By Sushmita Choudhury
March 18, 2009
When you know you are not getting an increment this April, does it make sense to splurge on a designer dress? What if it’s a Rs-26,000 Versace dress being offered at half the rate? On hearing about this sale, 25-year-old Bhavna Krishnaraj had only one question: “You mean I get to own Versace for the price of a month’s partying?” Adds the sales executive and part-time actor who divides her time between Delhi and Bengaluru: “I spend over Rs 13,000 on dining out, discotheque fees and weekend driving holidays.”
When the recession started in the second half of 2008, luxury retailers predicted that high-end brands would be immune as their target group would neither tighten their Chanel belts nor compromise on their lifestyles. Six months on, terms like recessionista and chicko-nomics are in and the Richie Rich club is shying away from luxury. This only means it’s party time for aspirational customers like Krishnaraj because high-end brands, desperate to encourage footfalls, are rolling out unheard of discounts, some even going up to 70%.
Some good bargains may be over as this is the time retailers typically start unveiling fresh stock, but don’t lose heart. There are plenty of end-of-season sales that show no signs of ending. Says Abhay Gupta, executive director, Blues Clothing Company, that represents several top labels in India, including Versace: “Discounts encourage the undecided, aspiring customers to be drawn into the client base. India offers a very large aspiring class that wants to get into the luxury bracket and these promotions help.”
|“Given the current economic situation, every retail segment, including luxury, is getting impacted.”
– Devangshu Dutta, CEO, Third Eyesight
Apart from Versace, Ashish Soni and Corneliani are also trying to tempt impromptu purchases by offering 50% discounts. Crave Armani? The world-famous suits at the Delhi outlet are now 40% cheaper. At the Malini Ramani outlet, last season’s creations probably cost less than your mobile phone bill. For example, a dress costing Rs 9,500 last year is now going for Rs 2,000. The good news is that most designer brands also have accessory lines. So even if you can’t make place in your wardrobe for a high-maintenance designer outfit, consider picking up add-ons, be it belts or bags. They cost less than apparel, yet carry the same snob appeal.
In addition, Delhi’s Emporio Mall, which houses only luxury brands—Dior, Harry Winston, Louis Vuitton and Tarun Tahiliani, to name a few—has an exciting month-long promotion under way. Shop for at least Rs 10,000 at the mall, which should not be difficult given the price tags, spin the fortune wheel at the lobby and walk away with guaranteed gifts, ranging from a discount voucher for one of the stores in the mall to free gifts. In addition, if you participate in the lucky draw, you may drive home in a BMW.
The cut-price couture mania is not limited to the capital. Many a luxe store at The Collection-UB City in Bengaluru has announced a sale. For instance, Moschino is selling its inventory at half the marked price. Also at Bengaluru, Samsaara, the multi-brand luxury boutique housing collections by top Indian designers, is offering a 50% discount. If you don’t think Rs 1,500 is too steep for a negligee, then Etam is the place to go. The luxe French lingerie brand has a flat 70% off on its entire stock at its Bengaluru and Delhi outlets.
While recession-proof luxury has been globally established as an oxymoron, the India story stands out. This is one of the very few retailing hotspots where high-brow brands that, as a rule, don’t mark things down, have been compelled to offer rebates. For instance, Versace CEO Giancarlo Di Risio recently commented that the brand’s core customer did not queue up for bargains at post-Christmas sales, but was “on the slopes in St Moritz or on a boat in the Caribbean”. Yet, the outlets in India have not balked at catering to bargain-hunters.
Interestingly, most luxury retailers cringe at linking these bargains to recession. Gupta, for one, quotes surplus choice to explain lower same-store, year-on-year sales. “The same customer is being chased by too many brands in a particular product category. Our margins are impacted by higher costs on rentals and other operational overheads rather than recession, which is more of a mediagenerated hype than reality,” he adds. So some brands are calling it the end-of-season sale, while others term it a promotion and most of them don’t advertise it loudly.
Whatever it’s called, it’s probably your first chance to own designer labels without robbing a bank. You’d better hurry, though. These offers are open ‘only till stocks last’. Also, the bargain bonanza is not going to be there for much longer. Industry experts are unanimous in their belief that demand will pick up again in the next six months.
What if consumers continue to play scrooge? According to Devangshu Dutta, CEO, Third Eyesight, a specialist consulting firm for the retail sector, brands have three backup strategies. One is to mark down off-season merchandise (so there may be another round of sales before the winter collections are launched). Another option is to open discount outlets so long as the brand can generate enough leftover merchandise to keep such outlets running round the year. A luxury retailer may even consider destroying leftover inventory since the loss incurred will be less than the cost of damaging the brand image. One can only hope that the discount store format emerges as the preferred beat-therecession strategy in India.