As renowned luxury brands Hermes and Louis Vuitton hike their goods’ prices in South Korea and China, LuxeBook tries to understand whether the same strategy will work in India not.
Luxury consultant Veronique Poles, decodes these luxury brands’ business plans and predicts Indian consumers’ reaction to it.
Why are Chinese consumers buying products at a higher price?
All eyes are on the Chinese market as China is luxury industry’s biggest consumers.
Chinese consumers are obsessed with luxury brands. For them, these are symbols of success and a medium to assert their social status. The Chinese shopping frenzy, at the reopening of luxury stores in late March in China, termed as ‘revenge spending’ after weeks of isolation, confirmed and cemented Chinese consumers’ position as the top drivers of luxury consumption in the world.
The high amount of money spent on some brands like Hermès, Louis Vuitton, Chanel, Dior and Sephora is considered to be a positive recovery sign. The luxury brands that had invested in China in the last few years and the ones that implemented effective digital strategies have done well even during the crisis.
Although international travels will be restricted for a couple of months, Chinese consumers will continue their shopping online or in stores, as long as there is no disruption in the supply chain.
For all the above reasons, we believe that Chinese consumers will not be really affected by the fact that French fashion houses have raised prices. We believe that new prices on some products of complete collections will become ‘the new normal’, which will benefit other brands as well.
Will the price hike strategy work in India?
Usually if a few companies start a trend, others follow suit. So far, however, luxury houses have been cautious and raised the prices of only a few products (Chanel on few of its iconic bags and on small leather goods while Louis Vuitton on selected bags, garments and accessories). India will be no exception to the price-rise strategy.
In India, we believe, that some clients will place orders for some high-value products over the phone before the stores reopen. Therefore, this pandemic crisis, like other crisis will not affect true luxury buyers.
The affluent and high-earning consumers will continue buying, but will be more thoughtful about what they purchase and will invest in high-value luxury items.
However, we do believe that immediately after the lockdown, customers will opt for health, wellness and beauty treatments and would also want to travel within India by private yachts or jets. Shopping for luxury goods will feature after all of these on a consumer’s priority list.
On the other hand, professional uncertainty related to job loss, fall in income, closure of companies and start-ups, will also have repercussions on consumption patterns, buying behaviour. A few might delay their shopping plans.
Quick getaways for shopping to Dubai, Bangkok, London, Paris will also have to wait until international flights are fully operational.
Eventually, Indians might snub international luxury brands and opt for goods created by ‘designers back home and the country’s exceptional crafts and rich textile. Consumers will prefer customized, exceptional pieces of design, which is made in India.
India is no stranger to luxury.
During the lockdown, the digital push by Indian companies have created immense awareness of their products. The national campaign to support the local industry has instilled a sense of pride in ‘make in India’ products and services, encouraging more people to join the movement to support craftsmanship and sustain the economy.
We believe that this pandemic crisis could be the perfect opportunity to rethink the word ‘luxury’, rightly or wrongly used by many categories in the Indian market, and to reorganize the sector.
How long do you think the Indian luxury retail sector will take to recover from the slump?
Luxury brands have not yet recovered from the aftermath of demonetization and are now faced with the pandemic crisis.
To rebound, luxury brands will have to make quick decisions about their digital presence in India, as online shopping will definitively be the future of this country and its economy. The brands will have to be supported by unrivalled reform agenda from the Government and a specific priority for investments in digitalisation.
The right kind of support and collaborations will help luxury retail recover soon.
What should brands do to woo their Indian consumers?
Luxury brands will have to act without delay to adapt to the new changes, offering specific responses and identifying new opportunities at the same time.
We believe that International luxury brands will have to rethink their strategy in depth, not only in India, but in the rest of the world.
What do you think will be the new normal on luxury e-commerce sites and retail outlets?
The post-pandemic results seen in China have confirmed that E-Commerce is a crucial channel for luxury brands.
We believe in the potential of the technology to gap all the challenges related to the fragmented market and its diversity and to help overcome new challenges related to the pandemic crisis: changes in needs, choice and behaviour.
Some solutions already used by some companies during the pandemic crisis, will be even more diversified in terms of flexibility and personalization to answer the new needs: virtual shopping experience with in-house stylist, booking private appointments online, personal shoppers, trained salesperson and home delivery across India.
Safety will also be a big concern and brands will have to incorporate the best social-distancing and sanitisation practices in their shops.