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Reinventing Luxury

Reinventing Luxury

From offering luxurious experiences through augmented reality to launching more pocket-friendly collections, the pandemic has forced luxury brands to think differently

Mumbai-based entrepreneur Alok Shah (name changed on request) has an enviable collection of luxury watches. From Rolex and Omega to Cartier and Breitling, Shah owns some of the classiest watches. Buying a watch is like buying art for the 40-year-old as he spends hours at the store trying to understand the craftsmanship and technology of each piece that interests him. He was looking forward to his business trip to Geneva in May this year where he planned to buy a watch from Swiss watch-maker IWC's latest collection. The pandemic forced him to cancel the visit. When business started bouncing back in June, he treated himself to a three-dimensional demonstration of the watch on IWC's website while sitting in his plush sea-facing apartment in Mumbai. He not only got to see the detailing but also got a sense of how his chosen watch would look on his wrist. After a few weeks, a sales executive of IWC's retail partner in India knocked on his door with the watch.

Down South in Visakhapatnam, 35-year-old cardiac surgeon Arvind Rao (name changed on request) had to present a research paper to a panel of global doctors in August this year. Though a virtual presentation, it was a big moment in Rao's life, and he wanted to look his best. He booked an online consultation with Aditya Birla Retail's The Collective whose sales executive created a personalised digital menu card based on specifications mentioned by Rao. It offered a host of uber luxury formal suit brands, even gave details of craftsmanship and the cuts and the fits. The executive also arranged a video call to demonstrate how the suit would look. Rao zeroed in on a pin-striped Hugo Boss suit, which was shipped to him from The Collective store in Mumbai.

Had it not been for the lockdown, he would have travelled to The Collective store in Mumbai to touch and feel the fabric and try out the suit in person. The same goes with watch connoisseur Shah who would never have bought a Rs 4 lakh watch online. Luxury, after all, is all about experiencing the product in person.

However, these are different times. The pandemic has forced the luxury industry across the world to take a hard look at the way it has been doing business for ages. The most glaring change has of course been the 'phygitisation' of iconic fashion events such as the Milan Fashion Week and the Paris Fashion Week which this year turned away from physical runway shows attended by the who's who of the fashion world to virtual presentations.

Integrating digital into business model or offering virtual experiences is just one part of the transformation that luxury companies are going through. Though the $380 billion global luxury industry has taken an over 40 per cent hit during the pandemic (the $20 billion Indian luxury goods industry has shrunk over 50 per cent), the stress had started showing much before. A large number of independent luxury goods wholesalers in Europe and luxury departmental stores in the US had already been downing shutters due to vanishing buyers. One reason was millennials, who prefer 'wearable luxury' and don't care much for stiff-collared suits or one-of-a-kind hand-crafted watches.

The demand today is clearly for casual and fashionable products, a trend which also came out strongly in the recent Netflix show, Emily In Paris, where a legendary French fashion designer's painstakingly crafted collection gets bought out by a young designer duo at an auction who then go on to give it a street fashion look by spraying it with paint. This compels the fashion legend to go back to the drawing board and come up with a more whacky collection appealing to the youth. "People have started dressing up more casually. Luxury is going into street wear," agrees Amit Pande, Brand Head, The Collective and International Brands, Aditya Birla Fashion and Lifestyle (ABFL). Abheek Singhi, Senior Partner and Managing Director, Boston Consulting Group, calls it "casualisation" of luxury. "People today are bargain hunting in luxury and brands which had never discounted earlier are doing so now. The pandemic has accelerated this trend." But that is not all.

Phygital Luxury

A few luxury brands have been talking about embracing digital for a while now. However, most have been sceptical. "We were always afraid of digital as we thought it was difficult to create experiences there," says Dilip Kapur, Founder, Hidesign. "Ecommerce has always been considered transactional, which doesn't fit into the ethos of a luxury brand," says Bijou Kurien, Chairman, Retailers Association Of India (RAI).

However, the pandemic has forced creation of compelling virtual experiences. Watch brand IWC recently adopted augmented reality. One can now virtually walk into its flagship store in Geneva, browse through its collection and even "try out" the watch from comfort of one's home. Similarly, Panerai has launched an app that enables a customer to try out watch straps, while Gucci has launched virtual trial rooms. "Luxury today is all about connecting more deeply with consumers with minimal contact," says Akash Sheth, Group Managing Director, Magnanimous. With consumers increasingly opting for the digital route, luxury brands are trying to increase personalisation. "Brands have also started taking products to homes as people are sceptical about moving out. They have to reinvent relationships, else they will lose out," says Sheth.

Kapur of Hidesign says a lot of time and money is being spent on creating emotional connect through social media platforms which they had overlooked prior to the pandemic. "Our social media pages don't talk much about sale of products. On the contrary, we are spending a lot of time narrating stories of our brand, our efforts to build a sustainable community. We are also connecting with customers through conversations on lifestyle and health."

Her Story, a home-bred luxury jewellery brand launched in February last year, also switched to digital soon after the pandemic struck. "We put in a lot of effort on our Instagram page to tell stories of our craftsmanship and brand. This led to a spike in number of followers. We also did virtual video interactions with our consumers and that paid off," says Ankit Mehta, Co-Founder, Her Story. Mehta's wow moment came when a customer from New York bought a jewel worth Rs 7 lakh for his wife on their 10th wedding anniversary. The brand added a personal touch by getting a poem written for the wife and made a small video on the making of the jewel and got it delivered at their home. "The customer had discovered us on Instagram. Digital has expanded our reach," says Mehta.

Be it Louis Vuitton, Burberry, The Collective, Hidesign or watch brand Frederique Constant, over 50 per cent of their sales during the pandemic have come from digital (store revenues have been almost nil). "Luxury consumers are already getting used to shopping from homes. Brands like Louis Vuitton and Prada have seen more than 80 per cent rise in digital interaction by consumers. This means the new luxury consumer is not afraid to explore that platform of brand engagement," says Smita Jain, Director, Master in Global Luxury Goods & Services Management, S P Jain School of Global Management.

However, one needs to be careful as the digital strategy could backfire, says Kapur of Hidesign. He says Hidesign has reduced its presence in ecommerce marketplaces as it fears that the value approach of marketplaces could lead to dilution of brand equity. "Marketing a luxury brand entails in-depth story-telling and creating a certain aura, which we can do only through our platform. Ecommerce may be profitable but is dangerous for the brand," says Kapur.

"Digital hasn't really filled the void as people are not able to touch and feel the product," says Jayanti Varma, Brand Strategist, Frederique Constant India.

Kurien of RAI agrees that selling luxury on ecommerce platforms could be dangerous. He says apart from creating a complete brand experience on their websites, they also need to carefully fit digital into their physical strategy. He cites the example of Burberry, which built a physical store with digital overtones. As one walks into a Burberry store, a sales person attends to the customer, but there are also videos of the brand's fashion walks with details of design, fitting and so on. "So, if a sales person isn't able to articulate a certain aspect well, the digital story makes it more conversational and engaging. Technology has to be smartly used to augment a sales person's role."

Going Casual

When one isn't able to go to workplace or attend social events, buying an expensive watch, a formal dress or a bag may not be high on the list of luxury brand loyalists. But what they certainly will not mind is stylish lounge wear or athleisure clothing. "A comfortable track pants with interesting embellishments is something that luxury lovers will not mind buying," says Kurien of RAI. In fact, advertising professional Nita Mehta, who never misses an opportunity to buy expensive bags and time-pieces each time she travels abroad, recently bought herself a stylish Nike-Gucci sneakers. "It has Nike's comfort and style quotient created by Gucci designers."

Almost every luxury brand this year has launched a casual wear range. "Gucci has launched oversized hoodies and so have many others. They are more affordably priced too as consumers are careful about spending," says Aashumi Mahajan, Founder, The Lux Maison, an online luxury fashion store. The casualisation trend, says Aman Choudhury, Founder, Luxulo, has also led to luxury lovers wanting a discount. "Luxury, per se, will be more about providing emotional value rather than a symbol of status and affluence."

Casualisation of luxury doesn't necessarily mean that luxury brands are offering cheaper variants, clarifies Pande of The Collective. "Consumers have no doubt shifted to casual. Sales of formal shirts and trousers have gone down, people are buying polos, track pants and flip-flops, but I am not sure if brands are lowering prices. A casual shirt from Dsqaured or a Philipp Plein T-shirt costs Rs 35,000-45,000." Pande says the casual wear foray is part of long-term transformation strategy and not a pandemic gimmick. "We are already placing orders for the 2021 autumn-winter collection. Brands plan their collection well in advance. Their casual strategy may have been fast-tracked but it's certainly not a response to Covid."

"Casualisation of luxury is here to stay," says BCG's Singhi. He says this will help them get into their fold a younger set of customers.


An airline partnering with a bank to launch a co-branded credit card, or a mass retailer tying up with a fashion brand to create a limited edition clothing line, is common. Luxury is also getting into the game. One has rarely heard of a Rolls Royce joining hands with a brand like Rolex to come up with a limited edition collection of watches. In the classical way of doing things, cross-promotions can dilute a brand's long-term equity. However, as times get tougher, brands are looking at capitalising on each other's customer base. "It is an opportunistic strategy. As businesses become normal, it will stop," says RAI's Kurien.

While the Dior-Nike partnership is the most obvious, British luggage brand Boconi has partnered with Italian lifestyle brand Fendi to launch a limited edition collection of briefcases. Closer home, luxury club, The Indus Club, is in the process of entering into co-partnership deals with a host of luxury brands. "Giving access to each other's customer base to minimise losses is the need of the hour for top-end luxury brands," says Harish Thawani, Founder and CEO, The Indus Club. Thawani says this is a 10-12 month trend till the market picks up.

Staying Safe

Luxury brands are going out of their way to convey to customers that their entire value chain, right from sourcing, production, supply chain and even their store, are following top hygiene standards. "Safety and hygiene are being positioned as luxury," says Virat Tandon, Group CEO, MullenLowe Lintas Group. Tandon expects a surge in business of chartered aircraft as the economy opens up further. "High net worth individuals need to travel for business, that's when they will prefer chartered flights to first class in a regular airline," he says.

The Indus Club, says Thawani, is investing in a specialised surface coating that will keep surfaces contamination free. The coating will cost the luxury club a couple of crores, says Thawani. "We are also going to use UV technology in air-conditioning ducts, which will make the air virus free."

Demand for luxury products is at an all-time low today, not because the connoisseurs can't afford it but because they don't have a reason to use the products due to limitations created by the pandemic. Market observers say it will take anywhere between two to three years for the luxury industry to get to pre-Covid levels. But Arun D'Silva, Brand Strategist, Frederique Constant India, sees an upward trend already developing. "As we move ahead, people who were sceptical about spending on expensive products are also beginning to open their purse strings."

However, when the industry revives, it won't be the same as earlier. The basic tenets of luxury, which is price premiumness, craftsmanship and personalisation, will remain, but consumers will consume luxury differently. Stiff collared luxury products and in-store experiences will give way to more casual and democratised collections with experiences becoming omni-channel. Consumers are changing. Brands have to change too.