The Voice of Fashion
Darshan Mehta: “I do not like the word luxury”
The president and CEO of Reliance Brands Limited on what luxury means in the Indian market, what sells and why the China comparison is flawed
Imagine a CEO’s chamber (corner office, sorry, as this CEO will insist) with fine handwoven carpets, a long, dark wood table for team meetings, quirky artefacts—miniature models of luxury cars included—books on culture, fashion, business and life, a bathroom with a black sink, that projects a virtual TV screen above the mirror and you have Darshan Mehta’s Gurugram office. Perhaps not quite because the coat hanger that usually holds an Italian jacket is at the moment without a mount. The said jacket, a deep blue Canali sits where it belongs, on the shoulders of the president and CEO of Reliance Brands Limited (RBL). Salted hair and beard, frame as lean as a mannequin, Mehta, 58, is getting ready, coffee in hand—black, no sugar, no milk—to take a flight to China for Tiffany’s 180th celebratory exhibition.
RBL, a subsidiary of Reliance Industries Limited, that acquired Genesis Luxury last year to become the largest conglomerate of international brands in India now has in its portfolio almost 50 brands. From luxury, bridge-to-luxury, premium to high street brands. From Ermenegildo Zegna to Giorgio Armani, Jimmy Choo, Burberry and Bottega Veneta with Tiffany & Co. announced and on its way and many more. From Muji, Mothercare, Marks & Spencer, Pink, Pottery Barn and the British Hamleys the oldest toy brand of the world which RBL bought this year.
Bottega Veneta store in Palladium Mall, Mumbai.
This December or in January 2020, RBL’s newest marriage, that with the 180-year-old storied American jewellery brand Tiffany & Co. will set up a home in India. The first store is planned at Delhi’s DLF Chanakya and the second in Mumbai in 2020 at the Jio World Centre. The latter is being spoken of as a behemoth space for arts, cultural activities, as a deep and wide retail hub, a temple for luxury, an imposing space to symbolise India’s growing might in fashion, retail and the arts.
You would think that Mehta, who passionately and persistently runs, treks and climbs—mountains, not just retail businesses—would be constantly juggling arrival statements. He is not. For all his jet lagged smiles and warm cheer, he is always guarded when he speaks business. Astutely programmed by his experience, he will not toss in the world wide web of his words, a single sentence out of gear or off corporate limits. Corner offices do that to people, let’s believe.
Photo: Saumya Sinha
Darshan Mehta, president and CEO of Reliance Brands Limited.
Mehta’s interviewer may get carried away with the anecdotes, figures and frontiers he places before you but the only way to interview him is to listen. Then read, also, between the lines.
Distract for a moment to consider the conflictual economic climate around us. Even as predictions of a global economic slowdown slowly enveloping us in its grim grip in 2020 dial up, the projections of growth in the Indian luxury market remain supple and optimistic. Assocham figures that placed it at USD 30 million (CAGR—compound annual growth rate) by the end of 2018, project it to surge to USD 50 million next year. By 2020, the wealth of high-net-worth individuals (HNIs) in India will rise by 94 per cent as opposed to China’s 74 per cent.
Interestingly though, none of the jargon that spins in luxury conversations—“growing middle class, surge in ultra-high net worth households or UHNHS, the digitisation of luxury, influencer marketing, emerging markets…” surfaces in the hour long chat with Mehta.
He talks of strategising luxury as emotional buying, the gender dynamics in its purchase and pursuit, why there is no real luxury buying in Tier 1 or 2 cities and why he doesn’t like the word luxury.
Edited excerpts.
Will Tiffany & Co. be the icing on the cake of RBL luxury portfolio?
We have lots of icing and cherries. Georgio Armani, Bottega Veneta, Zegna to name a few. We are also launching a luxury fashion boutique at the Jio World Centre next year. A 6000 square feet space with an Armani café. It will raise the bar on the men’s luxury experience. Even for Bottega Veneta, we are redoing all the boutiques.
For RBL, Tiffany & Co. marks an entry into a new category—jewellery. Watches and jewellery are plugged in one category. The added excitement is that now in India, you will be able to walk into a Tiffany store to select from a range of products priced from ₹7,000 to ₹70 lakhs whether it is for gifting or self-consumption. You can buy a silver chain for ₹7,000 wrapped in a beautiful blue box or an extraordinary storied piece priced a hundred times more. Not only that, Tiffany has 180-year old pedigree that makes it a gold mine of storytelling. From anecdotes to experiences of customers over two centuries to the legacy of precious stones. It stirs a natural, emotional quotient. Other brands can’t match up with this depth of storytelling.
Tiffany & Co.’s Vision & Virtuosity exhibition in Shanghai.
What is RBL’s objective in the luxury business?
First of all, I don’t like the word luxury. At a personal level with a strong middle class upbringing, for me luxury had a connotation of phoniness, a certain hollowness, bordering on making a fool out of someone. Of course we had an aristocratic society but it was mostly European word that depended on creating a lack of access and lack of reach. In an increasingly flat and democratic society that doesn’t hold. I like the word “fine things in life” better. I enjoy the aesthetic beauty of a carpet or an Apple phone. The brilliance of Apple is that it its luxury quotient has not been diluted despite democratisation. In the past, artificial scarcity was the marker for luxury but Apple broke that.
Coming back to RBL, we don’t pride ourselves only for our luxury business. Luxury in a particular genre was never mandated to me in a corporate scenario. The mandate that came to me gave me an open canvas, to shape it the way I wanted not only in the luxury way. I don’t speak at luxury conferences and don’t associate with it unless let’s say in HR practices and how to build careers of young people. For us Hamleys, Muji, Mothercare are as significant as Giorgio Armani. The best way to define RBL is by the flexibility of its canvas. We never just say “fashion”, so that’s why there is Pottery Barn as well. I focus on the top 50 million customers of India, from a marketing, sales, operations perspective. So we are aiming towards the discretionary spend of 3-4 per cent with services and experiences. As the customer becomes more sophisticated, you have to bring a sharper and sharper experience beyond products.
But does luxury sell in India?
Sales are an outcome if you put a certain amount of magic in the approach. Let’s take fashion. I define it as anything that sits on your body. Makeup, jewellery, footwear, clothes. What sits on your body is based on a tripod. The fundamental is that the desire to own it should come from the product itself. The adjacent player is the emotion connected with it which I call experiences around the purchase. Ten years back, one could sell a Gucci bag through a multiple page fashion spread in a magazine with subliminal messaging. But today that’s no longer true. The business of selling another handbag is an emotional one. And this emotion is kindled through tangible and non-tangible experiences. One of them typically is store design. But I call it the hardware of the brand. Then there is the software of the brand which is how you deal with the customer. Sale is thus an outcome of all these. Especially in fashion, if the sale doesn’t happen today, the kindling of a desire is an equal part of the job. I am in the job of creating desire not making sales.
Even so, does luxury sell in India?
The trajectory or the velocity may not be as we may have wanted. The natural instinct is to compare the numbers to China. I think that is a flawed comparison because China is seven times our size in the retail consumption basket and I am not even talking about the economy. They are at 5.5 trillion and we are 900 million. If you take that away luxury does sell in India. Because it corrupts. You wear a Canali suit once and you are not going back to Raymond. Besides, the paradigm of prices has shifted. For the longest period of time, people were changing spends on travel and alcohol but a good shirt continued to be one that cost ₹2,000. Now the paradigm has moved to ₹8,000. And then there is gifting. Gifting has become a way of life and not only during festivals. There is both anecdotal and numerical evidence that luxury sells in India.
More men seem to be loyal buyers of luxury in India than women despite popular myths about women endlessly aspiring for shoes and bags.
That’s true all over the world. The man in India continues to be the primary breadwinner, if not the only one. As the economic engine, his wanting to splurge on something is seen as legit. Women, except in very advanced societies which are socially evolved (even America was 70 per cent a men’s economy and 30 per cent women for many decades) buy less. This is unlike jewellery which is seen as a change in asset class but not as a “spend”. Clothes are money spent. Also, supply is a huge factor. The gender spend or category spend gets accentuated for men because the supply of luxury in men’s clothing is there but not so much for women. At a broader level, when it comes to clothing, women don’t know where to go for international clothing beyond a Zara even though 60 per cent footfall in malls is women. That’s not the case in accessories. On the other hand, in men’s tailored clothing, there are seven brands between Brooks Brothers and Giorgio Armani. Supply thus creates demand.
A campaign shot from Brooks Brothers.
Market research studies constantly talk about growth in spending in Tier 1, Tier 2 cities in India? But do luxury sales really seep down to those markets?
There are only four cities and then there is nothing. India is not a pyramid of consumption. It’s a flat line with a slight peak at the top. The good thing is that the critical mass of that flat line is significant. In absolute terms there is a 20-30 per cent gap between Delhi and Mumbai buying because of the infrastructural limitations of Mumbai. Then there are Kolkata and Bengaluru. But while Bengaluru is the foremost in terms of food and drinks and other consumptions, Ahmedabad is a stronger market for luxury. It has a traditional, super rich market with high wealth creation; it is the centre of design and education. These are the three-four markets for the luxury industry. People don’t realise that the biggest expenditure is on travel experiences today. But when you go to the next socio-economic class, travel is not for luxury but is largely combined with religious experiences. 39 million people went for a pilgrimage to Kedarnath this year. Can you beat that?
Given its might as leader of luxury in India why won’t RBL invest in Indian luxury, create a wide and deep homegrown brand that sells what is fine and uniquely Indian?
Crafts ability doesn’t give any country or company the ability to create businesses of scale. That is the biggest challenge with Indian luxury. A lot of Indian players in luxury are limited by the size of their business vision. We are a corporate and we work with that vision contrary to a family-run business which may be interested in creating a homegrown brand. For us dependence on quality and timelines of delivery are crucial. When we open a Giorgio Armani boutique, we are not worried about number of orders, quality, timelines. That can’t be said about Indian brands. Customers want width and variety while supply chain wants depth—that’s where the challenges of business growth creep in.
Besides, Indian brands don’t want to take a leap of faith and hand over their brands to others for running in other countries. Nor do they work with top line legal professionals. They hold on to their companies as their “creations”, unlike international luxury companies which will go to 50 countries even if they have bad experiences in eight of them.
Jaguar sells most in China, for instance, but is owned by Tata, an Indian company. When RBL bought over Hamleys we did not put an Indian flag on it. It is a myth that RBL as a corporate house must create something out of India. That kind of legacy with the length of time will become immaterial.
