Euromonitor International, a London-based market research company, in its public reports, projected India’s luxury goods market to grow from $6 billion in 2021 to $8.5 billion in 2022.
Cartier, Prada, Louis Vuitton, and Rolls Royce are just some of the names who have reported an increase in sales post-pandemic in India. Will the post-pandemic luxury splurge in India will only spill over for long term effect? Safir Anand, IPR lawyer, who has been on the board of platforms like FDCI, JLF and has been handling the IPR mandates of brands like Coco Chanel, Christian Louboutin, Hermes, Georgio Armani and others shares his insights in an interview with Business Today. Excerpts:
BT: The two years of COVID-19 pandemic and the ensuing lockdown influenced how people wanted to spend their money. Worldwide, people started compensating for the two ‘gone’ years from their lives by taking the splurge route – has this spending trend affected sales of luxury brands in India?
Safir: When COVID-19 hit in 2020, there were understandable fears due to lockdowns and malls and stores shutting globally including in India but the transition to e-commerce ensured that the customer had an opportunity to engage and purchase from their favourite brands even during that period. In fact, luxury goods in many cases are seen as investments and due to uncertainties, many people saw such purchases as security. In 2021 itself, when lockdowns eased and customers overcame their fears of stepping out, things started looking very different.
Economic activity increased as customers who had halted their plans during lockdowns took to shopping for their weddings and holidays and to satisfy their appetite for luxury cars. According to NielsenIQ reports released recently, due to the easing of semiconductor shortages, passenger vehicle sales are also expected to pick up. In 2022, Mercedes Benz had record sales in India and continues to project a positive trend going forward.
BT: What about supply and demand – is there a long wait at the luxury stores? Are customers pre-booking the latest launches? Which brands have witnessed a surge in post-pandemic demand?
Safir: Supply has hit many brands’ ability to have a faster turnaround in delivery and service satisfaction to their customers. Even in high-end brands of watches, cars, and premium bags, while demand has kept up, supply chain issues due to the effects of the pandemic, lack of staff, and other global issues have let the customers down. This has also given the industry the much-needed push to modernize and overhaul its supply chain management systems. Demand forecasting and inventory planning have never been more important than right now.
While the trend of long lines outside stores continues, luxury brands have been trying to stay appealing to their customers by offering customised opportunities for purchases, including prioritising special customers with limited edition pieces, opportunities to special customers to buy the product before the product hits the larger customer base and more.
Cartier, Prada, Louis Vuitton, and Rolls Royce are just some of the names who have reported an increase in sales post-pandemic.
BT: Has the volume of luxury goods sales gone up over years? By how much?
Safir: Earlier this year, Euromonitor International, which is a London-based market research company, in its public reports, projected India’s luxury goods market to grow from $6 billion in 2021 to $8.5 billion in 2022 and the current trend continues to support this projection. In fact, the projected growth rate has breached pre-pandemic levels.
BT: The grey market for luxury goods is increasing every day – this is a fallout of brand literacy in India. What legislations are in place to stop counterfeiting in India – is India among the largest markets for Chinese counterfeit dumping?
Safir: India has no independent legislation that specifically deals with anti-counterfeiting. However, protection from counterfeiting is available across the various Intellectual Property Law statutes, for example,
Section 104 of the Trade Marks Act, 1999 imposes criminal liability on any person who sells, lets for hire, or exposes for sale or hires or has in his possession for sale, goods or things or provides or hires services to which false trademark or false trade description is applied;
Section 63 of the Copyright Act, 1957 makes infringement or abetment of infringement of a work a criminal offence. Counterfeiting can also be considered an act of cheating under section 415 of the Indian Penal Code. The IT Act seeks to curb illegal infringing activities conducted through the use of computer systems and technology.
The Drugs and Cosmetics Act, 1940 stipulates procedures to counter adulterated, spurious or misbranded drugs and their export from India. India is one of the major markets for Chinese counterfeit dumping. India has already imposed anti-dumping duty on several products to tackle cheap imports from various countries, including China.
BT: Which home-grown designer do you think has the possibility to create a global impact?
Safir: I feel Manish Malhotra is a visionary and is taking the right approach with a focus on global expansion. His ability to appease the sensibility of his consumers is unparalleled and with the recent stake purchase by Reliance Brands in his business, I feel Manish is already on his way to be a global powerhouse.
Additionally, Sabyasachi Mukherjee also has a good business aptitude and has been able to create a good global expanse of his creations.
Rahul Misra is also an interesting name that comes to mind and has created a differentiated presence for himself and his brand including internationally.
BT: Will the splurge trend on luxury buying subside in the times to come?
Safir: For now, due to supply chain disruptions, the luxury industry is sitting on many pending orders which shall, for some time to come, positively add to their sales. Even otherwise, unless there is a black swan event, the luxury industry appears to be growing positively which is also reflected in projections made by industry leaders and independent agencies.
BT. Do you foresee any correction in the issue of selling and purchase of counterfeit goods?
Safir: The Global Brand Counterfeiting Report 2018 revealed a growing problem in the luxury industry, where online sales of fake goods accounted for 31 per cent of total counterfeiting-related losses in 2017.
Social media platforms have become key marketplaces for counterfeit luxury goods. While brands are employing AI and dedicated teams to monitor online activities and the Gen-Z customer is projected to rely on online sales, it is safe to say that for some time to come, customers can rely on physical stores of the brands and also prefer walk-in purchases due to the store experience.
Also Read: Why CARE Ratings shares zoomed 18% today
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today