High inflation, costlier loans and a shrinking job market are triggering anxiety among many Indians, but one trade seems immune to the economy’s downturn — the business of luxury goods.
Western luxury brands have not changed course despite the global financial meltdown that has forced companies in other businesses to scale down their India plans.
“The slowdown has not had an impact on us,” said Christian Blanckaert, senior executive vice-president at 170-year-old Hermes. “We don’t see any risk in entering the Indian market right now. There are definitely enough buyers who are willing to shell out huge sums for what they are determined to own.”
India’s rapid economic transformation and global integration over the last 15 years have created a large pool of consumers for luxury products. Even at one per cent of the population, the luxury market in India adds up to 10 million consumers — twice the population of Singapore.
The DLF Emporio mall in Delhi that opened this August houses more than 80 brands, including Louis Vuitton, Christian Dior, Tiffany and Co, Cartier, Harry Winston and Fendi, among others. For brands such as Cartier and Giorgio Armani, it is their first outing in India.
DLF Emporio gets 1,000 visitors daily — considered a good crowd in this trade, said a manger at the mall.
“The market is surviving on the well travelled, well educated and affluent population of the country,” said Tikka Shatrujit Singh, advisor to the Chairman of Louis Vuitton Moet Hennessy Group.
The appetite for luxury goods is not limited to big cities alone. Zaffar Sareshwala, a stock broker who branched out to start a BMW showroom in Ahmedabad in April, said he had sold 50 cars in the first six months against a full-year target of 56 set by the German carmaker.
“Looking at the response, next year we plan to sell 100 cars,” said Sareshwala, for whom most buyers came from Ahmedabad, Surat and Rajkot.
Bentley has seen double-digit sales growth since it opened its first showroom in India in 2004. The company has sold 100 cars, which cost between Rs 2.2 crore and Rs 4 crore, in the past four years, said Satya Wagla, MD, Exclusive Motors, the dealership for Bentley in India. Exclusive Motors also began selling Lamborghini in 2006, and has sold 22 so far.