Business - Luxury Brands;Where's the slowdown ?

HINDOL SENGUPTA


Luxury brands like Hermes and Christian Dior actually consolidate their position during the recession by entering new markets and sourcing cheaply.

Patrick Thomas lifted the shawl gingerly, with a light touch bordering on reverence. Like so many other Kashmiri shawls, this had a muted, cream base with deft stitch embroidery in summery pastels. Very English rose in summer dabbed with delectable F rench cologne. I could, if I closed my eyes before the CEO of Hermes, see the Scarlett Pimpernel gently place the shawl after the third dance at the Prince’s ball on the shoulders of his beloved Marguerite.

“You see,” said Thomas, his accent as charming as the snooty French luxury giant he leads, “this costs € 6,000. This is made in India and we say Made in India, very proudly. If I were to make this in France, I would have to sell this for € 15,000 and even then, I am not sure that I would get someone to make it in this quality.”


Quite easy, actually

I was getting quite dizzy by these figures so I asked Thomas about the India waiting list for the Birkin bag, for all practical purposes the most expensive hand bag in the world. Sometimes the waiting list for the Birkin, I had been told, could yawn on for years.

“That is not entirely true,” said Thomas, “we do not want to overstate the waiting period. If there is a request for a rare hide and a bag of a particular size, then of course there might be a waiting period but otherwise there should not be any waiting period for a normal Birkin or Kelly bag. In fact, in this store behind me there is a Birkin which you could buy.”

I, of course, can’t. The cheapest Birkin costs around five lakh rupees. But Hermes, once a saddle shop in France, now the most exclusive luxury brand in the world, is betting that lots of people in India can and will.

That’s why Hermes is celebrating an Indian summer across the world, complete with a perfume called Un Jardin Aspres La Mousson, inspired by the rains in Kerala. It’s all very touchingly optimistic.

Over the last few weeks, as I lived through three fashion weeks in India, I wondered where all this optimism in the world of luxury really came from…

So I asked Patrick Thomas if the recession is going to hurt them. He smiled benignly, have you ever noticed how everyone who works in luxury always smiles benignly, and said that there will always be enough people to appreciate quality.

To me that sounded a little vague, so I pestered on and asked if opening in India at a time like this was a nice, opportune hedge (with less people buying shawls for € 6,000, there might be more enamoured people in India willing to fork out cash) or a huge risk.

“People in India have always appreciated great quality. That is what we have in common with India, the love of quality,” said Thomas. “We may have come at the wrong time but this will ensure that we will be here for a long, long time.”

This sounded even vaguer, so I wrapped up the interview and rushed off to catch Sidney Toledano, the President of Christian Dior, Haute Couture.

Dior in India is run super efficiently by my old friend Kalyani Chawla who knows everyone, has everyone on fast dial and always looks like she just stepped off a cruise. (During the time I was meeting Sidney, Kalyani hugged Natasha Poonawalla, of Pune’s billionaire, though very shy, serum family, introduced her to Toledano and within minutes she had already bought a dress!)


Seen them before

Toledano, who no doubt could sense that brisk sales were happening, smiled: “This is not the first crisis we have faced you know,” he says in a hush-rasp. If you have reported on luxury as long as I have, you know that most top sparklers in the business of luxury speak in hush-rasps. I think it is the environment that does it. Somehow whenever I enter a luxury store, I find myself speaking more softly than usual.

But we deviate. So this is what Toledano told me: “We in the business of luxury have seen through World Wars, the Gulf War, 9/11 and every time people thought that we were going to go under. What actually happens is merely a bit of consolidation, some refocusing on which markets to concentrate on but believe me, the world never has less rich people. There are always enough rich people.”

But some things are certainly changing. For instance, almost every gallery in New Delhi, Mumbai or London or New York for that matter, is reporting empty days and dusty canvases. All the new artists who had blazed forward in a seemingly never-ending price march are skidding on deep recession potholes.

This is what really happens. If you have money today and a lot of people do have money, you are just more cautious. So if you are buying art, chances are that you are sticking to the big names, the veterans rather than splurging on the new kids.

The retail therapy of the rich who have recently lost some money will continue to fuel the luxury market but the customers are now shying away from brash, new, experimental brands and concentrating on the Diors and Hermes of the world. If the downturn continues, even in this segment there will be more and more people looking for a good bargain.

So what does luxury do during slowdown? To use that old advertising and marketing example, the brands that survive are the ones who strengthen their advertising and marketing efforts during a slowdown. They are the brands that actually make themselves indispensable for the consumer.


Capturing mindspace

Think about it — if in the customer’s mindset a brand is a must-buy even in rough times, wouldn’t they naturally surge towards it when they have more money?

That’s why that shawl in the hands of the Hermes chief is such a powerful symbol. It is a perfect example of what luxury (or style) does during a slowdown — it enters new markets in full force and sources the cheapest, though possibly the best manufacturing, and gives it a unique marketing spin that makes it ever so much more desirable for the customer