The writer's crash course in the history of Kapurthala drifted from war to opulence.
At the other end of a large table, littered with books, sat Tikka Shatrujit Singh, in a light blue linen shirt. His forefathers, the Maharajas of this Punjab principality, were great warriors. Over the decades, they fought many adversaries, from the Mughals to Pakistan (father Sukhjit Singh fought in the 1971 Indo-Pak war). However, great grandfather Jagatjit Singh was a traveller and a Francophile. He modelled his palace on the Palace of Versailles, had servants who wore Louis XV-style wigs, patronised trunks built by Louis Vuitton, and commissioned ornaments to Cartier. And when the Prince of Wales, Edward VIII, the future king of the United Kingdom, visited Kapurthala in March 1922, French hospitality awaited. The table settings were Parisian, so was the crockery. The extravagant menu, which started with Tortue Claire (turtle soup), was printed in French. There was no scotch, only French wine and cognac.
But on this sunny August 2016 morning, Shatrujit Singh wasn't in a royal mood. He wasn't going to entertain a request to look extravagant.
"We have picked a location for a photo shoot. But I need you appropriately dressed," someone from BT's photo team said.
"Do you think I am inappropriately dressed?"
"I meant to go with the backdrop (a wall in his South Delhi house crowded with family photographs and portraits), something like a sherwani."
"But I'm wearing a modern shirt. I can wear a jacket, why a sherwani? This is new India. Its casual, fun, modern."
Luxury is going casual. It is becoming less cumbersome, less tedious. This is resonating with the country's young, whose rising disposable incomes are fuelling a culture of conspicuous consumption. Singh knows this well. He, after all, seeded the luxury market in India in the early 2000s by influencing Louis Vuitton's India strategy - he is advisor to brands in the LVMH Moet Hennessy Louis Vuitton SE group. He has been witness to market swings, tribulations, hope and growth of the segment since then.
According to a Kotak Wealth Management report, the number of ultra high net worth households, or HNHs, was 146,600 in 2015/16, up 7 per cent from the previous year; the growth over five years comes to 16 per cent per year. Ultra HNHs have net worth of Rs 25 crore and above. Their top-spending categories are jewellery and apparel, followed by holidays, says the report. The luxury market is chugging along, too. In 2015, it totalled $14.7 billion. According to a survey by industry body Assocham, it could be worth more than $18.3 billion by 2016-end. The survey, whose findings were released in January this year, found that the spending on luxury cars is likely to grow at 18-20 per cent over the next three years, driven by demand from smaller towns and cities.
The business of luxury retailing is being shaped by a handful of first and second generation entrepreneurs. They are influencing the shoes that members of India's glitterati wear, the bags they carry, the watches that strategically pop out of their cuffs and the cars they drive. So, if you want a Canali jacket, you can go to Sanjay Kapoor, the Executive Chairman of designer label retailer Genesis Group. Need an edgy handbag? Priya Sachdev, the Director of TSG International, which retails upcoming brands, can get you a Katherine Kwei. Yasho Saboo, the owner of Ethos, can sell you an elegant Breguet, while your drive for the evening can be a Rolls-Royce bought from Yadur Kapur, who deals in super cars.
Interestingly, both Sanjay Kapoor and Priya Sachdev were bankers before they turned to running own businesses. Sachdev's father, Ashok Sachdev, is among the country's biggest automobile dealers. Yadur Kapur's father had a steel business but wanted his son to try out the automobile business. Together, these four entrepreneurs have taken luxury retailing to phase II - while phase I was mostly about five-star hotels (Louis Vuitton's first store came up in 2003 in The Oberoi, New Delhi), retailing has now moved to malls, where there are higher footfalls, and online. Phase III would be high street, but is still at a nascent stage.
Genesis of Opulence
We meet Kapoor of Genesis Group in DLF Emporio, arguably India's only 100 per cent luxury mall. The conversation drifts to the mall's opening in August 2008. The timing, just before the Lehman Brothers collapsed, was bad. "Everyone expected India to be five years behind China. India was clearly 15-20 years behind China," he says. "Lots of brands that came were disappointed. But in India, you have to take a long-term approach. Eight years later, in 2016, business is doing well."
Kapoor co-founded Genesis Colours in 1998. He re-launched the Satya Paul brand in 2001/02. And in 2007/08, he dived into the sea of opulence with Genesis Luxury Fashion, which markets and distributes international labels. Kapoor has emerged as the maharaja of luxury fashion retailing in India - Genesis Group has 100 stores, half of which sell international brands such as Giorgio Armani, Jimmy Choo, Coach, Hugo Boss, Bottega Veneta, Paul Smith and Tumi. He has joint ventures with British brand Burberry, the Italian Canali, and Villeroy & Boch. He doesn't discuss the company's financials but says it has been growing at 25 per cent compounded annual growth rate over the past five years. It is backed by venture capital. Investors include Sequoia, Mayfield, Henderson Equity Partners, Saama Capital and L-Capital.
What is driving the luxury business? "Women's accessories and men's clothing have done well. Women's clothing still gets competition from a lot of Indian brands," he says. The typical Indian luxury customer is in his 30s and 40s. He says those who walk into his stores are not the uber-wealthy. "The uber-wealthy are equally at home in London, Singapore and Dubai. They shop all over the world." It is the next level that has opened up a big market for Genesis. "Over time, our brands have become aggressively priced. We are now very competitively priced versus the product's country of origin," he says. This has created an incentive for shopping within India.
Kapoor's bet on emerging destinations has also worked well for him. A case in point is Quest Mall in Kolkata. Two years ago, people thought Kolkata was not ready for luxury, but Kapoor opened 12 stores in the city. "The quality of the mall in Kolkata merited the use of full force. Our belief in the industry and understanding of consumer psyche have helped us grow this business."
For Edgy Fashionistas
At Kitsch, the high-street store in New Delhi's Defence Colony that sells 20 luxury brands, Priya Sachdev of TSG International - the fashion retailing arm of The Sachdev Group of Companies - shows this writer Chiara Ferragni, a pop shoe brand. The shoes flirt; the pair's design represents a wink. "These are becoming a huge rage," she says. "There are no mass luxury brands here. These are visionary brands. We are working with young, upcoming brands. These are brands people are talking about and going crazy over." Chiara Ferragni shoes are designed by new Italian designers.
That's the niche the company has created. While Genesis sells well-established brands, TSG caters to "millennials who want something edgy". Sachdev, the investment banker-turned-model-turned-entrepreneur, picks up another pair of shoes to prove her point - leather sandals by British accessory designer Sophia Webster with artful metallic butterfly at the back. A pair costs Rs 47,000.
Selling to the millennials cannot be just a brick-and-mortar affair. While there are two Kitsch stores - one in Mumbai and one in Delhi - TSG is taking luxury online, too. A little less than two years ago, it started RockNShop, an online marketplace.
RockNShop aggregates brands, boutiques and designers. "We are working with both Indian and international designers. Kitsch's inventory is also on the platform," she says. The site showcases Indian designers such as Hemant and Nandita, Rohit Gandhi and Rahul Khanna. Besides Sophia Webster, international designers on the platform include Katherine Kwei, Barbara Bonner, Oscar de la Renta, Dion Lee, Céline and Edie Parker. It also has kids, home decor, beauty and fine jewellery brands. It does 50 orders a month. The average order value is Rs 25,000. The brick-and-mortar store's average order value is Rs 50,000-plus. Though touch and feel matters a lot in high-end fashion, a sizeable population is shopping online. "We are catering to the more evolved consumer who is already shopping on international websites. Indian consumers spend about $85 million on international websites every year. Our USP is that the customer service is in India. There is more security," says Sachdev.
A decade down the line, does she want to be remembered as the fashionista who proved that luxury can be sold online?
"I wouldn't like to be known. I am that person."
Yasho Saboo's team wants to market him as the "father of the luxury watch business in India". Saboo is the CEO of KDDL Ltd, which has been supplying watch components to international brands in Switzerland and India since 1983. He took a fancy to starting a retail business, and founded Ethos in 2003. Ethos Summit, the company's vertical for luxury stores, was launched in 2008. Ethos is today India's largest chain of luxury and premium watch stores, 42 of them. Selling 15 luxury brands - including Rolex, Cartier, Jaeger-LeCoultre, Breguet, Blancpain, A. Lange & Sohne, Bvlgari and TAG Heuer - the company generated billings of Rs 370 crore in 2015/16. Net sales (after deducting value-added tax) were Rs 327 crore. Many of these watches are in the Rs 10-lakh range, but Saboo has also sold a Breguet that cost more than a crore.
In 2011, he launched ethoswatches.com, which displays 7,000 watches (thìs platform only displays and does not sell luxury watches, though). "Online leads are served by our online watch consultants. The final transaction happens when the customer visits one of our stores as recommended by our consultants," says Saboo. He has a team of 29 consultants whose job is to answer questions and guide the potential buyer. This works well as many people like the convenience of researching on the web as well as the anonymity that it brings as they can ask questions without fear that they will be considered ignorant. "The more expensive the piece is, the more they want to research. Four years ago, we realised that the future was in omni-channel. People research on the Net and buy in the store," he says.
What is less apparent behind these large numbers is Saboo's real contribution to the industry. He has, after all, made price discovery easy and watch buying more transparent. Before 2003, luxury watches were mostly smuggled into the country. There was always a question mark whether the piece was genuine. Pre-owned and refurbished watches flooded the market. There were a handful of retailers.
"When we came in, I was convinced this model will not last. Indian consumers were evolving," says Saboo, who lives in Chandigarh. He wanted his company to be professional. "No unofficial imports. Ethos means ethics. Prices of watches were displayed upfront. Prices are visible on our website, too," he says. The website gets about nine million visitors a year.
By the time Saboo entered the business, malls had started coming up. He moved fast. "Because we moved early, we could take positions, in Mumbai, Delhi and Bangalore. Other watch retailers were anxious about the rent and lost out," he says.
In July 2014, a 46-second CCTV footage went viral. Twitter erupted, with some calling it "epic". A white Lamborghini Gallardo Spyder stopped at Le Meridien Hotel in New Delhi. But the hotel's valet did not quite get this Rs 3 crore machine that goes from zero to 100 km per hour in less than five seconds. He pressed the accelerator. The car snaked around the portico, missed a few people, and hit another car before crashing into a wall. A newspaper report said the 15-metre journey "has caused damage seemingly beyond repair".
What happened thereafter is not well known. The car was brought to a service workshop in Delhi where technicians brought it back to shape and re-painted it. "The car is perfectly all right now. We repaired it beautifully," says Yadur Kapur, Director, Select Cars, the Lamborghini dealer in North India.
Super cars - they can cost up to Rs 8 crore (Rolls-Royce Phantom used to cost Rs 8.5 crore) - is a trust business where the most important part is service. "The biggest concern is getting these cars repaired. We ensure a hassle-free experience. All our service managers are trained in either Italy or the UK. I can repair any car," says Kapur.
This has earned him many customers and dealership of four of the world's top five super luxury cars - he sells and services Rolls-Royce, Aston Martin, Lamborghini, and Ferrari in North and East India. The other big super-car dealer is Navnit Motors in Mumbai, but it represents just Ferrari and Rolls-Royce.
Kapur, though, is an old hand in car dealership. In 1998, he was one of Honda's earliest dealers in India. Subsequently, BMW joined the portfolio. By 2008, he had made up his mind to enter the luxury segment.
"Rolls-Royce was looking for a company to represent it in the North. It realised I ran a professional set-up. I knew premium customers well," he says. Before this, people from North India had to buy Rolls-Royce cars from Mumbai.
Kapur is reluctant to share the numbers, though sources say he sells 60 super cars a year. He says Rolls- Royce has grown well over the years. "Rolls-Royce can surprise. I have a 21-year-old customer and a 60-year-old, too," he says. He says the perception that only the young buy sports cars isn't true. "A lot of older customers also prefer sports cars. Age is not a barrier."
Most of his customers are well-travelled and know their cars. Selling, therefore, isn't complicated. This also means he doesn't try to influence the customer. Eighty per cent customers, he says, come pre-determined. "He knows the engine, the specs, the features, the leather trim he wants. He may want the car in a particular paint finish to match the wife's handbag," he says, half-laughing. "This has happened," he says.
So, Select's representatives focus on making the potential buyer experience the product. Often, the super cars are transported in huge trucks to the customer's home for trial runs. After the sale, they do get a bit more demanding.
"I get calls at 12.30-1.00 am. My customers need to know that there is somebody always around to help." The key, like in many other businesses, is to stay engaged.
That brings us back to Tikka Shatrujit Singh.
Over the past two years, Singh has sensed disengagement of many luxury brands with India. Although some see the Indian consumer rising in importance given the slowdown in China and the Middle-East, hopes of "India's potential" were doing the rounds even in the early 2000s, and although the market has grown manifold since, India has largely underperformed compared with other emerging countries.
"In 2003, there was romanticism about India," says Singh. "Foreign luxury brands said they would lobby the government for lower duties and Indians would start spending." That didn't happen. Availability of quality real estate space was a constraint, too. "How can you sustain a business with one mall (Emporio in Delhi)? Little city Dubai has five Louis Vuitton outlets. Of course, India has been a disappointment," he says. India has three Louis Vuitton stores, in Delhi, Mumbai and Bangalore.
Foreign brands also ran into other headwinds - high tariffs (upwards of 100 per cent import duty on luxury cars, for instance) and limits on company ownership.
Disengagement by brands could result in lost opportunity. "Luxury brands have stopped engaging with India or the engagement has become less frequent. They have lost the momentum," Singh feels. How can they set the pace right again?
The key to success is to build personal relationships, says Singh. Engage with India at every level - young politicians, HNIs and, of course, the royalty.
"They (royalty) are the custodians of romantic stories. These families continue to live in India. There is a lot more you can do. Keep the channels open."