India is a land of inequalities, and we as Indians, learn to accept, adapt and live with & around these inequalities. The concept that children from the aristocratic, richer families mainly interact and socialize in similar social circles is not essentially true in this case. Most Indian parents, having gone through a lot of tough times in their own lives, make sure that their kids don’t take things for granted and in order to discipline them and show them the ‘real world’, send them to common schools and colleges alongside several other kids from different social backgrounds. Hence, there is a co-existence of the rich and the huge middle-class. As these two kids grow alongside each-other, one from a rich family and one from a middle class family, two things tend to happen....
1)the middle class child, tends to aspire for his rich friend’s lifestyle
2)the rich child starts feeling guilty about his wealth!!!
It’s a natural phenomenon... I have seen students asking their drivers to drop them far from the college gates, slightly embarrassed of their expensive car! And it’s not just about kids or teenagers... this is just the age when it all begins. We have seen our mothers not wear expensive diamond jewellery in front of close relatives who can’t afford the same. When a friend, who can’t afford the same watch, asks about its cost, one usually scales it down considerably just so that they don’t feel bad... Why does one do such things?! I believe that it’s out of guilt... guilt of making the other person feel lesser... the guilt of making someone else envious... And if they are so guilty of showing off their wealth to friends and close relatives, then one can imagine if people would actually show it off on the streets!!!
Several rich Indians buy swanky cars like Porsche or the Rolls-Royce, but never take them out to work! They still go to office in their lowest model of the Mercedes, the basic BMW or Honda Accord. Again, guilt – “I don’t want my staff to feel that I have too much money!” (Tax evasions is another issue – ‘I don’t want to come under the public eye’ – but that could be a logical justification to the sub-conscious guilt i.e. ‘I don’t want people to know that I have so much money and feel jealous’)
So when does the Rolls-Royce or the Berkin or the Chanel dress actually come out of the closet... only when they move out in their own circles - socializing, in parties, get-togethers, special occasions. Hence, the consumption of luxury products in India is very specific to occasions, leading to infrequent usage. So, how can luxury brands drive higher sales, if the usage occasions are themselves limited?! It’s a huge opportunity, locked away in the socio-cultural construct of the Indian value system and I believe that the key to unlocking this opportunity is the high street brands in India.
The interesting thing about brands like Tommy Hilfiger, Mango and Esprit in India is that they aren’t just high street brands; they’re in fact considered semi-luxury brands! The accessories and starting lines of these brands are actually well within the reach of the Indian middle class, however, the semi-luxury status of these brands, intimidates them. There’s a firmly rooted belief in India... ‘Jitni chaddar ho, utne hi pair failao’ (spread your legs only till the length of your blanket) Hence, Most middle class Indians don’t even enter these stores thinking that they will not be able to afford it.
And alongside this, Indians also tend to have an unusually high self respect. In India, one will never find a queue outside a luxury brand store like in other Asian countries! Indians don’t like window shopping unless it is with the intent of buying soon... We don’t like to enter a store and feel that we can’t have it!! Hence, most middle class Indians will not even consider a Mango or an Esprit, even though they might actually be able to afford it!! During a research I was working on for a major fashion retailer in India, I came across dozens of consumers who spent large amounts of money in Indian stores like Globus or Pantaloons, but had never even thought of visiting an Esprit or even a UCB outlet, thinking they're too expensive. It’s only when I took them to these stores that they realized they could very well afford it!
This is a huge opportunity for these high street brands which they have been unable to leverage in spite of their presence in departmental stores. It’s much easier to lure people to check out your collection in departmental stores. These brands could probably have more accessories, belts, wallets, t-shirts, etc. and in-store communication to attract footfalls from within the departmental store, even in the non-‘sale’ days. But they must be cautious enough not to lose their semi-luxury status!
Acceptance of semi-luxury brands by the middle class friend leaves the rich one free of guilt to show off his luxury item!! Hence, the opportunity unlocked for the high-street brands can actually unlock a much larger opportunity for the luxury brands here. It also gives the richer consumers the excuse to start consuming their luxury products more regularly, on a daily basis, thereby benefiting both! Thus, a slight bit of an inclusive strategy adopted by the high-street brands gives the runway brands the liberty to remain with their exclusion strategy. In India however, both seem to be following the same exclusion strategy, hence, I believe the problem for both.
