“The other day, my jeweller called saying the bangles I was interested in were available,” says a Mumbai-based PR executive who declined to be named. “I just thought, ‘how unnecessary at a time like this,’ and told them I wasn’t interested right now.” Among the businesses most hit by Covid-19 are anything to do with luxury. Whether it is jewellery, art, clothes, shoes or grand homes, major purchases are being put on hold. Consumers are beginning to exercise restraint, preferring to sit on cash.
A recent survey by investment firm Bernstein and Boston Consulting Group estimates that globally, luxury market sales could be dented by as much as $43 billion. India, whose nascent but growing luxury industry was estimated to be $30 billion in 2018 by Assocham, and projected to grow to $200 billion by 2030, is just beginning to feel the effects of the virus. Domestic demand is taking a hit, and so are exports: India acts as a “back-office” to many western fashion brands to whom it provides raw and semi-finished materials and components. But, as the coronavirus reduces demand from overseas, and as the country goes into lock-down mode with malls and retailers shutting shop, industry insiders see a bleak near to mid-term outlook. As a result, sales — already somewhat muted given our economic slowdown — are slowing.
Cecilia Morelli Parikh, co-founder of luxury retail store Le Mill
With most cities banning large gatherings, weddings, that big marker of Indian exuberance and a barometer for luxury spending in India, stand postponed.
“It has had a big impact on the fashion industry and stores,” says Tina Tahiliani Parikh, who owns the multi-brand boutique Ensemble. “Stopping the flow of NRIs to the country has been another severe blow. As social distancing is now the only way to stem the pandemic, most clients are postponing shopping unless it is urgent. Our teams are helping customers home shop and delivering at home [their web portal should be online in the next two weeks], but the industry is under a lot of stress.”
Fashion for social distancers
- Try Raquel Allegra jumpsuits and Dries van Noten T-shirts (for a bit of drama to pair with your tracks). Brands like Maus from Sri Lanka, and Baon are great. I also think it is a good time to make yourself happy and just wear some great accessories, like Big Janda Vacintho earrings.
Cecilia Morelli Parikh, co-founder of luxury retail store Le Mill, agrees. “People are not looking to buy show-y pieces, since they have nowhere to go,” she says. “They are buying pieces that uplift them while at home, without breaking the bank, and I see this as a foreseeable trend in the future.” Le Mill is fast tracking a website that will launch in two to three weeks, and is increasing its Instagram content, given the brand’s high user engagement on the platform. In fact, it had an Insta-story on the various steps its home delivery service undertakes in light of the virus – including a stylist wearing a mask and gloves while handling the garment, steaming the garment to ensure hygiene, packing it in a sanitised garment bag, and delivering to the client via a private car.
Delhi-based designer Gaurav Gupta is anticipating a 50% drop in sales this month. “Stores have had almost no walk-ins because people are scared to go out,” he says, adding that while some are still coming to his stand-alone outlets wearing masks, he anticipates plummeting footfalls in the coming months. Gupta, whose clothes retail from between ₹50,000 to ₹5,00,000, says wedding orders for the summer months have also been pushed to later in the year, which will impact cash flow. Meanwhile, he is talking to his fellow design fraternity to see how they are grappling with supporting employees, who are scared to come to work but need their income. “It is a Catch-22; if there are no sales, how does the staff get paid?” he asks. For now, he is likely to consider a 50% rotational staff.
Losing their sheen
Mehernosh Heeramaneck, one of India’s most important jewellers, says budgets among the uber wealthy have definitely reduced. “I’ve never seen it like this, it is really scary,” he says. Some potential sales have been cancelled and, as a major buyer of important stones, he has imposed a moratorium on purchases till things settle.
Art’s good tidings
- In the midst of evaporating sales and cancelled events, here’s some good news. On March 16, Sotheby’s Modern & Contemporary South Asian Art auction totalled $4.8 million in New York (the highest total for the category since 2017), with 91.1% of lots sold. The sale saw robust online bidding, with 33% of all sold works acquired online.
Also in disarray are local companies that work closely with western luxury brands. Gayatri Khanna Sabharwal, founder of Mumbai-based Milaaya Embroideries, says that all her production orders for Dolce & Gabbana, Etro and other high-end brands are on hold. “Some smaller companies have even cancelled their pre-Fall orders last week,” she says. “With Italy in quarantine, and numbers there still on the rise, they don’t see an end in sight. This is throwing the entire luxury supply chain into disruption, panic and worry about the near term, since so many people are dependent on these jobs.”
Real estate is faring no better. “There were at least 89,200 luxury units lying unsold across the top seven cities by 2019-end against 81,290 units a year ago,” says Anuj Puri, chairman of Anarock property consultants. He believes no price segment will be immune to the fallout of this pandemic. “In fact, buyers of high-end homes usually prefer multiple site visits, so the need for social distancing will be a dampener,” he notes, adding that “many developers are postponing their new launches and will wait to see how the situation unfolds over the next month or two”.
NS Harsha’s Recent Life exhibition at Chemould Prescott Road
Double down on digital
The art market is also impacted. Numerous art fairs in the region have been cancelled, in which blue chip Indian galleries participate and generate significant sales. Although Roshni Vadehra of Delhi’s Vadehra Art Gallery says that Covid-19 is not affecting them thus far, she predicts a slowdown, given market volatility. With Delhi banning gatherings of more than 50 people, the gallery is not doing any major exhibitions or events.
Shireen Gandhy, of Mumbai-based gallery Chemould Prescott Road, says it is hard to say how seriously this will affect business, “but looking at the global situation [of how seriously the art market has been impacted], it definitely will”. She adds that after a bustling start to the year — with two successful exhibitions of NS Harsha and Anju Dodiya — the city feels like a ghost town. How incredible to imagine that just a few week ago, things were so different.
Even as the world as we know it halts, luxury companies will have to re-think their futures, perhaps turning to AI and digital more aggressively. As Gupta says, “This is a humanitarian crisis and our reaction to this emergency will shape the consequences.”
This is unprecedented and we don’t know what the humanitarian, financial and, most important, the psychological cost of all of this is. For a long time I have been [saying] that… the value system needs to change, with a commitment to buy well and enjoy it fully, and not be flippant and define yourselves by what you put on your body or wear something only once because you’ve been on Instagram. As for us, we are wondering if we should shut the factory. I don’t want to lay people off because no one is going to get a job. Or should we take a pay cut and work three-four days a week? Assuming we don’t have to shut down because of a government directive! It is all too soon to say and this story has to be updated every week
Tarun Tahiliani, designer (to Team Weekend)