Luxury In India: Down But Not Out

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1 Luxury In India: Down But Not Out The global luxury brands entered India some years ago, believing that the country s growing prosperity and huge consumer base were a solid foundation to build up their businesses in what for them was a brand new market. Now, after the global economic slowdown, report Shanoo Bijlani and Regan Luis, these brands find they are actually in better shape than many of their counterparts in other countries. Chirag Wakaskar - Getty Images for Cartier International 46 Solitaire INTERNATIONAL AUGUST 2009

2 T he global economic slowdown has affected luxury jewellery spending in India. One of the main reasons for this is a dramatic fall in the number of wealthy Indians (with assets of at least $1 million), whose investments have been eroded by the slump. While the people who fall into this category certainly haven t lost their power to purchase luxury items, a great number of them have curbed spending on ostentatious goods like jewellery and so-called prestige watches. There were 84,000 millionaires in India at the end of 2008 compared with 123,000 in 2007, according to the Capgemini and Merrill Lynch World Wealth Report. India s millionaire population shrank 31.6 per cent last year, after posting the fastest rate of growth (up 22.7 per cent) in Despite the economic malaise, a couple of global luxury brands that have been operating in India for some time told Solitaire that they remain hopeful of the country s potential for growth as a market for high-end goods and have no regrets about setting up base here. Solitaire INTERNATIONAL AUGUST

3 Harry Winston s decision to set up in India was made at the right time. Given the association with India, we were always keen to have a presence in the country. The response from our clients is definitely encouraging, says Gurinder Sahni, chief executive, Harry Winston Boutique, India. Independent French luxury jewellery and watch maker Chopard has been in India for over 10 years now. Chopard has always believed in the strength of the Indian market. Furthermore many other developments in this amazing country are yet to come, said Chopard area manager Nicholas Hofmann. He added that the purchasing habits of the firm s clients in the past few months have somewhat changed. We therefore need to adapt. As a family-run company, we can be more flexible than other brands to react to this change, he noted. While Harry Winston currently has a single boutique at DLF Emporio in New Delhi, the country s only luxury mall, it plans to open new stores in India in the future. Chopard on the other hand has 13 multi-brand stores and two boutiques at the Oberoi hotel in Mumbai and at the DLF Emporio mall. We continuously study new Harry Winston Gurinder Sahni Fawaz Gruosi 48 Solitaire INTERNATIONAL AUGUST 2009

4 opportunities throughout India. Besides Mumbai and New Delhi, where the brand is well-known, other cities in India are also showing a strong interest in our brand, Hofmann says. Demand for upmarket products has percolated even into smaller Indian towns where people have the financial resources. We do have some clients in the smaller towns, where there is brand awareness, says Harry Winston s Sahni. Fawaz Gruosi, founder and creator Italy s de Grisogono, a new entrant in the Indian luxury retail space, echoes this. We do get enquiries from tier II cities like Pune, Chandigarh and Hyderabad where there is concentration of wealth, he notes. de Grisogono, which started distributing jewellery and watches in India through the Vama Group a few months ago, has 17 boutiques worldwide, one of which is in New Delhi at the DLF Emporio mall. We may consider another boutique in Mumbai at a later stage, if we get the required response, Gruosi says. Since 2003, de Grisogono has seen an average growth rate of 28 per cent. By 2007, this stellar performance had translated into a 27 per cent increase. However, we have been adversely affected since the economic slowdown in terms of sales worldwide. In the US and Russia, some of our biggest markets, business is down by 65 per cent. Europe is still our largest market, and accounts for between 17- and 24 per cent of our sales, he adds. However, Gruosi observes that markets in the Far East, India, China, Brazil and Mexico are now beginning to show signs of growth. We seemed to have reached the bottom of the economic turmoil, and should see a slight improvement by September. By Harry Winston 50 Solitaire INTERNATIONAL AUGUST 2009

5 we should be back to levels, Gruosi notes. Luxury brands can no longer afford to depend on a single market. Following the slowdown in developed countries, India and China, which together account for one-third of the world s population, have emerged as the next two big potential markets. Chopard will continue to be proactive in India to further increase our visibility and to cater to Indian clients, Hofmann states. In fact, Chopard is present in over 60 countries. The ability of India to maintain economic growth in spite of the severe global decline is a sign of financial independence. The two largest countries in the world, with a combined population of over 2.5 billion people, are now running on their own economic engine. People are becoming more aware of niche luxury brands like de Grisogono and are also happy to buy into the exclusivity. Since the Indian jewellery market is very fragmented and has been ruled by the family jeweller, it is difficult to convert an Indian customer into buying into the concept of branded jewellery. The potential however is definitely for our watches, Gruosi says. Overall, despite the worldwide economic slowdown, the global luxury jewellery brands that have been operating in India are in better shape than many of their counterparts in other countries and are looking forward positively to better days much sooner than elsewhere in the world. de Grisogono Solitaire INTERNATIONAL AUGUST