A Hermès store in Delhi. In-store ambience has been a defining feature of luxury retail
Image: Fabien Charuau
Traditionally, luxury goods came with pedigree, an exclusive in-store ambience accompanied by personalised service, and a very high price tag at a physical store located in a tony part of the city. However, if that address is post-scripted with a dotcom, the luxury brand would be sharing part of its address with all retailers, luxury or mass—for example with Walmart.com—stripping it of all exclusivity, and denying customers a unique shopping experience that justifies the price tag.
And yet, as global events lead to slowing sales growth, the changing order of things is dictating that luxury gets an online address. While US economic growth over the last few years did sustain luxury sales, security threats in Europe led to lower passenger traffic and correspondingly, lower sales at regional airports and retail stores. Further, saturation of stores in China and declining Chinese spending on luxury goods, due to the government’s anti-corruption drive, added to the slowdown. So there was jubilation when, after an entire year of stagnating sales in 2016, the global personal luxury goods market—high-end handbags, shoes and jewellery—showed growth of about 6 percent in 2017.
Adding to the general uncertainty are changing consumer lifestyles and expectations of existing consumers, dictated by a digital way of life. The wealthier customers have started shopping online, enjoying the luxury of ordering at their convenience, from a vast selection of merchandise and having it delivered to their doorstep in a day or two. Chinese consumers who fuelled a large part of the luxury industry’s growth in the past also sobered up in their tastes by shunning big logos and ostentation, and felt comfortable mixing luxury with fast fashion.
Finally, the newcomers to luxury, i.e. the millennials, now account for a larger share of premium goods sales. They are fickle, jump from brand to brand, and think nothing of participating in the shared economy by renting a designer outfit for a day from renttherunway.com.
Customers today expect luxury labels to show commitment to human rights and the environment
(This story appears in the 02 February, 2018 issue of Forbes India. To visit our Archives, click here.)