Facing an extraordinary circumstance and uncertain future due to COVID-19, it is like a roller coaster ride with no idea what lies ahead. STIMULUS 2020, an extensive webinar, was an ideal platform that brought together experts from various industries, making an attempt to contemplate the future of the Indian Luxury Market
By: Nikita Vivek Pawar
Posted on: April 21, 2020
Despite geographical insecurities and recession fears last year, the global luxury market was valued at an estimation of $1.4 trillion. The beginning of 2020 had predicted a promising increase in the global as well as domestic markets. But that was before a virus outbreak of such a vast and dangerously contagious magnitude. While China has been successful to contain the virus to some extent, that’s not the case for others yet. COVID-19 has made the once bulletproof industry’s future now seem blurry, unpredictable, with a lot at stake.
Redefining the usual seminars, employing the terrific power of internet, STIMULUS 2020, an exclusive webinar, was organised by The Global Luxury Group and Crosshairs Communications (PR Partner), with LuxuryFacts as the Digital Partner. The aim of the webinar was to connect with strategists, business owners and executives to canvas possibilities and new ideas in media, luxury, lifestyle, leadership and other industries. About 70 speakers (bought together in a short time of 10 days) from different facets of the Indian luxury industry, who were hosted over 14 panel discussions, contemplated and talked about the future of the luxury business in India.
The last few weeks in quarantine have afforded immense self-reflection. With the forced shut down substantially altering not only our habits and way of living, but also our perceptions and understandings, we were forced to adopt alternative procedures, techniques and methods to function and sustain. As social circumstances affect market dynamics, the luxury sector is no exception. Though regarded as a recession-proof industry, COVID-19 has created multiple doubts. Emerging from the extensive two day webinar, here are few scenarios deemed evident across all sections of the Indian luxury market.
Artificial Intelligence and Digitisation
As the lockdown has shut down shops and showrooms, brands have to adopt alternative or diversified distribution channels. While fashion and media would have to adopt the digital media, artificial intelligence might take over certain aspects of tourism, hospitality and home decor sectors. Although luxury brands have been quite hesitant of the online platforms, Ms. Pria Kaataria Puri, fashion designer (aka the Kaftan Queen), rightly suggested that established luxury brands and labels wouldn’t face many problems in adopting the digital medium as people are familiar with the brand’s products. She also added, “However, newbies, who have just entered the industry and whose business also does depend a lot on experiential marketing, will have to face the glitch as one can never do away with physical store completely.”
Will the age of digitisation close brick and mortar stores? No. Apart from the product, physical stores offer a luxury buying experience – one that makes the customer feel more valued. Mr. Ramesh Somani, Founder and CEO of Exhibit Magazine & BBC Top Gear India, explained: “While buying a new car, the customer wants to experience the car, have a test drive, feel the interiors - have the purchase feeling.” Adding on to it, Ms. Nonita Kalra, Editor of Harper’s Bazaar India, highlighted that the print sector would always be the luxury of media, where the quality of the paper and the content would be impeccable and eventually turn into a collector’s piece – another testament of the value of an elevated experience.
Content has always been the king
The Indian audience has been diverse and experimental, as seen from the surge of Instagram, Facebook, Tik Tok and other social media platforms. Sadly, creativity in terms of content was seen shrinking and more commercialised. Contained in their homes and with not much to do, content consumption has seen a tremendous increase. From binging television shows and reruns of the classics, people are now looking for more qualitative and productive content. Content has always been the king, but post-COVID-19, the choice and type of content consumed will evolve. Amidst this chaos as well, people are sensitive, responsible and encouraging, truly understanding the gravity of the situation. In the future, only appropriate, credible and authentic content will thrive. Experts predict that the apocalyptic genre of cinema might emerge as a new genre for the Indian film industry.
Conscious over conspicuous
Along with our lives, the lockdown has shown evident changes in our surroundings as well. Better air, decrease in pollution, clearer water, or animals coming out on the streets, we are given a testament of the forced changes we inflicted within a short period. Witnessing the change, people would be moving towards sustainable, reusable and environmentally friendly alternatives, choices and methods. From fashion to automobiles and from hotels to homes, a conscious effort will drive our lives. People now would want to associate with brands and labels that try and reduce their carbon footprint, implement better manufacturing processes and push for zero-wastage. Electric cars, organic and sustainable fashion brands, renewable energy resources will see a significant upward graph curve in times to come.
Change in consumer behaviour
Consumer behaviour has been dynamic and a subject of interest for many. Changing times, circumstances, mindsets, and consumption of information and content contributes to people’s buying tendencies and preferences. Considering the pandemic situation, Mr. Abhay Gupta, Founder & CEO of Luxury Connect, said, “While speaking about the purchasing pattern of the consumers’ post-COVID 19, we will see two segments of consumers emerging strongly in the forefront. The conscious and the aspirational buyer, who will be mindful of their spending and shall only purchase if it is a necessity. On the other hand, we will find premium buyers, who would want to go all out and might want to go on a shopping spree to kind of deal with the happiness of being free and this, in turn, will bring back the much-needed optimism in the economy.”
Another prediction was people are now invested in the thought of ‘you only live once’ and would increase their purchases of luxury goods as they would now prefer quality over quantity. Brands that have a strong sustainable storyline and are practising sustainability will have a high chance of increasing their turnover.
An entrepreneur is key to any business economy. Mr. Suhel Seth, founder and managing partner of the consultancy firm Counselage India, where he advises leaders across the globe on branding and marketing, explained the basic virtues of efficient leaders that we need both on political and apolitical grounds, to flourish as people and countries. ”Firstly, leaders lead by examples and not speeches. Secondly, leaders are defined not by platitude but actions and finally, leaders involve people and create engagement without confrontation.“ He also felt great that there is scope for more reinvention than rebranding.
To find opportunity within chaos is another crucial and differentiating quality of an entrepreneur. Mr. Ashish Kashyap, founder of Goibibo, co-founder PayU and currently with INDwealth and AI-based SuperMoneyApp, rightly pointed out that the biggest startup successes have risen from recessions or crisis, be it Airbnb after the last recession, or the surge of packaged foods after World War II. The post-COVID-19 era would certainly see the rise of entrepreneurship that would probably create the next big thing of our economy. Searching opportunity in adversity, this economic depression might also lead to successful start-ups and ventures.
Going sector by sector, experts at STIMULUS 2020 highlighted the below factors that will dictate business post COVID-19.
Luxury cars have seen a significant rise since the economic reforms in 1997. Mr. Jatin Ahuja, Founder, Big Boy Toyz, highlighted the growing acceptance of luxury cars within the Indian market. According to statistics, Audi sold about 70 cars in 2000 and over 13,000 in 2019, certifying the increasing demand for luxury automobiles within the Indian market. However, the Indian automobile industry has also seen its fair share of ups and downs from demonetization, the implementation of GST and various banks bankrupting.
Super luxury cars like Lamborghini saw about 15% growth last year. Mr. Hemant Arora, CEO/Business Head at Lamborghini & Aston Martin - New Delhi, stated that the rise was because of the launch of the SUV model from the brand. The ‘you-only-live-once’ audience is deemed to be the saving grace of the industry. However, people would be driven to opt for a hybrid or an eco-friendly car over the traditional one. Brands, thus, need to push on Research & Development for better alternatives as well as create designs that do not compromise on the luxury aspect. Having said that, as humans return to their older habits sooner or later, it is expected that the safe-playing audience sector would soon be back.
The most significant deciding factor, however, according to experts, would be the tenure of the lockdown. Considering the lockdown and its aftermath lasts less than six months, the automobile industry would be able to recover at a much faster rate than if the repercussions last for more than a year.
Fashion & Jewellery
The reopening of an Hermes store in China saw record sales of $2.7 million in a day. The concept of ‘Revenge spending’ thus got light. Due to the recent restricted access, people are expected to shop relentlessly. After a month-long quarantine in China, with the largest luxury market of the world bouncing back, there might be hope for the Indian Fashion market as well. Mr. Abhishek Agarwal, Founder, Purple Style Labs (PSL), who recently acquired Prenia’s Pop Up Shop, clarified that the concept of reusable luxury or preloved luxury is still in a very nascent stage in India and it would take some time before it is commonly known. However, the big, better and fatter aspect is predicted to die due to the demand for sustainable, responsible fashion.
The most affected sector of the Indian economy are the daily wage workers, which also includes craftsmen. Though designers are trying their level best to retain them, the ultimate decision is with the audience. Fashion designer Mr. Tarun Tahiliani wishes the ‘buy less buy better’ to be the future thinking of people, moving past the Instagram life, and to owning items that are classic, versatile and mindful. Also, this is a great time for contemporary brands to incorporate Indian fabrics to encourage the craft as well as contribute to the economy. The designer himself has created a contemporary silhouette collection using Chikankari. While the big fat Indian wedding would soon be back in business, the bridal sect of the industry would soon recover and be thriving as earlier. Affordable luxury brands will also see a positive response after the quarantine gets over.
Jewellery, on the other hand, has accepted the digital mode. Ms. Neha Lulla, Celebrity Jewellery Designer, said, “The Indian consumer will spend, but will spend in a very conscious way. Even though consumers like to have the touch and feel factor come into play while purchasing jewellery, in the current lockdown situation, jeweller apps that allow you to shop jewellery online will see a hike in sales.” Having said that, people would still prefer the brick and mortar stores for the touch and feel of jewellery, especially bridal jewellery. Ms. Lulla further clarified that the reusable luxury concept won’t be welcome in case of jewellery as it is not just a product but also has emotional sentiments attached to it.
Hospitality & Tourism
It won’t be wrong to say that the hospitality and tourism sector is the worst-hit sector due to COVID-19, and will probably take the most time to recover and be back in action. Moving forward, hygiene and health will be a major factor of consideration while deciding a travel destination. Most luxury hotels have all ready started creating an improved health and sanitation protocol. Dr. Ankur Bhatia, ED, Bird Group, mentioned all the Roseate Hotels & Resorts would have a disinfecting booth at every entry gate, both for guests as well as employees.
Due to a long time in quarantine, there is hope that restaurants and bars will see a rise in guests. Even then, people will have to follow social distancing and other hygiene practices even after the quarantine, mostly as a precautionary measure. Ms. Priyanka Bahl, Founder/Editor, The Dram Attic, explained people would want to have the experience of a bar and still have the privacy and feel-safe environment. The spirits and alcohol sector will have a definite and continuous surge as people are desperate to move out after the lockdown.
While it is estimated that international travel would take about a year to normalise, we don’t see a cosy picture for domestic travel as well. Mr. Chetan Jalan, founder of ChaloHoppo, a leading travel outfit catering to north-east India, worries that the continuous curfew beginning from the CAA amendment followed by the quarantine would adversely affect the tourism sector, especially the north-east states of the country. Travel within the country would be limited to the metropolitans, if necessary, as people would be wary of travelling for a considerable time.
With the Mecca of the horology industry, BASELWORLD, skipping a year, the future of the watch industry is claimed to be a in much better position than others. Regional or group based tradeshows might rise in the near future as watch brands are moving away from heavily consolidated fairs. Luxury watches like Rado, Patek Phillipe, Rolex, Jaeger-LeCoultre and more are expected to recover soon, due to either revenge spending or the aspirational portion of the audience.
A key aspect of luxury brands is the connection that they establish with the consumer, leading to a loyalist audience. Luxury watch brands can diversify into digital platforms, but the watch industry, just like bridal jewellery, would remain in the physical stores' format. Apart from digitalization, and people going from global to local, Mr. Mitrajit Bhattacharya, Founder, the Horologists & the Corner Room Project, briefly explained the short term and long term steps for luxury watch brands in India.
Short term steps include Safety for employees and customers (like Rolex which has completed stopped manufacturing not only to ensure employee safety but also unwanted production in case of strategy changes); Proactive Communication (to communicate safety protocols and procedures, while also going live on Instagram and Facebook to ensure constant communication with audience); and Reassurance for a long-time commitment (where the top line management needs to create confidence for a better tomorrow among their employees and stakeholders).
The long term steps include Reviewing 2020 inventory and revising the 2021 collection (as the apocalyptic situation will give rise to the discounting, counterfeit watches and fakes in the market, companies need to have clear data on the inventory across the country and rethink and design the 2021 collection according to the market analytics); Enhancing digital engagement (via custom activation, e-commerce and digital marketing); Managing cash well; Clean Sheet Demand planning (as with the inventory spread all over the world, it would be difficult to clear the inventory as retailers will try to discount, which might further worsen the company’s situation); and Adjusting the Supply Chain and merchandising plan.
The homes session of the webinar was a rather insightful and heartfelt conversation, majorly revolving around concepts in the home décor sector to make it more sustainable, eco-friendly and cohesive. The panellists agreed that this scenario would propel the home sector in a positive direction.
The home décor sector is expected to see a rise of brands that are using products and materials that have a great environmental value. With a change in mind-sets, maximalism might see a short death. The youth or Gen Z is more aware and conscious about the effect on nature and would want to implement ways to mitigate the adverse effect. Greenhouse practices and incorporating nature and environment to its maximum level would be the key driver of trends in the coming decade. Electronic devices and applications in the home industry would see more of Artificial Intelligence, and a vast segment of customers would opt for value over volume. In the light of the current scenario, there is a foreseeable up-rise in home-based entertainment equipment, and house gatherings and parties over meetings at public places.
Influencing has been a crucial part of the eco-system, be it celebrities, socialites, social media influencers, etc. The market post-COVID-19 would turn their heads towards real people, whom the audience can connect and relate with. As rightly put by fashion writer and sustainability activist Bandana Tewari in a session: “The consumer of tomorrow is not greedy.” Consumers will not look for superficial value but rather explore the experience. Consumer behaviour patterns showcase that they would sway towards sustainability and also not put emphasis on the price tag of a genuine product’s true essence and making. Thus influencers in the form of media, entertainment, and social activists will need to resemble this thinking and accordingly provide intelligent discourse.
During the entire span of the webinar, hope and resilience was evident. The quarantine has not only helped alter our preferences, but it also has a massive silver lining that reminds us of the strength mankind has with the will to sustain and survive. The post-COVID-19 world would surely be a much better place to live in, with newer ventures and ideas and the resilience to achieve our goals.
Images courtesy: Cris Ovalle, Engin Akyurt, Marvin Meyer, Noah Buscher, Nordwood Themes, REVOLT, Riccardo Annandale, Toa Heftiba, STIMULUS 2020