Throughout its history, India has had a rich and longstanding appreciation of luxury goods and services, albeit amongst a small minority. Louis Vuitton survived the depression thanks to the maharajahs’ passion for the brand; Rolls- Royce sold 1,000 of its cars in India between 1907 and 1947; and some of the most luxurious hotels in the world have been Indian.
More recently, however, there has been a seismic shift in the Indian luxury landscape, fuelled by the unprecedented surge of millionaires. Just two years ago, India counted 173,000 millionaires. In 2015, that number will have more than doubled, to 400,000. The result is that India has become the world’s fastest growing luxury market, expected to be worth US$15 billion in 2015.
Despite this potential the luxury market in India remains a difficult one to crack, both for global and local players. The longstanding restrictions on FDI have curtailed expansion in India by global brands. Equally, if not more important for multinationals and local luxury brands alike has been the extremely fragmented and poorly developed retail and distribution infrastructure. However, a retail revolution, now in the making, will soon shake the traditional foundations. On the surface, this promises to be a boon for the luxury industry. Yet, in fact, another, even greater challenge will emerge. As the luxury market in India consolidates, in 10 years time close to two million people, with the right training and education, will be needed to work in the premium and luxury sectors.
Human resources are important for any firm. For a luxury firm, the human resource factor is vital. True luxury is not just in the product or service alone, but in the overall experience each customer has with the brand. Every touch- point between the brand and the customer either heightens this experience or diminishes it. And, in luxury, a negative experience will never be tolerated.
What does this mean in managerial terms? Clearly, operations are important. At the very least, the right goods have to be at the right venues at the right time through efficient supply chain and logistics management. More broadly, it is essential that the luxury brand continuously evoke the same association through every point of contact. Luxury firms need to achieve that magic balance between delivering standardised and consistent services, while also creating a unique, customised and unforgettable experience for each individual customer. Every employee in a luxury firm, from top management through to the front liners, needs to be selected, trained, motivated and imbued with this understanding.
Having employees with a solid business education, such as an MBA, with a focus on luxury management will thus be essential for the rapidly growing luxury industry in India. Moreover, luxury brands should implement ongoing training for all levels of the organisation, so that all managers and employees understand the elements of superior service quality and their role in delivering it. Only then can ongoing brand loyalty be forged in what will soon be a very competitive luxury landscape in India.