Potential for luxury brands in tier I and tier II cities of India
Louis Vuitton was a French box-maker and packer who founded the luxury brand of the same name over 150 years ago. From humble beginnings in the french countryside, Vuitton’s skill, innovation and determination quickly saw his signature trunks coveted by the world's elite. Upon arrival in paris in 1837, Vuitton became an apprentice at a successful box-making and packing workshop - a craft that was highly respected at the time. Hence, till date the core of the brand is the art of packaging. Within a few years he had gained a reputation as one of the best in his field in the city. Vuitton's fortunes rose in 1853 when he was appointed the personal box-maker and packer of the empress of France, Eugenie de Montijo - the wife of napoleon bonaparte. This opened the doors to a new class of elite and royal clientele. Vuitton introduced a trunk in a beige and red striped canvas in 1872. The design appealed to the new parisian elite and helped secure the brand's position as a luxury offering. According to credit suisse’s 2015 global wealth report, india has ranked up in the list of top 20 countries as the number of ultra-high-net-worth (uhnw) individuals rose by 100 since mid 2014. According to kpmg-assocham India luxury summit 2014, India is responsible only for 1-2% of the global luxury market. Luxury retailers, both national and international are racing to expand their footprint in India. though the luxury consumer is fragmented in India, but luxury retail is concentrated mainly to tier 1 cities. Luxury retailers open in luxury malls (DLF Emporio, Palladium, UB City etc.) Or preferably in luxury hotels. The Indian luxury consumer is spread across the metros, tier-I and tier-II cities. “close to 40% of the Indian luxury consumers are living outside of metros and shop on their travel overseas or in the metros. High internet penetration across tier-ii and tier-iii cities along with high disposable income may lead to around 80 million transactions on the internet by 2020. Whereas, the uk is attractive to tourists of all ages, including the new younger luxury shoppers, because of its high profile as a tourist destination, particularly london, and the wide range of shopping opportunities it has, which have expanded over the past couple of years,” said maureen hinton, group research director at conlumino, london. Britain’s luxury industries are strongly export-oriented with 78% of production, in value terms, destined for overseas markets (i.e around £25 billion in 2013). Year-on-year export growth in 2013 was around 12.1%, a rapid increase attributable mainly to a strong performance in the luxury car sector. In london, luxury retailers are looking beyond the traditional core of old bond street/new bond street. Examples include loewe and nicholas kirkwood who opened stores on mount street in mayfair in a location traditionally dominated by antiques shops and galleries. As with consumers based in emerging markets, the tastes and behavior of affluent individuals living within the United Kingdom are also evolving, according to new report by deloitte. By respondents, deloitte found that the UK luxury consumer has a strong impulsive purchasing driver. This is more pronounced among female and older consumers, while millennials are driven by trends and less defined by routine. In the United Kingdom, 58 percent of millennials buy luxury goods through e-commerce channels, thus driving omnichannel. But, 78 percent of UK millennials purchase goods in-store because of the desire to touch and seen an item before it is bought. By targeting millennials via social media, brands are upping their chances of building a relationship with this consumer, which may translate to lifelong loyalty. If done smartly and strategically, social channels can be a cost-effective way to share innovative visions while building up the brand’s allure and lifestyle. Louis Vuitton in India has 3 stores. Through my Internship Experience where I worked as a Fashion Consultant at the Louis Vuitton store I made gained some key insights about the brand and the target customers. On the basis of my research of the two markets, and the brand Louis Vuitton underlined by my internship experience I believe some concrete steps can be taken towards strengthening the brand image and operations in India. There are different aspects that can be taken under consideration to boost sales in India as there is a vast potential consumer spread across the country. Taking the consumer behaviour and target audience in consideration Louis Vuitton needs to educate their consumers in India about the brand more. In the international market specially united kingdom, owning a Louis Vuitton product is like an investment. People connect to their purchase emotionally and value it. The consumer’s there don’t only care about the product design but also want to know about the product they are investing in. Whereas in in India consumers are least bothered about the inspiration or the collection of the brand but just about the product design. The consumers of Louis Vuitton are who want to blend in with the classes; are fashionistas, or trendsetters; experiencers who love travelling, wine tasting, etc.; absolute luxurers for whom luxury is about exclusivity and customization; and megacitiers—part of the global elite.. As per my experience, research undertaken and observations Louis Vuitton has a vast clientele from the 2nd and 3rd tier cities of India. Even though lv has an option of bank transfer purchases yet tend to lose out on sales as many bank branches vary from city to city and there are many products that can be bought only after trying as the anatomy of every individual is different, for example, shoes, belts , cross shoulder bags etc. As a solution to this, Louis Vuitton should increase it’s presence in the country. Rentals being high in India and as Louis Vuitton is present in 3 different cities they should allot their regions amongst the stores to take over the sales, aftersales etc of the 2nd and 3rd tier cities of the country falling in a particular region so that sales are done in a proper manner. This will also allow the home sales to take place frequently in different cities as it hardly takes place at present. This will not only solve the point of sales but also help the client advisors to connect to the clients better and building relations with them as it will give them a chance to not only interact over calls and emails but also meet in person for sales. They can also further can come up with a pop up store in those cities. These also help in understanding the demand of the client which further helps in the product assortment at the store which in turn can increase sales. I would like to conclude by mentioning that this would not only improve the sales and make their presence more but also help in educating the potential and target consumers about the brand which is an important aspect as a consumer in India should value their Louis Vuitton product as much as a consumer in united kingdom does. This in turn will help the brand to grow more in India and in the hearts of people who are their clients.