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MAP TO NEW MARKETS

Go posh: High life in the hinterland

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Recently, a Gurgaon-based e-commerce company got an order to deliver a Dolce & Gabbana bag worth Rs 1 lakh to a customer in a small town in Jharkhand. "The customer is a miner and there is so much money in that belt, " says Sharad Thakur, chief marketing officer of Highstreetlabels. com. A few months ago a wealthy businessman in Pune ordered a silverware trunk specially crafted in Jaipur for his daughter's wedding from The Trunks Company. The firm restores antique Louis Vuitton trunks and creates bespoke versions. Recently, it delivered a special chest to a client in UP - to store his ancestral collection of swords and rifles. Luxury has a new address in India - small towns. Far from the glitzy malls and dutyfree shops of big metros, in dusty mining towns, quiet civil lines and crumbling havelis of mofussil India, global heritage and luxury brands are finding new patrons who have both, paisa and panache. With India's growth story shifting to tier II and tier III cities, luxury market (expected to reach $14. 73 billion by 2015 from an estimated $8. 21 billion this year), too, is exploring these new frontiers. From Hyderabad to Ludhiana, Surat to Jammu and Indore to Chandigarh, non-metro destinations are turning into the new hot spots for luxury retail. Luxury is a relative term and in a diverse country like India, it is finding more space in the vocabulary of the rich and the affluent in smaller towns and cities. The well-heeled there are splurging like never before on expensive watches, jewellery, cars, clothes, bags and exclusive experiences, like spas. Most of these cities already were home to old moneyed khandaans, famed for their refined taste in luxury. They would splurge on high-end brands by shopping in bigger cities or during their visits abroad. But with proliferation of the nouveau riche in small towns and the increase in the spending power of the middle class, luxury brands now want to set up shops at their doorstep.

BOONIES GO POSH


"We are looking at taking our brands to cities beyond Delhi and Mumbai once the right real estate options are available. The affluent in smaller towns and cities are surprisingly well-aware of fashion trends and want the latest collections from brands, " says Sanjay Kapoor, managing director of Genesis Luxury, which markets brands such as Armani, Burberry and Canali in India.
Genesis has taken up space for half a dozen stores at a luxury mall in Surat being built by Virtuous Retail, a retail real estate asset platform sponsored by the Xander Group Inc. It is also looking for space in Chandigarh, Ludhiana and Jaipur because several people from these towns frequent its stores in Delhi and Mumbai.

Similarly, Reliance Brands, a part of Reliance Industries Ltd, which has recently brought American menswear brand Brooks Brothers (BB) into India, has plans to open stores in the metro cities but has set its eyes on Chandigarh for the flagship store.
Those who are unable to open stores are resorting to options like e-commerce and trunk shows. Sonal Singh, a homemaker from Ahmedabad, has a penchant for high fashion eyewear and bags. She already owns labels like Louis Vuitton, Fendi and Bottega Veneta. The 32-year-old "convent educated" stylista is now hoping that her millionaire husband, who owns a couple of resorts in Gujarat, gifts her a Birkin on her upcoming birthday. It doesn't matter if Ahmedabad, once a hub of arts and science, lacks big ticket luxury stores. Consumers like Singh shop online. Forty per cent of sales of Highstreetlabels. com come from small towns.
Reliance Brands is planning trunk shows for smaller destinations. "It is interesting to see how in a small place like Jodhpur, a trunk show organised by a client for his/her friends and family can help us do great business in just one day, " says Darshan Mehta, president and CEO, Reliance Brands.

SMALL TOWN, BIG SPENDING


Kimaya, a one-stop shop for India's best known high fashion labels, was one of the first to realise the potential of these 'new markets' when it opened a grand store in Surat in 2011, followed by more stores in Hyderabad, Lucknow and Jaipur. "Needless to say, the response has been amazing, " says Pradeep Hirani, chairman of Kimaya.

However, he adds, consumers in small towns are not traditionally big spenders. Their tastes are influenced by either mass media or their own personal whims. In that sense they are more trend-driven than style-governed. They will pick up things either worn by their favourite Bollywood celebrity or hyped by media. "On the other hand, a metro consumer is very well researched and indulges on merit, value and experience. Big city consumers are often more sophisticated and conscious in their choices, " says Hirani.

Bird Group's executive director Ankur Bhatia offers a different perspective, though. He says the divide between the buyers of luxury in metros and non-metros is shrinking by the day. "Luxury consumers from smaller cities are equally discerning;given that they are well-travelled and have greater exposure to the international markets and luxury products, " he says. Bird Group represents select high-end luxury brands in India comprising BMW automobile dealership, Porsche Design franchisee, and other luxury merchandise under the brands Bally and van Laack.

Paritosh Mehta, co-founder of the Trunks Company, says that his most ardent clients come from non-metros centres and they come up with detailed requirements for made-to-measure trunks. "They are passionate high net worth individuals who live life on their own terms. They value discreet luxury that is created as per their convenience and for their comfort, " adds Mehta.

The demand for luxury is not restricted to clothes and handbags. Real Estate developer Lodha Group, has a host of buyers coming from small towns. "They are spending several crores on luxury apartments in Mumbai not only as an investment but as a way to lead a better lifestyle, " says R Karthik, vice president marketing, Lodha group.

Delhi-based designer Manjeet Bullar constantly receives requests from across India for bespoke interiors and furniture. "Recently a client from Indore asked for his entire bathroom to be re-done with 24 carat gold plating, " says Bullar whose client list includes corporate and political heavyweights. He has also designed a special sculpture for Ferrari store in Delhi.

THE LUXURY MAKEOVER


Traditional wealthy families in small town India have always been reserved and restricted in their display of wealth. But not their next generation which is well-heeled and educated at some of the best institutions in India and abroad. It is this band of consumers that has the appetite - also fuelled by the media to a great extent - for luxury labels and exclusive experiences. They want high street brands to be available in their neighbourhood. "I would definitely shop more if there were shops selling luxury products in my city, " says Sonal Singh.

Apart from frequent international travel, it is larger spending power that has small town India asking for more. "A lot of people have made money as a result of real estate boom. More women are working and have the independence to make purchase decisions, " says Abraham Koshy, professor of marketing at IIM Ahmedabad. "Even Bollywood does not glorify poverty anymore. No longer is there guilt associated with conspicuous consumption, " he adds.

This has spurred growth of malls in tier II cities that will have the right spaces to house these iconic brands. New pockets of regional growth have led to a rise in the number of first time luxury consumers - most of who are within a younger age demographic, reveals a recent survey by Yes Bank and Assocham. These consumers are, of course, brand conscious but also tech savvy. It is not surprising to note that 36 per cent of the 300 respondents (CEOs of luxury brands) surveyed see themselves increasingly using social media platforms as a brand connect and to increase awareness within this new target segment. The survey further adds: "Given the spending patterns, new pockets of growth will gradually evolve to move up the luxury chain;62 per cent of CEOs believe the ideal marketing strategy to penetrate these towns is to begin retailing 'ladderto-luxury' brands, " the survey further adds.

MAP TO NEW MARKETS


CEOs of luxury brands were quizzed on their strategies to tap tier II and tier III consumers:

36% use of social media

38% distribute through e-retail

62% Introduction of BTL (bridge-to-luxury ) brands

65% of the CEOs interviewed feel that tier II towns are ready for luxury consumption

Source: Yes Bank

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