Branded Deluxe: Postcard from New Delhi (Column)

The gates to India are opening, very slowly, for luxury marketers

Mark Tungate is based in Paris. His column from the capital of fashion and luxury appears regularly.

Don’t believe everything you read about emerging India,” a local ad man, who wished to remain anonymous, told me at an industry party in New Delhi. “It must be the PR job of the century. I live here—and I can tell you, this is still the 1930s.”

Crawling along the highway from our luxury hotel in Gurgaon, Delhi’s spoiled suburb, it looked more as if two or three centuries were jammed on top of one another. Our hotel was a slick cube of glass and emperador marble. But all along the roadside were shacks of corrugated iron and cardboard. Their inhabitants warmed themselves over open fires, while goats and wild boars picked through the litter nearby. The entire scene was swathed in a dank fog that recalled Victorian London—except that it was a virulent soup of pollutants, noxious to a level “more than 12 times the exposure limit recommended by the World Health Organization,” according to a report in The New York Times on Jan. 25, the day after I returned to Paris.

Even Gurgaon itself is an illusion built on sand. As the Indian Economic Times put it on Feb. 2: “On the surface, Gurgaon continues to stir to life every morning with people rushing to offices within stylized glass-facade buildings and shoppers thronging the malls… But outrageous as it may sound, Gurgaon is on its deathbed.”

The problem, says the report, is water. Although an estimated 30,000 wells have been sunk, the water table is receding and the city may end up dying of thirst. Meanwhile, the party I attended—for an advertising competition called The Epica Awards (for which I headed the jury)—took place at a Bollywood-style palace called The Kingdom of Dreams. Which pretty much sums up the role of luxury in India. Like Bollywood itself, luxury advertising in India offers a glimpse of a world that for most people remains pure fantasy.

Delhi's only true luxury mall, the DLF Emporio

Of course, we know that India is one of the BRIC economies and that international luxury brands have been trickling into the market since the start of the last decade. But after an average annual growth rate of 7.7% between 2002 and 2011, the economy slowed to 5% last year and the value of the rupee has plummeted.

Part of the problem, locals told me, is the way India became rich. “We opened call centres and wrote software instead of actually making things,” said my new adland pal. “So the educated rich got richer, while the poor stayed poor.”

This expanding gulf is visible everywhere you look in Delhi. There’s no downtown shopping district: downtown is a crumbling traffic-choked sprawl where no Ferragamo heel would dare to tread. Luxury brands are clustered in malls that resemble white-walled fortresses.

And they’re not strictly luxurious, either; not by Western standards. The new rich demand value for money, so they prefer what the British would refer to as “high street brands”—more Zara and less Vuitton. Real estate firm Jones Lang Lasalle India estimates that the country accounts for less than 2% of the global luxury market. Consultancy Bain & Co says India contributed just over €1 billion (C$1.5 billion) to the global €217 billion (C$325 billion) luxury market last year.

Genuine luxury brands are traditionally loath to lower their prices to attract cautious mid-level spenders, for fear of undermining their premium status. But both Burberry and Chanel have opened stores in Delhi’s Select City, which is considered a middle-class bastion compared to the city’s only true luxury mall, DLF Emporio. Even over there, luxury brands have been shrinking their retail space to maximize profits in the face of rising rental costs—provoked by a lack of suitable infrastructure. Not only that, they’re hit by punishing import duties.

But India has always been a land of contrast; that’s part of its mythology and its charm. And the luxury market will continue to grow. Cartier certainly thinks so, as its owner Richemont has just applied to open its first single-brand outlets in the country. Under Indian regulations, a third of the products sold by overseas brands must be sourced locally. No problem for Cartier, since many of the jewelry trade’s diamonds are cut and polished in India.

The news reminded me of a scene I witnessed in Delhi.

We were stuck in a traffic jam behind one of the city’s ubiquitous yellow and green auto-rickshaws. The driver—who, I was told, probably lived in his vehicle—had craned his head out to peer at an advertising poster outside a shopping mall. It was for a jewelry brand called Shree Raj Mahal. The slogan read: “The gates to a dimension of luxury, elegance and beauty are open.”

This column originally appeared in the April 2014 issue of Marketing. To get your hands on more of Mark Tungate’s insights into luxury marketing, subscribe today.

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