Understanding how to target India’s thriving luxury market is greatly driven by their buying behavior. Exactly who are “India’s super rich” anyway? Luxury brands know their target is to reach India’s rich dispersed across the country’s smaller industrial cities. The only problem is that these particular potential wealthy consumers are wary of shopping online. So what’s exactly working for luxury brands when it comes to marketing strategies to connect with India’s luxury market?
How about trunk shows! A trunk show is an event in which vendors present merchandise directly to store personnel or customers at a retail location or another venue such as a hotel room. In many cases it allows store personnel to preview and/or purchase merchandise before it is made available to the public. Typically, clients view the merchandise, place orders, and then wait for the vendor to manufacture and deliver the goods. If the merchandise has a designer, the vendor may choose to have the designer present at the event to add to the customers’ experience. Prototypes, samples, remnants and leftover items from runway shows are also sometimes offered at trunk shows. Trunk shows may be open to the general public and advertised in the mass media or may be confined to special customers or those on a mailing list.
To reach India’s new millionaire households–at least 44% of whom reside in second and third-tier cities, a Kotak Wealth Management report shows–these companies rely on trunk shows…
The wsj.com breaks down the top five factors explaining the growth of India’s luxury market.
#1 Rising Wealth – The number of millionaire Indian households worth 250 million rupees ($3.8 million) grew by 17% from 2014 to 2015. That figure is expected to more than triple to 348,000 households over the next five years with a combined net worth of 415 trillion rupees, according to Kotak Wealth Management.
#2 Big Spenders – Luxury-goods sales in India grew 25% in 2014, compared with 7% in China, according to research firm Euromonitor.
A bag is 8% to 10% more expensive in India than in Europe or the U.S. due to import duties and luxury tax. Indians prefer shopping abroad, say analysts, and are familiar with luxury brands’ latest lines.
#3 Locating The Money – Over the next five years, spending in the Indian luxury market is expected to more than double to 236 billion rupees from 132 billion rupees, according to Euromonitor.
And the wealthy in India are spread out. Some 44% of India’s millionaires now live in emerging towns and cities, according to a Kotak Wealth Management report.
#4 Changing Taste – International luxury brands command only a tiny share of the Indian market, where they face strong competition from local fashion designers and jewelry makers. Indians prefer traditional dress and jewelry but shoes, bags and watches from global brands are a hit. Indians are also developing a taste for high-end skin care, expensive luggage and fine wine.
#5 Consuming Offline – Luxury buyers’ preference for bricks-and-mortar stores in India is partly driven by their desire to “touch and feel” goods before they make a purchase and a fear that goods bought online could be fake. A customer’s preference to buy in-store is likely to continue over the next five years, according to Shreyansh Kocheri, an analyst with data provider Euromonitor.
Trunk shows are particularly popular in the bridal industry, in which January through May is trunk show season. At trunk shows, brides can view a larger selection of a bridal designer’s collection than is normally carried in a bridal salon. Online or virtual trunk shows are gaining traction in the luxury sector. Bergdorf Goodman held its first virtual trunk show in 2010, and Salvatore Ferragamo launched its first online show in August 2011. Linda Fargo of Bergdorf’s labeled virtual trunk shows “the future.” Retailers add behind-the-scenes footage and customers make online purchases, usually pre-season and at full price. Many trunk shows online allow pre-order with a deposit.
While online trunk shows may not be popular in India now….However, luxury brands are also looking to educate consumers in India on the value of online trunk shows from reputable companies. This could be big! Emerging luxury brands should also start thinking in this direction of online trunk shows to reach India’s luxury market… Enhancing the value of trunk shows and technology will be a major marketing strategy for luxury branding.