As CEO of a luxury company, I know that our success is rooted in understanding our customers. Continuing from last week, I will be writing a series of columns on this topic and how it relates to Indian brands, Indian consumers, and the economies of Asia on a broader perspective. The so-called luxury leader of our part of the world is Japan. How did luxury and Japan become so intertwined? First of all, it’s prowess as a financial and manufacturing hub in the decades after World War II provided the country wealth that allowed luxury consumption. New generations followed course; luxury purchases became a habit, and Japan’s luxury spending has remained elevated even in the face of the many problems in its economy.
China has surged ahead to become the focus of global luxury, with every luxury brand rushing to establish flagship stores not just in key locations but also in every third, eighth, and 12th-tier city. The biggest threat to the global brands, however, is local Chinese luxury brands. Over time, it will become increasingly difficult for international brands to penetrate the Chinese market. Why? Chinese brands understand Chinese culture and, importantly, its regional variations.
RAllow me to provide an example from another BRIC country, Russia. In Moscow people flock to outlets by Valentin Yudashkin and Slava Zaitsev. Why? Is it patriotism? No, it is because these brands understand their customers. Russia is a huge country and its people have a distinct culture from both Europe and Asia, whose borders the country straddles. But different parts of Russia also have different cultures. Yudashkin recognises these regional variations and offers different products in different cities, and I do not mean just simple adjustments for the climate. Coming back to India, I recently spoke to a representative of a top luxury brand in the country who informed me that South India do not have luxury consumers. That is not the case.
There are luxury consumers in the southern region, but the merchandise and the packaging has to be different. I recently visited Bangalore and while South India is not home to me, I have been doing some market research in the area (I also studied in Chennai and Bangalore). I know the area well enough to compare it to North India. The people are different, the atmosphere is different and the general attitude there is distinct from Delhi. Of course, the eating and drinking habits are also different, as is the experience desired at luxury venues. India is one of the world’s most diverse countries by nearly every measure. A true understanding of consumers requires appreciating their differences and offering products, services and experiences that cater to those differences while still maintaining the essence of the brand. This is hard work, I recognise. Even the giants of global business can get it wrong.
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