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 environments.

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?