Luxury never goes out of demand: V D Wadhwa

Timex Group India Ltd, a subsidiary of the US-based watch maker Timex, is bullish on the Indian luxury market. In this interview to Alokananda Chakraborty, VD Wadhwa, managing director & CEO, Timex Group India, speaks about the huge opportunity waiting to be tapped. Excerpts.

How would you explain the difference between luxury and premium goods? Which category of brands is affected more by the recession?
Luxury has exclusivity whereas premium has high value with no guarantee of exclusivity or attitude. Mostly, the term luxury is associated with goods that are expensive as the price is related to scarcity, brand and storytelling. Such goods are targeted to high net worth individuals and people who have high level of disposable income.

The desirability to possess them is based on — consumers need for high quality, exclusivity, craftsmanship, precision and innovation. Premium goods, on the other hand, are expensive variants of commodity goods — it is pay more, get more. It's the craftsmanship and quality along with the pedigree of the product having value justifiable to the purchase.

Luxury is recession free while premium gets affected. The percentage of the population that apparently has shrugged off any recession is buying enough Louis Vuittons and Versaces for all of us. During recession, the premium goods are affected more in comparison to the luxury goods. The customer has to adjust to the budget in accordance to their income and the substitution effect comes in to place, and this causes the customer to purchase less of it and move to more of substitute goods.

Is a luxury brand that starts talking about value, demoting itself to a premium brand?
A luxury brand never pushes itself to the level of a premium brand as premium brands could be more affordable when they go on sale and become accessible to the masses. If it's available for the masses, then the status of being exclusive fades away and luxury brands never highlight itself as a discounted brand. For example, Louis Vuitton has never gone on sale; rather they discontinue old seasoned stock.

How do you make a case for luxury in an economy which is in the throes of an extended slowdown?
Luxury never goes out of demand even during an extended slowdown as luxury customers are mostly high net worth individuals and jet setting executives. Aston Martin is a fine example of a luxury automobile brand. The waiting period for them could be anywhere between one and two years as these are customised according to customer requirements. The customers are willing to pay upfront and wait for their customised vehicle. Luxury is a necessity of the rich. For them, the luxury goods are essential commodities even during recession and it doesn't affect their lifestyle.

What's your perspective of the Indian luxury market? What differences do you see in terms of the culture of luxury and consumer attitudes in India compared with the US and the Chinese luxury markets?
China is 20 years ahead of India in experiencing luxury and it would take us at least 10 more years to match up with them. Mind you, the demographics of luxury buyers are no different in India in comparison to the rest of the world. The jet-setting consumer of luxury is a guilt free shopper in the age group of 25-40 years and he is fresh, successful, ambitious and career driven. The belief of being and buying exclusive is what differentiates this genre of consumers from the rest. At the same time, the consumer has the money to spend and is discerning enough on which luxury brands to spend on.

During the past year, the luxury market experienced a digital tipping point, with many brands rolling out e-commerce sites, social media campaigns etc. How should luxury brands approach social commerce?
Luxury products, alternatively known as sensory goods, have aesthetic characteristics that are best appreciated through the use of the human senses. High end fashion brands such as Cartier and Louis Vuitton have created their colossal brand strengths through an emphasis on the aura, creative and prestigious ambience of the brand which is reflected through the retail atmosphere. Luxury brands do not indulge in mass marketing, rather promote themselves via social media campaigns and offer personalised services to their customers through their own websites.

Are affluent consumers doing more research before making purchases now?
The affluent consumers are smart buyers and conduct proper online research on the latest fashion products prior to purchasing the product. The biggest trigger amongst this set of customers is the desire to buy and being the first time owners. They can afford it and own it.

What do you think should be the focus of luxury brands eyeing the Indian market?
Localisation of products should be the focus for luxury retailers and they should strive to become a part of the Indian way of life. Clients love products for two reasons: one is the cultural connect and two is the special feeling of owing something not available anywhere else in the world. Timex is the only international MNC with manufacturing facilities in India and to that extent we have been able to connect with the Indian consumer better.

What are the luxury brands in your portfolio and how have they performed over the last three to five years?
India is the fastest growing market in our industry. The whole new fashion and luxury segment at Timex was brought to India three years ago with Versace and Ferragamo under its umbrella of brands. The growth has doubled in the last three years and Timex has performed 200 per cent of their last year's expectation.