The idea of luxury today has evolved into a complete lifestyle, spanning fashion, food, travel, hospitality, health and wellness, and even technology. Yet, it is also a well-established fact that ‘fashion remains the fulcrum of luxury’ and that all other sectors prey onto fashion as a category to drive, growth, inspiration and value additions. Hence, when it comes to luxury, the first thing that most people think of is ‘Fashion’, which itself is a broader concept spread across the realms of apparel, footwear, jewellery, timepieces, eyewear, fragrances and alike.
However, in the present era of democratization of almost everything, the luxury fashion industry is finding itself in a strategic dilemma. The commercial demands of business have begun to take a toll on the creative aspects of the designer community, while the rapidly-evolving business landscape is also impelling the luxury brands and retailers to rethink and adapt, as they strive to preserve themselves in the quintessence of luxury amid creative and business disruptions.
The phenomenon is prevalent the world over, including India. Importantly, the luxury market in India is still-nascent, but definitely growing, and is peculiar in its own way.
Enduring Creative Disruption
The very essence of luxury fashion lies in deep-rooted research; emphasis on new textile blends; inspiration – the Eureka moment for every designer; silhouettes perfected via multiple prototyping; and collections large enough to satisfy every global patron. The essence over the last some decades has got slightly tweaked, however. The luxury fashion first faced disruption way back in 1975 when fast fashion brand ‘Zara’ cannibalised on the very process of how luxury fashion ought to be created – in a slow, relaxed and cyclical manner.
The luxury fashion brands thwarted the onslaught by fast downscaling to introduce entry-level elements of eyewear, perfumes, and accessories like footwear, scarves, ties, belts and even bijou jewellery. Experimentations of associations/special lines for the likes of H&M were resorted to by a few established names of the luxury fashion space.
However, the core fulcrum of apparel fashion stood the test of time until the very recent times when corporate-led brand companies began to demand ‘fast fashion’ from established luxury brands. This has led to a further disruption in luxury fashion to date – no clear path seems to be emerging. Attempts of ‘See now, buy now’ introduced by a few top names like Burberry are yet to prove themselves and may not find favour among true connoisseurs.
Collaboration: The Way Forward?
Caught in creative disruptions, the global luxury fashion and lifestyle brands and companies have been trying to find and define a success formula that can ensure commercial success without compromising on the carefully crafted brand positioning, ethos and value propositions. Some have gone on to collaborate with designers, artists and even hotels and auto companies to further their popularity, revenue as well as prestige.
Historically, the western luxury brands have quite frequently and successfully used the ‘collaboration’ methodology. The French fashion house and luxury retailer Louis Vuitton has had several such associations, while various other have also explored the genre. Here, are some of the most successful fashion tie-ups of the West.
Louis Vuitton X Art: The fashion powerhouse Louis Vuitton (LV) has been teaming up with ‘Art, Artists and Artisans’ for many years now.
a.) The Takashi Murakami collection: Renowned Japanese artist Takashi Murakami had designed a multi-coloured monogram accessories collection In SS2003 for LV that became highly sought-after.
b.) The Iconoclasts collection: On LV’s 160th anniversary in 2004, six art and design legends – Karl Lagerfeld, Rei Kawakubo, Frank Gehry, Cindy Sherman, Christian Loubitton and Marc Newson – co-created ‘The Iconoclasts’ collection, signifying their interpretation of the LV monogram into their design and product sensibilities.
c.) The Richard Prince-inspired range: The Marc Jacob for LV SS2008 accessory bags and caps collection was inspired by artist Richard Prince’s ‘The Spiritual America’ exhibition in 2007.
d.) The Yayoi Kusama range: In 2012, the brand released its bags-to-clothes range featuring signature polka dots by legendary Japanese artist Yayoi Kusama who is famous for her fascination with polka dots.
e.) The Chapman Brothers: British visual artists Jake and Dinos, popularly known as Chapman Brothers, have been tapped twice by LV. Both their AW2013 and SS2017 collections have been well-liked.
Louis Vuitton X BMW: In 2014, LV created a special luggage collection for BMW’s revolutionary sports car ‘i8 plug-in hybrid’ that fits precisely into its boot space. The collaboration was acknowledged as the ‘pure expression of the art of travel’.
Alexander McQueen X Globe Trotter: Alexander McQueen and Globe Trotter, two iconic British luxury brands, had launched special limited edition luggage collection that helped strengthen and accentuate both brands’ appeal to their classic luxury audiences.
Over time, the trend has permeated the Indian market as well. Several Indian designers have entered into collaborations with international and home-bred lifestyle brands and/or companies, adding a new dimension to the country’s luxury space. Enlisted below are some of the notable tie-ups in the Indian context:
Rohit Bal X Titan: Leveraging each other's brand strength, watchmaker Titan and ace designer Rohit Bal introduced a range of luxury watch collection targeting the top segment in 2003, which became quite a hit.
Sabyasachi Mukherjee X Bombay Dyeing: This was in 2007. What could be a routine branding exercise between a textile giant and couture king for its range of Bed & Bath line, the tie-up further strengthened the designer-corporate collaboration trend.
Sumeet Verma X Judith Leiber: This is perhaps India’s most acclaimed partnership in ‘true’ luxury. Designers Sumeet Verma and Judith Leiber came together in 2009 to create bejewelled handbags range. It was an instant hit at a time when international luxury had just begun to surface on a wider scale in India.
Tarun Tahiliani X Timex: Iconic designer Tarun Tahiliani co-created a mono-branded watches range in a tie-up with world-renowned watchmaker Timex Group. Launched in 2010, it has turned out to be one of the most long-standing and profitable fashion collaborations in India.
Confluence by Swarovski: Austrian crystal maker Swarvoski’s avant-garde, India-inspired jewellery line has been co-created with eleven top Indian designers like Rohit Bal, J.J. Valaya, Suneet Verma amongst others. The collection, launched in 2016, is available in India, USA and Europe through various multi-brand designer stores and portals.
Abu Jani-Sandeep Khosla X JW Marriot: Designer duo Abu Jani and Sandeep Khosla designed and curated the fashion event ‘Wedding of the Year’ for hospitality brand Marriot International at its 5-star property New Delhi in July 2017. It became one of the most appealing associations of the year, taking the collaboration trend to a whole new level of experience and emotion.
Withstanding Business Disruption
Amid creative disruptions, the luxury brands have a lot to deal with on the business front as well. Some of the long-established business models are on their way out, paving way for newer and innovative concepts. Who would have thought that luxury items would be available through virtual shops one day or that the world order would go a drastic change with the emergence of new luxury consumption centres like China, Japan and now also India, while the traditionally rich western countries will slow down? Even the consumer attitudes are now changing at a much higher pace than before.
The liberalisation of the Indian economy in 1990s and the policy changes thereafter have been a rollercoaster ride for foreign as well as home-bred companies across sectors, including luxury. However, some sweeping developments that unfolded over the last 3-4 years have unleashed a fresh whirlwind of the transformation of the country’s business milieu. Let’s take a glance at them:
a.) Digitisation of Financial Services & Demonetisation: Both these government initiatives aimed at weeding out alternate economy from the system came as a big blow to various sectors. Luxury, however, was gainfully impacted during the initial window of relaxations during the demonetisation drive launched in November 2016. Cash transactions peaked for a few hours when accessories, jewellery, watches, real estate and other high-value goods ended up being replaced with stashed away cash. Thereafter, there were mixed reports as to positive or negative impact. Most brands feel that the initial slowdown was replaced by more balanced cashless transactions, bringing in more control and ease of doing business at store-front level.
b.) Goods & Services Tax (GST): The single most key factor driving mixed emotions post demonetisation has been the implementation of GST. With multiple slabs, a plethora of paperwork and lack of clarity, GST started with a resistant trade blockage in general. Luxury brands operating in malls found their overall costs coming down due to inputs being credited for GST paid for imports and/or real estate rentals. With a uniformity of taxes across stores in various states, the margins could be healthier too. Clearly, well-implemented GST can give a boost to the luxury trade.
c.) FDI policy changes: While FDI was technically opened up in 2012, complex sub-clauses on sourcing norms, investment size, location, etc., had restrained brands from announcing their plans. However, recent changes in single-brand retail norms and relaxations on sourcing restrictions have been welcome by global luxury and superior premium brands.
d.) Ease of doing business: With several positive announcements regarding new company formation, single window clearances and faster clearances of permits, etc., India’s ranking has significantly improved on the World Bank's ‘ease of doing business’ index. Moody’s also has upgraded India’s sovereign rating to Baa2 from Baa3, putting India on similar lines as Philippines and Italy. As a collective result of the aforesaid, over 250 to 300 foreign brands have announced their plans for India.
e.) Creation of mass affluence: With increased focus on infrastructure development, employment generation and growth in smaller cities are imminent. Rapid urbanisation has led to increased awareness and a new demand for premium-to-luxury goods. Brands like Zara and H&M have now become household names in most middle-class families in tier II and even tier III towns. Luxury brands have begun to seep in via trunk shows, private sales and events that cater to the rich and affluent classes.
Success in Evolving Landscape
The luxury fashion and lifestyle market in India is one of the world’s most multifaceted, exciting and tricky markets. Brands and retailers that want to capture a share of this rapidly-evolving market need to learn to adapt, or risk missing one of the next greatest untapped opportunities for the luxury business. Some of the keys to success in 2018 and beyond include:
a.) Learn, adapt & diversify: India being a vast demography, a ‘one size fits all’ strategy will not work. Diverse strategies are needed to handle different demographics in order for brands to be unbeaten in the luxury sector. Luxury experiences, both in store as well as online, has become of prime importance for consumer acquisition and retention. A deeper research into the ethnicity of the region can be a great help. A region-wise marketing and communications campaign could pay rich dividends.
b.) Focus on brand value proposition: Indians generally are extremely value-conscious. It is fairly important for brands to communicate their value systems clearly and loudly and provide closeness, uniqueness, product and brand acquaintance with appropriate messages. They need to educate this new Indian customer on their value proposition to win them.
c.) Indians are digitally-savvy: Don’t ignore the digital medium. The R-O-B-O (research online – buy offline) phenomenon is perhaps the deepest in India. Recent reforms towards a ‘Digital India’ have ensured that the power of the net is freely available to a larger populace.
d.) Train, educate and invest in HR: With so many varied customers, the lack of human resource (HR) talent is a key challenge. The luxury brands neither can be too sophisticated to scare away the new customer nor can be too ordinary to not make an aristocratic customer shy away! Driving this balance in line with the brand’s cultural customer experience is perhaps the biggest operational challenge for them.
e.) Believe in the market & stay invested: India is a long-term paradise. A brand needs to be patient, keep controls in place and let the ‘brand – customer’ relationship evolve. There are no quick gain methods in this market.
f.) Collaborate, not compete: A relatively easier method that can work in a foreign brand’s favour is to collaborate with like-minded but differently skilled Indian brands and add value to each other. Recent associations between Christian Louboutin and Sabyasachi, Swarovski and various designers are a gaping example of this factor.
The Indian luxury sector is growing at CAGR of around 25 percent. Last projected at US $18.7bn, it is expected to reach US $180bn by 2025, as per NITI Aayog CEO Amitabh Kant. The growing number of Indians climbing up the ‘affluence’ ladder and many more turning ‘aspirational’ presents a massive market potential for luxury and ‘affordable luxury’ fashion companies. Significantly, the Indian origin premium-to-luxury brands are also making their presence felt. The likes of Titan and PC Jewellers have made it to the international legion of top 50 luxury goods firms that was topped by Louis Vuitton.
Hence, even as there is still some way to go for India to become the next luxury fashion destination, the good part is that the country’s business environment is becoming ever more conducive to luxury businesses. The India growth story is indeed promising, no doubt!