune as a viable destination. According to Shibil Malik, regional head of sales (western region), IHHR Hospitality, “Our core target group are the corporates and leisure travellers visiting the city. With over 300 German companies and automobile manufacturing units based in Pune, there is a growing demand from young professionals as well as expats for better housing and facilities.” The hotel, located in the heart of the entertainment hub of Pune at Nagar Road (close to Koregaon Park) has 209 rooms to cater to business travellers. Its unique selling point is the Ista Spa. Part of the same chain that owns the world’s No. 1 destination spa — Ananda in the Himalayas, the therapists at Ista are all trained at The Ananda Spa Institute. There are at least 12 five-star hotel properties at different stages of development in Pune. According to the recent CII-A.T. Kearney Report, Indian Luxury Review 2011, Pune is among the top four attractive cities in India for luxury retailers to set shop. It also states that with the luxury market spreading its wings beyond New Delhi and Mumbai, cities like Chennai, Hyderabad and Pune, collectively host 30 luxury brand stores. Hermès, too, chose to launch a store in Pune before its launch in Mumbai to cash in on Pune’s old money. The city has its share of scions, the second generation of industrialist families who are consumers of luxury. Add to that the nouveau riche, new money families and the growing expat population and you get an idea of the kind of affluence we are talking about. The once quiet town with year-round pleasant weather, a haven for retired people, is now a bustling city of high income young professionals working in the IT industry. The swift growth in the IT sector, coupled with the presence of premier educational institutions that attract talent — teaching and otherwise — from across the world has altered Pune into a lifestyle hub with mega malls, a variety of restaurants, five-star hotels, posh residences and luxury brands setting shop here. The city’s per capita income is 50 per cent higher than the rest of the country, mainly due to its large number of manufacturing units and growing education sector — the 10,000 international students, on an average, it attracts from 62 countries, indirectly boost sectors such as garments, entertainment, transport and hotels. Add to this the high number of international travellers to the city that the Osho Ashram attracts every year. Pune’s expansion story may be recent, but its seeds were sown years ago. Among the early adopters of the Pune story was the premium European airline brand Lufthansa, which tapped into this emerging market by introducing nonstop flights between Pune and Frankfurt two years ago, flying six times a week. Adding to the momentum was the setting up of the Mercedes-Benz India’s manufacturing plant in Chakan, a suburb of Pune, in February 2009. With an area of 100 acres of land and independent assembly facilities for passenger cars and commercial vehicles, the infrastructure has added to India’s growth story in the automobile industry. “The city of Mumbai has reached saturation point and various environmental issues prevent industries from setting up their plant here. Moreover, real estate prices have touched the roof. In such a scenario, Pune is the best option. Apart from being closer to Mumbai and having a pleasant weather, Pune has seen industrial growth over the last few years,” says R.K. Agarwal, Director, Ernst & Young India Private Limited. As young professionals dominate the demographic profile, luxury brands find that they have a captive audience, the big spenders on luxury. Aiding this spending power is the easy availability of bank loans, credit cards and the desire to lead a good life, feels Agarwal. Pune is clearly the new destination and the way to go. •
ClockWise from TOp Left: The Westin Pune Koregaon Park; An inside view of yoopune; An interior shot of Ista Pune; the classy Ista Spa and the beautiful window of an Hermès store
The two full service business hotels — Courtyard by Marriott Pune Hinjewadi and Courtyard by Marriott Pune City Centre and the luxury brand — Pune Marriott Hotel & Convention Centre have shown a surge in demand in both these segments. “Pune as a city always had excellent taste and displayed class in their choice of fashion, music and culture. It was about time that the city’s need for luxury products was fulfilled. Pune has seen a huge influx of people from all across the nation and globe, a factor which has played a major catalyst for the growth of the luxury market here,” adds Manish Tolani, Director, Sales and Marketing, Marriott Hotels Pune. Westin Hotels and Resorts launched its second Indian property in
December 2011| blackbook | 29
The fine art of selling
10 Corso como
Bombay Electric
“Bombay Electric, the cutting-edge store in Mumbai, could be the template for the next millennium of Indian style” — Suzy Menkes
Designed to Appeal
le mill
Concept stores, which look incredibly glamorous and blend fashion, art and design, all neatly packaged under one roof, are an ideal platform for luxury brands to enter a nascent market without spending on a stand-alone brick-and-mortar unit By Nishant Bangar
W
hen the eclectic fashion store, Bombay Electric, launched in Mumbai years ago, it was touted as India’s answer to a thriving international trend — the luxury concept store. Back then, it was the only multi-designer store in the country that had a fiercely individualistic style sensibility and housed designers whose products matched it. Located opposite the iconic Taj Mahal Palace, the heritage space mirrors the electric energy of Mumbai. “My idea was to create a concept store that would sell cutting-edge fashion and accessories in a space that’s designed to look beautiful,” says Priya Kishore, who set it up as an experimentation in progressive design in India. “Bombay Electric has now transformed into a space that sells interesting experiments in fashion,” she says. Today, amidst cherry-picked Indian designers and curated international ones, the store often hosts cocktail evenings, concerts and launch parties, utilising the pretty tree-lined outdoor courtyard of the property that it occupies. Around the world, concept stores are looked at as temples of luxury, fashion and the arts. Milan’s 10 Corso Como, Paris’ Colette, New York’s Bellhaus, and, the more recent, The Place Concept Store at Bucharest are places that travellers mark down as must-visits on their itinerary. These stores — brilliant alchemies of design, fashion and luxury — mirror the vibrant
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culture, eccentricities and exciting vibe of the city they are located in, and feature the absolute must-haves. But more than that, they have the power to give a luxury brand an international exposure. India has had a blow hot-blow cold relationship with concept stores. While Bombay Electric and Bungalow 8, Maithili Ahluwalia’s chic design-cumfashion store in Mumbai, and the bohemian Hot Pink in Jaipur have existed for a while now, they mostly cater to international travellers looking for Indian designs and artefacts to carry back as a little something from their trips to the country. Some years ago, South Mumbai was the location for an inspiring multi-storey, multi-designer store, Muse, which promised to become the shopping destination for local luxury lovers. However, despite an appealing format that mixed and matched top-notch and often edgy Indian designers with international brands, ranging from premium to luxury, the store shut shop a few years after it started. Stores like these have come and gone, leaving a gaping hole in the Indian luxury market that calls for one that matches up to international standards. Le Mill, the new concept store in Mumbai, attempts to fill this gap. Although located in a rundown mill complex in central Mumbai, and surrounded by decaying, decrepit warehouses, Le Mill’s interiors are very
European, with a couple of art installations nonchalantly spread out amidst the otherwise stark décor. It stocks haute brands like apparel from Thierry Colson, The Row by Ashley and Mary-Kate Olsen; jewellery from Mawi and Jade Jagger; and bags by Vanessa Bruno and Yvonne Yvonne, besides a variety of home furnishing and cutlery brands. “While travelling and living abroad, I noticed that there are certain brands of Indian origin available in other countries, but not necessarily accessible in Mumbai. I wanted to create a space to showcase and sell these brands in India,” says Cecilia Morelli-Parikh, co-Founder, Le Mill. Unfortunately, the store is seen as ‘unapproachable’ or ‘inaccessible’ even by Indian luxury shoppers, and is just another haven for expats and travellers, perhaps because of its location. Analysing the factors that lead to the success of a concept store, Nitesh Seghal, Director, Blues Clothing Company, says, “A concept store has to provide the latest collections and international designs. Customer service standards, brand-mix and after-sales service would have to be impeccable to garner reputation and credibility, like that of 10 Corso Como and Colette.” In a country where even base entry into the market has its own set of strict and stringent rules, the opportunities for international brands are limited. When brands do make it in with the help of Indian partners, the country provides very minimal scope for expansion, particularly due to the lack of retail space in the luxury sector. So, luxury brands might find it interesting to enter India through the concept store route, which offers them a platform to showcase their range without having to go through the rigour and red-tape of bureaucracy. Though the ground situation is far from ideal, Morelli-Parikh says, “While I feel that concept stores are the new luxury and fashion phenomenon, I believe this idea is very nascent in India, which means it will only grow.” Indian luxury behemoths have already begun exploring the concept store format. In June this year, Genesis Luxury launched Luxxe Box in Chennai, a multi-designer menswear store that stocks all the brands it has brought down to the country: Canali, Paul Smith, Etro and Tumi. In a similar vein, but on a wider scale, Blues Clothing Company’s Blues Galleria houses menswear brands like Corneliani, Versace, Cadini and Damat; it also stocks concept brands like Royal Blues, Su Misura, Custom Tailoring & Exclusive Fabric, and Bench and Bar. The focus is on entrepreneurs, advocates and executives. “It (the store) caters to the crème de la crème of society in its product offering and services,” says Sehgal.
Louis Vuitton Island maison
That’s exactly the segment brands need to focus on to capture the attention of the captive middle-class luxury consumer. “Studies have shown that consumers know, on first sight, whether a piece of merchandise appeals to them; the probability of their making a purchase increases if they spend more time in a store. Second-tier luxury brands, in particular, can make inroads by partnering with local trendsetters. Creating such surprises will help engage consumers while showcasing the relevance of the brand itself,” says a Boston Consulting Group report, The New World of Luxury. •
The Five Best Concept Stores
Concept stores are in abundance across the world. Here’s a look at five inspirational ones that are a must-visit for all luxury lovers. • Colette, Paris Launched in 1997, it is the icon of luxury concept stores across the world. • 10 Corso Como, Milan The 1,200-sq m store is self-described as a network of spaces rolled into one experience. • Moss NY, New York It is known for its design and feel that resembles that of an international museum. • Dover Street Market, London Dover Street Market has a designer roster that boasts of Carven, Giambattista Valli, Hussein Chalayan, Rodarte and Haider Ackermann. • The Corner, Berlin With branches on the east and west sides of Berlin, the store boasts labels such as Balmain, Balenciaga, Chloé, Lanvin, Alexander Wang and YSL. The Corner is often referred to as the Colette of Berlin.
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The Last Impression
Perception is Reality I
t is not breaking news that luxury, as a concept, is perceived differently by different cultures and countries. In China, a branded shampoo, considered a staple in the western world, is regarded as a luxury product simply because it comes from a foreign brand, even if it is sold in a supermarket. The same goes for India. This explains the bonanza that all luxury houses currently enjoy in China, where their brand power, already very high across the world, is catalysed by the fact of being foreign than by savoir-faire or quality. Their success in these markets is so high that their products and stores are ubiquitous; they are expanding and communicating to an extent where they are much more accessible. From a customer education point of view, no more technical knowledge or education is needed to understand that luxury is highly desirable, even if you are just talking about, say, a chic key ring from a global brand. This, however, results in a complete contradiction to the basic rule of luxury — scarcity of supply — best illustrated by Hermès’ unwritten commitment to never deliver a Kelly bag in a particular colour and material requested by a customer at any given moment and place, instead offering them an alternative to their desire. With potentially huge profits in mind, the luxury houses serve everyone and sell just about everything in China. The vast masses, still young and not too well-educated in the history of luxury, are unable to re-create the mystic surrounding the brands to a large extent, unlike say those in Europe. History has shown that luxury segments could be strongly affected by such reasoning. Take, for example, perfumes: until the mid ’80s, these products were considered as pure luxury in Europe. Then, to maximise profits, fine fragrance underwent democratisation along two lines — design and distribution — in order to open up to new audiences. The creation was transferred from in-house fragrance designers to
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In fledgling markets like India and China, the perception of luxury brands as repositories of heritage and fine craftsmanship, and not just as mere commodities, will establish them as market leaders
Selvane Mohandas du Ménil A manager for franchises and wholesale, for EMEA, U.K, Eastern Europe and Asia, for a reputed French luxury house, Selvane Mohandas du Ménil, has immense first-hand knowledge of the developing markets. His knowledge and skill is often tapped by luxury business schools in Europe in the form of guest lectures and as a mentor to MBA students.
industrial behemoths such as L’Oréal, Interparfums, Coty, Puig, all big names that created new perfumes, which were used by marketing strategists as brand extensions. The distribution was eased up so as to create economies of scale. Perfume supermarkets such as Sephora used product management techniques derived from FMCG managements in order to sell the maximum products in the shortest period of time, with a minimum cost of service. As a consequence, today, a standard perfume is a product subject to calls for tender from luxury houses, developed by industrialists and sold in a supermarket-like point-of-sales to all passers-by. No wonder that perfumes are no longer considered luxury and strategists are looking for ways to reinsert the idea of luxury in them. In other words, the essence of luxury is mortal when it is sacrificed to profit maximisation and premature openings to uneducated masses. But the customer’s ability to educate himself is not to be underestimated. It took forty years for the Japanese luxury audience to evolve from an entry market logomania to a much more refined and subtle perception of luxury. The Russian customer, on the other hand, learnt four times faster, and Moscow posh places now look considerably different from 10 years ago — less bling and logo, more twisted classicism and respectability. The Chinese audience similarly learns fast. It took them a couple of years to understand that a Cognac is not to be drunk with dinner and that they should appreciate wines instead. In a period where information is everywhere and easy to access, it will not be long for the Chinese market to adopt a mature market behaviour pattern. (The process has actually already begun, not only in terms of consumption but also in matters of ownership. For instance, Chinese equity has taken control of the Omas pens or vineyards in the Bordeaux region) and one can reasonably think that
the Indian market is next on the list. However, the world is not at all what it used to be at the time when the Japanese or even the Russians were getting educated in the nuances of luxury. In terms of Chinese perception of their power, the new generation has begun to believe that its own culture can be revitalised to create desirable objects, the same way France and Italy do. The concept of luxury is evolving worldwide. The idea that true luxury lies in French or Italian products is increasingly being challenged by either new countries — the US being first with brands such as Donna Karan, Coach, Calvin Klein and Ralph Lauren, or by constant search from the houses themselves for increased margins — how can you sell French heritage when the soles of your shoes are made in India and your bags in Mexico? If luxury houses treat the Chinese market the way they once treated the Japanese, i.e. expansion and profit maximisation at all costs — even as they try and survive this period of collapse of their traditional markets — they will probably lose much of their soul. Unfortunately, this soul and essence is the only shield they have to prevent their own transformation from inaccessible luxury products to the commoditised ones. If this happens in China, the effect will be devastating and commoditisation will be the worst experience for the houses. Especially at a moment when China — reinforced by its international position, its exchange reserves, its domestic optimism, a recent understanding of brand value (shown by recent cases of faking brands, such as an entire Apple store rather than faking products), and the thousands of students sent abroad to learn creation and design — have all the necessary cards in their hands to think about a domestic luxury market the same way they did for the rest of the industries. So, where does India stand in this context? The domestic luxury market is not well-established yet,
Old vs. New: India’s old money would rather invest in artisinal products that reflect the country’s heritage, like a rare Pashmina shawl. In contrast, the nouveau riche is sourcing all their luxury products abroad and will continue to do so until the price gap reduces to a reasonable difference
but luxury brands already have a presence. The HNWI category can be best divided into two types for India. The first group, very well-travelled, is used to the consumption of luxury products in a western way and is already sourcing it abroad. And will continue to do so until the luxury boutiques open in appropriate environments in India and, more importantly, the price gap reduces to a reasonable difference from what they would pay in London, Dubai or Singapore. They have already embraced the luxury lifestyle as the western customers know it. The second group, more secluded, is often composed of India’s old money and for them there is no sense in consuming western products. Even if it is expensive, what is the point of wearing an expensive French dress when Indian products can be of similar quality and better express the Indian soul and value? For them, the highest definition of luxury can be better expressed in expensive cars or foreign jets. Due to their isolation, however, the strategists of luxury houses across the world regard them as the Most Wanted Targets; they are seen as perfect equivalents of educated luxury customers in Europe
and the US, with the right technical knowledge and purchasing power. In short, when compared to Chinese customers, their hitory makes them an adequate customer group to guarantee the permanence of luxury as a tradition and a view of the world. Unfortunately the development of the Indian luxury market is not yet equivalent to that of China, and this order could change everything. If western houses continue to favour growth and profit at all costs, over meaning and real heritage, they might milk the Chinese cow but will have difficulty imposing themselves on India afterwards even if all the current obstacles (scarcity of adequate commercial spaces and cost of importation among others) are lifted. Also, if the Chinese begin to think about competing (with the international luxury houses) using their own culture, there is no reason why Indians will not do the same. It is well-known that India enjoys a disorganised and scattered luxury market in some fields, such as jewellery and gold, and there is no reason that, one day, this domestic industry would structure itself to create international labels.
If western houses continue to favour growth and profit at all costs, over meaning and real heritage, they might milk the Chinese cow but will have difficulty imposing themselves on India afterwards
The same thing goes for silk and embroideries. Secondly, luxury brands might lose before even starting to seduce the right Indian consumer target. By commoditising themselves, opening up the way to international competition and losing their attitude, luxury houses will decrease their appeal to a class of customers who is already not inclined to purchase their products, and therefore, will not benefit from the growth promised by the Indian market, seen by many as the next relay of growth after China. It is, therefore, extremely important for luxury houses to have a two-fold strategy while on a growth path in China. Favouring their brand equity over potential profits might help them enter the Indian market more easily, especially if they have kept their integrity and true identity alive. Not only will this help them face the fierce challenge of competing with two countries where the idea of luxury and its savoir-faire is the oldest in the world, Europe included, but will also help them ensure a long-lasting healthy growth. As a Greek saying goes: Milk the cow, but do not pull off the udder! •
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The Luxury Magazine Experts
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