Trend three: Luxury in India
December 12, 2012
Luxury brands move online
Lulu: In 2013, we can expect to see luxury
brands in India embrace e-commerce in a big way. Today online
shopping is only about $7 billion dollars, but it is expected to
explode to $84 billion in 2016. There are a number of reasons why
this trend will be significant—two from the luxury brand owner’s
perspective. First is favorable economics. Today these brands pay a
lot of money for real estate for their stores in Bombay and Delhi,
but they aren't having enough footfalls and are therefore not very
profitable. Online would give them savings that could be passed on
to the consumer. Second is access to consumers. The desire for
luxury brands is spreading fast outside of Bombay and Delhi, and
online is an effective way for luxury brands to tap into consumers
in tier 2 and tier 3 cities.
Ektaa: Today you’re going to find that luxury
is the big catalyst in creating a new breed of online consumer. You
will also find a lot of budgets coming into digital that would have
been otherwise spent in high real estate costs; they are actually
going to be spent instead on creating digitally simulated store
Lulu: There are a couple of reasons why this
trend will be significant from a luxury consumer perspective.
First, online is a safe and nonintimidating environment in which to
make a purchase. For many luxury buyers in India, they are buying
luxury goods for the first time, and a very sophisticated store
interior and pushy salespeople can be quite intimidating. Second is
sheer convenience. Sitting at home and having your Gucci or Prada
just a click away—nothing can beat that, especially for luxury
consumers who already know and are familiar with the brands.
Ektaa: The big boom is, of course, in the
multi-branded luxury sites that offer deep discounts—sites like
99labels. There's a big boom in this category. The second and more
interesting trend, especially for Indian consumers, is sites like
CaratLane that offer organized certification for their gemstones,
gold, and jewelry. Today we see a big shift: Indian consumers are
starting to buy their jewelry online.
What is the burning question for 2013?
Lulu: What's the burning question on this topic
for 2013? Is this all hype? Will e-commerce actually allow luxury
brands in India to turn a profit? Will the deep discounts offered
on these luxury brands actually impact brand perceptions? And will
Indian consumers embrace luxury online in the way we are predicting
that they will?