Home > Business > Special
Have money, will spend
Soumik Sen |
July 12, 2003
India's maharajas were famous for buying Rolls-Royces by the dozen and Cartier jewellery by the quintal.
So, they wouldn't have batted an eyelid if they had stepped into the newly opened Louis Vuitton showroom in Delhi's Oberoi Hotel.
In fact, they would probably have asked a hanger-on to pick up a few pure goat leather Suhali bags that are selling there this season. The price tag: a mere Rs 128,000 for each one.
Rs 128,000 would have been peanuts for our maharaja. So, the next stop might have been an exclusive showroom selling Corum watches.
These watches tell the time but they also identify the owner as a member of a super-rich elite. Take the Admiral's Cup pink gold watch. It costs Rs 12.5 lakh (Rs 1.25 million).
Sceptics who believe that there are cheaper ways to tell the time should have a brief chat with Kanpur businessman Ajay Rastogi.
Here's one businessman who isn't afraid to flaunt his wealth on his wrist. Rastogi collects Corum watches and he owns eight of the manufacturer's Bubble range. The price of each one: Rs 175,000.
Mahatma Gandhi would definitely have disapproved but high-priced goods like watches and leather cases are flying off the shelves in India at a speed nobody would have thought possible.
Take a look at Louis Vuitton's Suhali bags, which were shipped to India last month. About 300 bags were despatched to India but it turned out to be a gross underestimate of demand. The entire collection sold out more than two months in advance.
Louis Vuitton's famous travelling cases aren't the only items that are being snapped up by the dozen. Over 90 per cent of LV's Tambour chronograph watches brought into India priced at Rs 189,000 were sold before they were even launched.
What's the explanation for all this? India's maharajas have been nationalised and don't have the buying power that they once did.
But India's new businessmaharajas are opening up their wallets on everything from luggage to watches -- even if they have to pay six figure prices.
"It's the coming of age of high end customers. People want to associate with a super high-end brand," says Sunil Grover, Corum's sales and marketing manager for the Indian subcontinent.
Corum Watches is already selling in two showrooms and will open four more this year. Out of these, two will be exclusive boutiques in Mumbai and Delhi showcasing the company's super-premium products.
Obviously, there won't be crowds beating a path to the Corum showrooms. The company reckons that it sells between 15 and 20 watches a month and of these, six cost more than Rs 250,000.
The company's cheapest watch retails for Rs 80,000. Six limited-edition Bubble Lucifer watches are expected this month, and two have already been pre-sold. The company has also sold one of its Rs 12.5 lakh Admiral's Cup watches.
It's much the same story at the starkly smart Louis Vuitton showroom in New Delhi. The company's retail manager in India, Prasanna Bhaskar, who had lived in Hong Kong for several years, was nervous about selling luggage that costs over a lakh.
But she needn't have worried. Buyers are coming in droves for a chance to flaunt the famous LV logo. There's buyer interest in everything from the fall-winter fashion bags that will be launched in September to the Eye Love multicoloured bags designed by Marc Jacobs and Takashi Murakami.
About 30 Eye Love bags -- each costing Rs 128,000 -- have already been sold and that's an extraordinary figure even by global standards.
Says Bhaskar: "Several limited-edition bags probably sell more at the Delhi store than in many European stores."
Louis Vuitton had conservatively reckoned that it would have about four or five buyers each day. But they get about 15-20 and this is long before the peak -- Diwali and marriage -- seasons.
The fact that Indians are reaching for their wallets in larger than expected numbers is making companies like Louis Vuitton readjust its sights.
It is looking at new strategies and products to woo Indians and even their top designers are getting in on the act.
That's obvious from a pair of distinctively styled ladies shoes, priced at Rs 25,000, that look unusually like a pair of Rajasthani slippers.
Louis Vuitton now has a new neighbour at the Oberoi. International fashion and lifestyle company Hugo Boss, which has just opened its first exclusive Boss shop in India. The 1,350 square foot store showcases the Hugo Boss menswear collection for spring/summer 2003.
"We thought setting up shop next to Louis Vuitton, would give us the ideal positioning and the right profile of customers," says T N Pratap, CEO of Dubai-based Bin Hendi Fashions, the Boss franchise holder, which already has 12 high-end fashion stores, including three Hugo Boss outlets in Dubai. "Luxury retailing is a relatively new concept but here to stay," says Pratap.
Boss reckons that India will gradually grow into a key market. So it's making sure that a suit that costs £500 in London will cost the rupee equivalent here. That's an expensive strategy because it means that Hugo Boss is picking up the extra duties.
"End-retail price in India will be the same as the end-retail price in America or in Britain so that Indians who are globally aware of high end fashion don't have to wait for their next foreign trip to pick up a Hugo Boss," says Lars-Peter Larsen, Hugo Boss, Hong Kong.
Boss sells a range of men's products including woollen suits priced at Rs 50,000. Then, it has everything from belts for Rs 4,900 and jeans for Rs 5,900 upwards. Jackets start at about Rs 23,000. Boss is likely to open more outlets in Mumbai and Bangalore.
Other high-end companies are also discovering that the Indian rich are willing to spend on watches and the suchlike.
LVMH (Louis Vuitton's parent company) launched its TAG Heuer and Christian Dior watch brands earlier this year and they're already going great guns.
"We project sales of 3,000-4,000 TAG Heuer watches and 4,000-5,000 Christian Dior watches in year one," says Ravi Thakral, managing director, Asia, LVMH Watch and Jewellery. "Thereafter, we expect to grow by 20 per cent each year," he adds.
TAG Heuer is already in 30 showrooms and Christian Dior is in 28 retail stores. LVMH plans to double this in the next two to three years.
How do these super-premium brands connect with Indian customers? Boss believes largely in below-the-line marketing like sending out special invites to its loyalists.
Similarly, Louis Vuitton depends heavily on direct mailers. It also hosts product previews for carefully selected invitees. Internationally Vuitton is associated with music and art, and there are plans to sponsor Indian music concerts.
Now that a handful of international brands have discovered the Indian customer, it's certain that others will be on their way soon.
Bvlgari is likely to be opening soon. And there are rumours that Georgio Armani will soon make its bid to smarten up the affluent Indian male.Companies like Louis Vuitton and Corum have thrived in places like South East Asia and China. Now, it looks as if India is heading in the same direction, as the country's rich look for new ways to demonstrate their wealth.