Take it to the streets

PUBLISHED : Friday, 30 September, 2011, 12:00am
UPDATED : Friday, 30 September, 2011, 12:00am

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Given the success of Hermes' luxury Chinese brand - Shang Xia - it was only a matter of time before it turned to India. The new Hermes sari, to be launched next Friday in Mumbai, is a bold attempt by the French luxury brand to 'connect' with rich Indians.

The sari is an acknowledgement by Hermes of the Indian woman's attachment to tradition. She may wear an Armani suit during the day and a Versace gown for a party, but for weddings and formal occasions, Indian women prefer to wear a sari due to their strong cultural identity.

'We want to meet Indian culture. Our sari is not a marketing tool; it is a tribute to Indian culture and elegance,' says Hermes regional head Bertrand Michaud.

The idea of a Hermes sari is, for Radha Chadha, managing director of Chadha Strategy Consulting in Dubai, a master stroke. 'It's delightful. It's like saying 'namaste' to India in its own language,' she says.

The 25 saris - made of cashmere, twill silk and mousseline changeante - have been created in Paris and are priced at US$2,000. The range demonstrates a new awareness by the luxury brands, who have not seen the kind of growth in India that they have experienced in China or Russia, of the need to cater to the specific needs of the discerning and often finicky rich Indians.

With economic growth roaring along at 8 per cent annually, and some 200,000 millionaires, India was expected to be a no-brainer for the luxury brands. Yet it accounts for just 0.5 per cent of the global luxury market at US$846 million. China accounts for 10 per cent, at US$17 billion.

The big brands came to India expecting explosive growth. Instead, they had to wait. Several factors thwarted their hopes. For one, there is no Bond Street, Fifth Avenue or Ginza in India where they can set up shop. Instead, they may end up next to McDonald's or Pizza Hut - not quite the neighbours they're used to.

In a country where mansions stand alongside slums, or access to a five-star hotel is along a rubbish-strewn, pot-holed road, luxury brands have found it difficult to provide their usual opulent and sybaritic retail experience.

Without fashionable, upmarket areas to occupy, such brands have been confined to small outlets in five-star hotels or to the two dedicated luxury malls in New Delhi and Bangalore. Smaller shops mean less room for stock, so they end up selling a pared-down version of their range. Import duties of 30 per cent or more also make luxury goods more expensive in India. Many affluent Indians who travel frequently prefer to shop abroad for luxury goods because it's cheaper, there's more variety and it's generally a more enjoyable experience.

The habit of shopping while on overseas trips dates to the bad old days, before India's economic reforms, when there was hardly anything worth buying.

'Maybe the younger generation will be different, but for my generation, the habit of shopping abroad is just too strong,' says Mumbai socialite Arti Surendranath.

The decades of deprivation are over - and affluent Indians are keen to pamper themselves. But they are very price-conscious.

'They analyse everything to make sure they are getting the best value for money,' says Siddharth Surana, a Jaipur-based jeweller. 'They want to know how you account for the price - a breakdown of the stones, the gold, everything.'

As a result, the luxury outlets are often deserted. On a weekday at the DLF Emporio mall in New Delhi, which houses only luxury brands, the shop assistants outnumber the customers. 'We consider it a good day if we sell two handbags,' says a shop assistant in a famous handbag and accessories store.

The solution that some brands have come up with is to cater to Indian tastes. Canali, the Italian men's fashion brand, has a jacket inspired by the bandhgala - a smart, high-collared jacket worn at weddings and formal occasions. It's India's answer to the tuxedo.

Then there is the limited-edition clutch bag by Bottega Veneta. The Bottega signature weave has been blended with conventional Indian embroidery and it has a sterling silver 'India' plate inside.

Customised goods make sense in this market because Indians enjoy a long tradition of handmade and handcrafted objects. Men and women generally go to their own tailor for bespoke outfits. An Indian woman would not be seen dead in the same sari as someone else.

Even jewellery tends to be custom made - jewellers visit clients in their homes for leisurely discussions about individual designs over cups of cardamom tea.

The maharajas, who set the gold standard for opulence and excess, would never accept a ready-made Louis Vuitton or Cartier piece. Theirs were unique and made to order. Indians who made their fortunes since the economic reforms 20 years ago have continued this tradition.

But tailoring products to suit Indian tastes and keeping them exclusive is only a partial solution to sluggish growth in the luxury brand market, says Arvind Singhal of New Delhi retail consultancy firm KSA Technopak. He believes that by confining themselves to five-star 'ghettoes' the luxury brands have failed to come to grips with Indian retail psychology - or to understand that luxury can co-exist with squalor.

'The mansion of India's richest man, Mukesh Ambani, may be right next to a slum, but neither he nor the slum dwellers are upset about this. That's how things are. It's not like S?o Paulo, where you need armed guards to go through a slum area,' Singhal says. 'If rich Indians are comfortable with this juxtaposition, why do they stay away, feeling their brand will be devalued by being displayed in such areas?'

Hermes is the first to leave the 'ghetto'. It opened a street-level store in Mumbai a few weeks ago, the first international luxury brand to do so in India.

It chose a beautiful Victorian building in the historical Fort area - 15A Horniman Circle - which happens to be located at 'point zero', from where all distances in the city are measured.

Spread over 3,000 square feet on three floors, with an art gallery on one, it is one of Hermes' biggest Asian stores. 'We want to be part of the life of India; that means being on the street, not tucked away in a hotel. And we have so much space that we hope to have our entire collection here,' says Michaud.

But Singhal believes luxury brands need to do more - starting with their attitude towards small-town India, where he says there is a lot of cash and big aspirations. Aurangabad, in Gujarat, is one such town. It made the news last year when a group of businessmen ordered 112 Mercedes-Benz cars en masse just to prove they could.

Luxury car dealers such as BMW, Audi and Mercedes-Benz have already opened showrooms in these towns.

Singhal says luxury fashion brands should follow their lead by opening stores in such towns and reaching out to Indians who are in the market for luxury products, even if they don't speak fluent English or buy Vogue magazine.

'The brands are being silly and discriminatory. Why don't they reach out to small-town Indians through Hindi magazines and TV channels? What's wrong with that? They think it's OK to market in Mandarin but not in Hindi,' he says.

There are signs luxury brands might start to apply the same marketing strategies in India that have worked in China, where they have opened stores in smaller cities such as Qingdao, Shandong and Chengdu, Sichuan. Hermes opened a store in Pune, three hours' drive from Mumbai, in January last year.

But perhaps the best hope for these brands is the younger generation, who have grown up seeing the names in the media and on hoardings. In New Delhi, interpreter Alisha Mehra's 22-year-old daughter is besotted with Louis Vuitton bags - a good example.

'She's happy shopping for clothes in a local market - haggling and sweating it out in the heat - but for handbags and shoes, it's got to be a luxury brand,' she says.