Consumption of luxury retail goods in 2009 is not going to take a knock, not by a long shot. For high net-worth individuals (HNIs), who own private jets and indulge in luxury vacations, there is no cutback on their spend. With net financial assets of at least $1 million, excluding their primary residence and consumables, HNIs are shopping away like nothing has changed.
Time to roll out the red carpet for the Porsche and the Prada, and you can even throw in a twinkling tiara for good measure.
The New year is set to see top end Italian, French and Australian retailers scurrying to set foot in the market, and marquee malls will vie for marquee brands. For a section of the cognoscenti, who would sniff at mingling with bargain hunters at some luxury mall, special, private screening being organized to herald in the New year.
On show, among some of the ultra-huge gemstones, will be a single, stone-studded ring. Price tag: upwards of $200,000. A bracelet, which recorded brisk sales during Diwali, will have 20 such stones. And these items are literally flying off-the-shelf.
This one segment that has never felt the need to cut back. Compared to their net worth, these expenses are nothing, a trifle actually. And thanks to such sales, our Diwali has been extremely good. The new year promises to be even better.
Figures back this trend. India led the world in HNI population growth in 2007, rocketing by 22.7% and exceeding gains of 20.5% in 2006, according to the Asia-Pacific Wealth Report by Merrill Lynch and Capgemini, which reported that India had 123,000 millionaires in 2007 and showed the fastest pace of expansion. Though the new round of statistics are yet to come in for 2008, indications are that the figures would add up to a new total.
Luxury brands are growing at a healthy clip of 30% annually, and it is not jewelry alone that is showing the way. Apparel, watches and even perfumes are hitting a high note.
The year 2008 has been pretty good. The effects of the slowdown are yet to show. The luxury brand sale phenomenon going on in Bangalore and in some areas of Delhi. Internationally brands are going on an early sale, but there isn’t as much distress as is being made out. We expect 2009 to go largely smooth as we see the sentiment going up again.
CEO of TSG, which brings in brands like Stella McCartney, Lanvin, Jean Paul Gaultier and Moschino: This year they opened four stores in Bangalore’s UB City and opened the first Kitsch store in Delhi. Although Moschino store at the Taj in Mumbai was shut due to the terror attacks, they are back on our feet. Customers have been very supportive.
There are no discounts on offer here. There is no correction on these expensive pieces. It takes time to collect most of their pieces and do not offer discounts. Most buyers are not looking for value, they are looking for something exclusive.
Interestingly, luxury brands in India have also found new customers in an increasingly wealthy middle-class, the growing ranks of working women and a youthful population that is not afraid to splurge or quaff their daily drink of single malt. The spirits industry has been growing at a steady 7.2%. Within this segment, single malt whiskey has been growing at double digit growth, though on a small base.
The imported spirits market is estimated to be about 1.1 million cases, of which 79% is whiskey. Within this, single malt comprises 30,000-35000 cases, which has grown from 25000 cases recorded in 2007. Post September, sales have not been impacted for single malt whiskey.
These products are brought by consumers at the upper end of the income level, who appreciate fine whisky. They are well-traveled and are part of several malt clubs. They largely pick up their favorites from international airports. It is being noticed now that people prefer to consume and enjoy their drink at home rather than at a five-star hotel or a fine dinning restaurant.
If home is where the action is, it is natural for consumers then to increasingly design their personal space for entertainment. HKMT Acoustic Designs continue to get enquires from private clients for designing their personal space for entertainment. They design and customize home theaters for both corporate and individuals.
The demand is such that they don’t accept more than four orders a month. Last year, the demand was around two mini theatres a month. This has obviously been pumped up. They are optimistic that the trend would be better in 2009.
On an average, a home theatre costs Rs20-25lakh. A tiny diamante ring from Italian Damiani jewelers cost as much. Incidentally, splashy, private events are also back in vogue. Upscale brands need to do something to keep their customers buying and though it may seem counter-intuitive to host lavish parties with champagne and caviar during a recession, for luxury marketers, this is one of the most cost-efficient ways to woo their customers. Luxury marketers are going after their core customers by holding invitation-only events.