Posts tagged ‘Branded Retail’

Consumption and the Super Rich

In our last post, we established the context for our exploration into the lives of the super-rich. We saw just how wealthy the 1% at the top is in comparison to the rest of the world’s population. In this post, we shall try and decode their consumption habits and gain deeper insight into the mind of the luxury shopper.

A survey conducted by Prince and Associates in association with Elite Traveller Magazine, which is popular among private jet travellers uncovered these spending habits of the Jet setting elite:

  • 89% purchase fine jewelry per year, spending an average of $248,000 (INR 1.24 Cr.)
  • 32% purchase luxury watches per year, spending an average of $147,000 (INR 73.5 Lakh)
  • 90% purchase fashion/accessories per year, spending an average of $117,000 (INR 58.5 Lakh)
  • 65% stay in a hotel/resort for leisure per year, spending an average of $157,000 (INR 78.5 Lakh)
  • 73% use a hotel/resort for a meeting or event per year, spending an average of $224,000 (INR 1.12 Cr.)
  • 59% stay at a spa per year, spending an average of $107,000 (INR 53.5 Lakh)
  • 21% take a cruise per year, spending an average of $138,000 (INR 69 Lakh)
  • 17% take an experiential trip per year, spending an average of $98,000 (INR 49 Lakh)
  • 75% make home improvements per year, spending an average of $542,000 (INR 2.71 Cr.)
  • 85% purchase wine or spirits per year, spending an average of $29,000 (INR 14.5 Lakh)
  • 30% purchase fine art per year, spending an average of $1,746,000 (INR 8.73 Cr.)
  • They own/lease 4.4 luxury vehicles currently and 85% are planning to acquire a new vehicle in the next 24 months
  • They own 2.5 primary homes valued at $2 million + (> INR 10 Cr.)

Thus, these people spend considerable amounts of money on things others might consider luxurious. If you thought only the Americans and Europeans were crazy about luxury, the super-rich in Asia are also quickly getting up to speed with the west. Japan has long been one of the biggest markets for luxury goods in the world, and India and China are fast catching up thanks largely to growing economies and young populations with large expendable incomes.

However, it’s not just the amount of money they spend, but the manner in which they spend it that suggests the lengths this segment is willing to go to in order to satisfy their desire to consume.

Consider, for example these shopping behaviors exhibited by some of India’s super rich and reported by the Economic Times :

  • Shahnaz Husain, Cosmetics Diva, has a Louis Vuitton collection in her wardrobe—not crafted at any factory of the French fashion giant, but at her bungalow in South Delhi, designed by herself and stitched by an in-house tailor. She always buys LV Bags in pairs: One to be used as a bag and one to be cut up and shredded for use by her tailor.
  • Diljeet Titus, one of Delhi’s top lawyers, has bought 40 handsets of luxury phone brand Vertu in the last couple of years. Vertu phones in India cost between INR 3 lakh and INR 66 lakh. Titus also loves to splurge on luxury watches, suits, phones and vintage cars for himself.
  • A lady in Delhi sent 3 specially imported Hermes Birkins worth INR 60 Lakhs to a family friend whose daughter’s wedding she was unable to attend. She also sent an apology note.

This is not just a Delhi phenomenon, although Delhi is fast establishing itself as the nation’s luxury capital. The Delhi stores of most luxury brands with a presence in India are their best performing stores in the country today and cities like Bombay and Bangalore are only just catching up. As far as luxury malls are concerned, Delhi’s Emporio, Mumbai’s Palladium and Bangalore’s UB City are the most preferred destinations for luxury brands seeking to open in the country.

mall interiors

Data gathered from one of the world’s top apparel brands with operations across India suggests that approximately 55% of all revenues come from a small portion of the total customer base (~10%) and spending is concentrated even further amongst the top 1%.

Interesting anecdotes from those in the industry bear this out. One customer, for example, a rich businessman from the Mumbai area spends approximately 2 million INR annually at just 1 store of a brand selling premium casual wear, in addition to shopping at the brand’s stores in Thailand, London and at other locations across Europe. Another customer in a different city once deposited approximately 1 million INR at a certain luxury brand’s store in cash! He said it was too inconvenient for him to carry cash around every time he had to buy something. Even more surprising, he used up his store credit within 90 days.

A 2008 research amongst affluent households (Household Income >$100K) and Super-Rich Households (>$250 K) also provides keen insight on the media consumption habits of the Super Rich, as compared to the affluent. The richer one gets, the more time one tends to spend reading and surfing the web, versus time spent watching TV and listening to radio.

Thus, the super-rich individual today is:

  • A big spender on luxury products and experiences
  • An eccentric and a stickler for personalization, both in experience and in product
  • A global traveller, in tune with the latest luxury trends around the globe
  • An avid reader and a digital native

The Super Rich Customer’s wallet is the Holy Grail most luxury marketers are after and the quest isn’t an easy one. “What do you sell to someone who has it all?” is the question most are trying to answer. In the next post, we shall take a look at what Luxury and Premium Brands the world over are doing to serve this ‘Over served’ segment.

  •   Rahul Sharma
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December 24, 2013 at 5:27 am 3 comments

Additional Info – Luxury Good Sales

Recently read an article in India Today talking about how luxury goods sales are booming in Tier-II cities in India – – thought it would make an interesting read for our readers, so here’s the link.

Back in January 2011, we’d also written about this in our post on Flash Sales – Who is Buying.

 

By,

EV Team

November 10, 2011 at 11:20 am 2 comments

The Shopping Experience: Electronics

Now that the format of these posts is familiar, dear reader, do allow us to cut to the chase :

 

Impressive : Bose

The sales assistants at the Bose store are good. They are polite, know the products and their features, and encourage you to take a look at the products. Even if you tell them that you are definitely not buying, they are enthusiastic about demonstrating the superior quality of the product through a demo (vital to convincing customers in the audio equipment category). You select a song from their list, they tune the system for maximum sound quality, let you hear the entire song and ensure that you walk away impressed with the equipment and their behaviour.

 

Satisfactory : Sony

We’ve also noticed that the staff at the Sony showrooms tends to be helpful. They patiently took us through all the features of a few laptop models, and simplified details when one of us asked a few doubts in a very confused tone. Point in their favour – they never smirked, even when asked to repeat simple details multiple times, or to simplify them further.

 

While I wouldn’t say that salespeople at all Croma stores are as good, one gentleman at the Kandivili (Mumbai) outlet did impress me. He was especially polite and reassuring to an elderly man nervously buying a laptop, explained all the details to him, helped him fill out the form for a data card and install it, and then gave the old man his personal cell-phone number to call in case there was any further help needed.

 

Not-so-good, a few examples of what we didn’t like:

  • Salespeople at some branded outlets seemed uninterested in actually speaking to consumers. In one outlet that we visited, one person was busy at the cash counter, two were chatting to each other and a fourth was standing outside the shop and speaking to someone on his cell-phone. ‘Sales assistance and us! Naah, we’re mannequins, part of the decor.’
  • Others had limited product knowledge, and did not show any enthusiasm to even try and find out the answer to a question, seemed a bit sulky too; maybe they felt the brand was a powerful enough draw on its own.
  • After-sales service seems to be one key feature that needs improvement. An anecdote from Nafisa below :

We wanted a certain not-in stock part and thought the salesman promised to call when it arrived and took down our contact details, we never heard from them again.

 When the unit needed servicing and I dropped it off at the service centre, no one said a word to me – I mean not a word, I had to ask multiple questions to figure out what was happening and what to do, when they would let me know, etc. They only promised to call when the unit was repaired so I could pick it up. Of course, they didn’t, I finally had to complain at the customer toll free number and even then they didn’t call up. I had to make multiple calls over 2-3 days after the due date, to the service centre before they told me it was ready.

 (S, you will recognise the similarity between the episode below and the one with your bag that you mentioned as a comment after our apparels and accessories post)

 

Grade given by the Escape Velocity team: A few exceptions that surpassed expectations; overall, a B.

 

Next Stop: To wrap up this series on shopping experience for premium branded goods in India, we’ll discuss some reasons for why the sales (and after-sales) service is in the state that it is in.

 

By,

 Escape Velocity Team

 [Disclaimer : This post deals mainly with one aspect of the shopping experience – interactions with the staff. Also, the list of outlets visited for the purpose of observation is not exhaustive.

Outlets mentioned in these posts will differ widely in terms of pricing, degree of premiumness and image; for the purposes of these blog-posts, we are still tackling all these outlets together.]

 

 

August 30, 2011 at 5:51 am 10 comments

The experience of shopping for premium branded goods in India

A question for you, dear reader: Have you ever shopped at a top-line apparel or accessories store in India and felt that the exclusive store experience was far from satisfactory?

Our loyal reader, Nafisa, definitely thinks so. She feels that salespersons at these stores often fail to carry through on the expectations from the brand. The manner in which they fell short of her expectations:

  • At the very basic level, lack of adequate knowledge of the product. Unaware or unable to explain the USP, don’t know of competition or how their product is different / better
  • Lack of interest in the overall category which could be  crucial to the brand experience
  • At a service level – lots of aggravation for customer and rarely do they respect customer’s time. No different from cheap brands and stand-alone store
  • A level of disinterest relating to customer concerns
  • Laze / lack of earnestness– no follow up with potential or existing customers. No follow – up or feedback loop when the brand has a website with the requisite options especially for the purpose

Why we think this is important:

In all interactions and transactions in a store, the organisation is presenting itself – or part of itself – to people with whom it either has a relationship or is trying to build one. If it is to be successful, it has to be consistent and clear in what it says and does in all these relationships; in addition, the impression transmitted from all touch points with the consumer must be consistent too, i.e. in-store interactions must match what the brand promises through other media such as TV and print ads, PR etc. In-store experience is a significant component of how people sense the brand and contributes to their perception of it, especially in the premium segment, where part of the reason for the purchase is the image that is being sold, the identity or idea which the consumer buys for himself / herself through the purchase.

Nafisa’s rant on this significant issue prompted us to run this as a theme for a series of blog posts. We’ve been doing some ground-work for this series – visiting retail outlets and making observations, speaking to a few people from the industry to get their opinion on the topic etc. We haven’t restricted our work to apparel and accessories either; we’ve looked at premium brands in a few other categories too. So do keep visiting our blog regularly to know more. Also, we’d love to hear from you about your point of view on the topic, so do write in with your comments, the more detailed, the better.

By,

Nafisa De Figueiredo and the Escape Velocity Team

August 9, 2011 at 5:52 am 23 comments

The Business of Branded Shirts

Branded shirts are everywhere and for everyone. In a country where traditionally customers preferred buying fabric over the counter and then getting the same tailored, this is a paradigm shift. And the preference for fabric over garments has not always been about the money. “You won’t get the right fit”, “These brands are tailored for western bodies”, “There is greater variety in fabric”… have been reasons given to opt for fabric rather than readymade garments.

But all this is changing. Branded shirts are growing and growing rapidly. The apparel industry is growing at a robust 15%. Brands such as Van Heusen have grown by as much as 60% in 2011. Shirts of varying sizes, styles and fits are now available everywhere. The market is not limited to metros anymore. Brands have penetrated tier I/II cities as well. Specific Mass Brands such as Liverpool (Gandhinagar, Ahmedabad), Cotton County cater to these areas. Increasing number of channels such as malls penetrating these cities has helped make this change faster.

How do these brands work? How do they differentiate from each other? How are they segmented?

Most brands purchase fabric directly from vendors. The fabric is sourced either to garment factories owned by the brand or to garment manufacturers/vendors. Sale is generally via dealers and/or directly to their customers via franchisees/fully owned retail outlets. They don’t risk inventory. Most operate on a “Sell before Make” model. Have trade shows, call all major dealers, get yardages of potential season designs made and take bookings before fabric orders are issued. Any extra fabric manufactured is generally sold off through their own outlets.

Brands typically operate with two lines “Autumn Winter” and “Spring Summer”. The former is a collection of dark dull-colored shirts while the latter is a range of bright lighter colors. This is generally followed by an End of Season Sale. The End of Season Sale is often a separate line made by compromising on the quality of the fabric and hence the price.

A close look at the market reveals a clear segmentation of brands. Peter England, John Player (ITC) are positioned as mass brands whereas Van Heusen, Allen Solly are positioned in the premium segments.  Brands differ in the product offering. While Peter England and John Player play with polyester and cotton fibers, Van Heusen, Zodiac and Allen Solly dabble in fine expensive cotton yarns. Touch a Zodiac shirt and then a Peter England shirt. The difference in softness in the shirt is evident.  

While brands are growing rapidly, the industry is facing its share of problems. Prices of cotton yarn have soared. A commonly used “40S” cotton yarn which was available in 2010 at INR 140-150 per kg is now available in 2011 at INR 290-300 per kg. Labor is increasingly short and becoming very expensive. Daily wage demands have soared from INR 175-200 to INR 250-300 per day. The budget had another shock for them. Garments now have an excise duty levy on them affecting the MRP by about 6-7%.

Have these problems changed targets for these brands? Probably not. With income levels in India increasing and an aspiring middle class, the Indian customer increasingly wants “brands”. The need is bound to grow and so is the market.  So, which brand do you wear ?

By,

Vibhor Tikiya

May 3, 2011 at 5:08 am 3 comments


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