While the international brands, such as Michael Kors, Kate Spade, Coach, and Charles & Keith, have a strong foothold in the luxury market in India, the affordable luxury market is no less of in terms of size (₹1,400 crore), growth (40 per cent) and number of local players (such as Capese, Da Milano, Cord, and Nicobar). Some of the premium luxury brands are in competition with many domestic niche players, who are positioned in various ways — minimalistic designs, colourful, Indian-inspired items, and unique craftsmanship — to handle the heat.
Hardik Mehta
Consumers
Type 1: Brand-conscious consumers who want status symbols. These people may buy from places such as London or Singapore. The usage of the products is infrequent and mostly during formal occasions. They are willing to spend anywhere between ₹12,000-₹25,000.
Type 2: This category wants value for money, yet prefers branded goods. Usage is more for informal settings. The younger generation is more patriotic so may prefer products made in India. The average ticket size is around ₹4,000-₹10,000.
Collaborators
Real estate is expensive and regulated. Multi-brand outlets (MBOs) are mostly restricted to luxury malls, which are limited in number and reach. These malls are confined to metro cities. There is a lack of high streets, which are suitable for luxury retailing. Thus, luxury brands generally launch stores in luxury malls or hotels, through joint ventures with local distributors.
Competitors
Here is the current positioning of premium brands. This perception map for handbags (domestic and international brands) shows that there is market gap for affordable luxury in Western-influenced designs.
Here is the analysis for introduction of flanker brands (priced 30 per cent lower than average for e-commerce):
- Icon and Atelier collections
Target group: Women between the ages of 25-35 years, who are more career-oriented and value freedom, and internationally styled. Men, in the same age group, who want to look unique with leather bags and whose needs are more casual than women.
Consumer imagery: Young professionals, indicative of seriousness at work.
Targeting new groups with collections such as Hidesign X Kalki and Hidesign X Disney.
Perception: Great quality, premium end.
Weak associations: Made in India Luxury, ecology conscious, local craftsmanship, fashion setter or influencer.
- Holii collection
Made of leather and fabric. St Holii is a synthetic version, which is priced lower.
Target group: Indian women in non-corporate sector, with global outlook and Indian roots, and colourful projection of character.
Perception: Goes well with Indian outfits and designs.
Brand image enhanced through exclusive stores at Future Group stores. Present at Future Group exclusively at 30 per cent below average price.
Recommendation for 25 per cent growth
Hidesign should enter the untapped affordable luxury market, where customer needs are minimalistic Western designs. The company should not make synthetic bags given its positioning and values, and because that market is crowded by products from unorganised players. Brands such as Caprese are paving the way for removing the unorganised sector with their non-synthetic yet affordable products. Hidesign’s portfolio should be extended, with a new flanker brand that has a new and distinct positioning as given below.
- Positioning for new flanker brand
The products should be positioned as minimalistic Western designer handbags that are your best companion during fun outings. The brand imagery in ads should be along the lines of ‘flirtatious, trendy youth who move on easily’.
Distribution: As a result of the dearth of good retail space, EBOs and airport outlets should carry only premium and high-end offerings (ICON, Jose, Atelier). The flanker brand should first be exclusively launched on e-commerce sites, and then move to MBOs such as Shoppers Stop, Westside and Lifestyle, after significant traffic is observed online (at least 20 per cent of total Hidesign e-commerce revenue).
- Advertising
The objectives would be two-fold:
a) To create awareness about the new flanker brand.
b) Minimising consumer confusion and brand cannibalisation.
Social media platforms such as Instagram and Facebook have become influential enough to increase awareness and engagement with potential customers. While the premium-end brand may call for a celebrity endorser, the flanker brand would be best marketed through social media influencers (with similar profiles as that of target customers).
SEO and social media advertising to be allocated at least ₹10 crore (2.5 per cent of Hidesign revenue) for next 12 months.
(The third runner-up is a second-year PGP student from IIM Bangalore.)