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Luxury brand starts with a very bright idea then a gradual process of innovation in design, selling and reaching out to ever eager luxe seekers. It may also mean recreating the brand promise of a magnificent feel and experience of opulence more magnanimous than the last.

As per Industry analysis and estimate, global luxury goods market is expected to sustain steady momentum with over 4 percent real growth this year. The global luxury market comprises nine segments, including personal luxury goods, cars, luxury hospitality, luxury cruises, designer furniture, fine food, fine wines and spirits, yachts and private jets. The three biggest segments remain as personal luxury goods, luxury hospitality and high end cars. Heterogeneous market trends in Asia are seen driving a stagnant outlook although India’s millionaire population has grown by 27% in the past year. In 2013, India had some 55 people on Forbes global billionaires list with a total net worth of $194 billion up from just 9 in 2004. KPMG report on India pegged luxury market at $8.5 billion and projected to $14 billion by 2016, this looks like a promising premise for Luxury brands that are still procrastinating arrival in India.

In 2012, Boston Consulting Group while explaining the phenomenon of ‘The Shock of the New Chic’ of dealing with new complexity in the business of luxury had underlined the fact that luxury segment consumers are shifting rapidly from ‘having’ to ‘being’ – that is, consumers had started to move from owning a luxury product to experiencing a luxury. This flagged off as a trend, is today seen manifested manifolds with changing demographicsand economy status.

Globally, many markets largely depend on touristic spending for luxury goods and not just on local consumers. The business of luxury experience from private airline services to five star restaurants is growing rapidly and is already worth over $1 trillion of the $1.8 trillion global luxury market.

Varied income groups was never a problem for Luxury brands, they focused on few takers as per the niche market requirements. But now, it appears that within the ‘Luxury’ segment the latest complexity is that of defining the target audience. The lines between middle class, upper middle class and premium or high end class is seen blurring.

New sets of consumers are generating viz. young and recently rich consumers as a result of blitz of VC funded startups. Preferences are changing, segments are changing. More varieties are seen hitting the selling counters to lure the luxe or soon to convert luxe consumers who are at the threshold of experiencing the magnificence of premium brands. The change in profiles of these consumers is challenging the way luxe brands had always been associated with. The circle of luxe consumers is expanding and growing more diverse. There is a vigorous churn and change in profiles of luxury consumers with ever growing appetite of experiencing the product and every time the experience should perhaps be enhanced and multiplied 3X. The craving is growing like Jack’s bean stalk. Luxury brands owners find that it is a fairly homogenized group of customers for whom they have to segment their profiles far more and innovate as per sharper insights. People perspectives are changing in what they seek from luxury brands.

Thorstein Bunde Veblen, an American economist and sociologist in his best-known book The Theory of the Leisure Class (1899), maintained that as societies mature, conspicuous leisure gives way to conspicuous consumption. Both are performed to demonstrate wealth or mark social status, which he further defined as spending more money on goods than they are worth or in order to impress the rest of society through the manifestation of their social power and prestige, be it real or perceived. In other words, social status, Veblen explained, becomes earned and displayed by patterns of consumption rather than what the individual makes financially. Subsequently, people in other social classes are influenced by this behavior and, as Veblen argued, strive to emulate the leisure class. This further implied that utility people derive from luxury goods is indirect. Its usefulness lies in what it conveys about possessor. Thus in economics, Veblen goods are defined as types of material commodities for which the demand is proportional to its high price, which is an apparent contradiction of the law of demand. Veblen goods also are commodities that function as positional goods such as expensive wines, jewelry, fashion-designer handbags, and luxury cars. In India, brands like Cavalli, Armani and Versace seem to be holding the Veblen effect.

Young professionals in mid class segment may be seen going for entry point luxe segments like Tag Heur, Longines,Swatch or Xylus to flash that watch on their wrist that would not have been too common some 5 years ago. There is relatedness to Swiss Alps by many more now rather than only with premium few. Same goes with few other personal luxury brands like shoes and handbags. Designer’s tag plays a significant role for a decision maker. Paris Hilton designer range, Di Milano, Hidesign have found new takers, but Chanel, Fendi or Hermes and somewhat Louis Vuitton, Mark Jacobs and Prada may still fall as Veblen goods targeted to those few very ardent followers who wait in queues for their seasonal collections every time a new range is expected or announced.

Luxury brands are also now seen exploring alternative positioning that of Thoughtful Luxury striving to be seen as ethical, sustainable and a socially responsible organization. Focus of luxe consumers is also shifted with asking for restraint, discretion and privacy while they are still invited for special sales experience of feeling the product connoisseur way. Such examples can be seen where a brands like Gucci came few years ago came up with sustainable soles collection made from bioplastic – a biodegradable material used as an alternative to petrochemicals. Price no longer stands as the real indicator of luxury, it is how the brand is perceivedand it reaches out to society demonstrating its commitments towards social obligations.

Then there is luxury in lifestyle and hospitality. Along with comfort and ambience, staff’s demeanor and presentation and timeliness in reaching out to a customer in need become distinctive factors responsible for repeat clientele and in longer term ‘brand loyalists’. A globally renowned hotel chain that epitomizes luxury, The Milestone Hotel lay a lot of emphasis on offering ‘Thoughtful Touches’ to their customers. They welcome a customer as a true guest with utmost hospitality offering individually designed and decorated bedrooms with custom made fabrics and original artwork, green tea or glass of Champagne on arrival, full range of children’smenus, bathrobes and slippers, personalized welcome gifts and child minding service, 24-hour butler service, Fragonard toiletries, canapés, ice and lemon provided each evening for guests staying in suites, client’s choice of soaps from a selection of world famous perfumeries on arrival while staying in a Suite, free unlimited wired internet not just in every bedroom but throughout the hotel even mobile phones and laptops for hire. Here, customization is the quintessence.

Then there are certain products that are not driven by either by demand or by prices or even by social purpose, they are just passed on from one lineage to another. There is a prelude to it, a history. Carpets, jewels or jewelry are such. Creating luxury brands of these is not utility based and may fall more into the Veblen phenomenon but they get passed onto posterity is what makes them Luxe.

In an age today that of sharing economy where most of the things have turned digital, adding value to services or products along with spreading awareness about it is paramount.

A London based hospitality service provider that focuses on renting out private luxury homes – Onefinestay.com that now also operates in London, New York, Paris and Los Angeles and recently raised D series funding of $40 million to keep growing. . The company provides a service to owners of distinctive and upmarket homes, ‘hosts’, by enabling them to let out their home to guests for short periods while the home is unoccupied. They like to emphasize ‘Handmade hospitality for stays in the finest homes’ that means they offer better than house-sitting, in that you have no responsibilities, more interesting than a self-catered property or serviced apartment because the owner’s possessions, their style, their touch and their personality remain. It lists hundreds of the ‘finest homes’ on its website, and only the best of the best make the cut. The company wants each place to be ‘individual’ and curates each location to suit peoples’ needs.

In high end car one will see the super rich’s easy bent on buying Mercedes S Class, BMW7, Jaguar XJ or if really a Rolls Royce or the Bentley. Till a decade earlier, SUVs were considered premium but yet not luxury as utility had a larger focus than the idea of flaunting a high priced car. In 2002, Porche launched its first hybrid and SUV, Cayenne taking a huge risk of uncertainty and attempted to change consumers’ perceptions of the SUV. They struggled in the beginning and by 2012 after reasonable success they re-launched with a tagline, ‘Utility redefined’. It presented through its advertising a mix of Rational i.e. fuel efficiency, safety and space along with the Emotional wants like power and dream-ability, making it appear much aspirational for its audience.

Then there is luxury that seems genetic i.e. gets passed on as inheritance. For example, antique carpets handed down from one generation to another create a culture of passing on an art form and sophisticated talent of maintaining it. The luxury lies in its fibre, wool, weave, designs or motifs and the customer’s deep love and passion of appreciating its heritage. A pair of cousins in Delhi, Nishant and Dhruv Chandra, have created a niche within a very niche industry. They hold a collection of antique carpets in a treasured cellar that are effortlessly positioned as exclusive. These carpets are of museum quality, carefully chosen over 40 years from New Zealand, Thailand, Persia, Turkey, China amongst other countries. Some of these are from private estates and auctions of royal families. Sheel Chandra, Nishant’s father didn’t have any knowledge or expertise of carpets but kept collecting out of love and learnt more with each purchase. Their collection presumably is the second largest in Asia, competing with the Sultan of Brunei who holds the world record. Here sentiments take precedence over other market denominators of supply and demand.

Traditional advertising has played a pivotal role in upping the stature of a brand and creating some very fine premium ones. Though Luxury advertising is just 0.5% of $6 billion advertising market it needs high levels of craftsmanship, creativity and emotional sentiments while developing positioning. Advertising is about setting a dream or a fairy tale and for that a credible seamless world has to be created. Advertising is about adding to a brand’s character and yet it is not enough. From the carry bag’s design and the way sales staff holds a customer’s bill to that music playing in the backdrop, all matters. If anything falls apart, the dream falls apart.

Mark Tungate, a British journalist based in Paris and author of Luxury World: The Past Present and Future of Luxury Brands describe how the word ‘luxury’ has almost lost its meaning. Once used to describe genuinely prestigious products or places, the concept of luxury has been hijacked by a multitude of aspiring or overpriced commodities, from foot spas to chocolates. The genuine luxury brands have to strategize to lift themselves into the realm of truly elite attracting and retaining their affluent customers. In the book he is seen visiting swiss watchmakers, the Champagne houses of France, the diamond district of Antwerp, the luxury enclave of Monte Carlo, the discreet ateliers of the last craftsmen and a host of brands in Paris – the self-proclaimed capital of elegance. Along the way, he uncovers the true face of today’s luxury industry. He lays a lot of emphasis for truly exclusive brands to use digital mediums well and not be wary of them thinking internet medium is not sufficiently emotional as compared to tactical in person boutique experience. He had also advised brands to look beyond elite luxury branding community akin to glossy magazine advertising that may help spur innovation.

Luxury today is in a more mature growth phase, in which the industry should be more resilient and less prone to economic highs and dips. The future will be characterized by disruptive innovations, such as cashless payments, 3-D printing, facial recognition and augmented reality that will completely change the luxury experience. The ever-sophisticated luxury consumer should increasingly adopt digital and social media and become more sociallyaware. This legitimate concern about diluting the brand’s uniqueness and exclusivity in the broadly accessible online world requires brands to move cautiously to ensure sustainable and long-term value creation.

No less important than the product is its positioning as a luxury item—something unique, with limited availability, and often aspirational. I discussed Apple’s rise to fame earlier how all its products are positioned as a combination of technological innovation and a luxury accessory. There are brilliant case studies to learn and understands the dynamics of these remarkably exclusive brands.

As per Bain & Company Luxury Goods Worldwide Market Study, the key to winning in the luxury market over the next 10 years will be getting ready for ‘Luxury 2.0.’ Success will be defined by a relentless focus on superior customer experience, flawless retail management and people excellence, till then let it be a rich man’s world.

My best wishes, have a great festive time ahead, stay blessed!

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