LVMH's Tikka Singh: In the Luxury Market, the Middle Class Is the Game ChangerPublished October 11, 2011 in Arabic Knowledge@Wharton
Tikka Shatrujit Singh, chief representative in Asia for French multinational LVMH (Moet Hennessy-Louis Vuitton) and advisor to the chairman of Louis Vuitton, has spearheaded the development of Louis Vuitton's business in India. The high-end leather goods and fashion house currently has four stores in the country.
According to Singh, affluent customers in India are very similar to, and have the same needs and wants as, wealthy customers worldwide. The real game changer in the luxury market in India, he said, is the aspiring middle class. "We have to be careful that the brand is always positioned at a level they are aspiring to reach," Singh told India Knowledge@Wharton. He added that India is very strong in the premium hospitality sector and that there is a huge opportunity for players to make a mark in this space.
An edited version of the transcript appears below.
India Knowledge@Wharton: You have a very interesting career trajectory. Could you share some of that with us?
Tikka Shatrujit Singh: Well, my career path wasn't planned. My parents never looked at my report card so everything happened by accident, which is perhaps a very romantic way of going about things But I don't recommend it to many people. I graduated from Doon School and went to Delhi University and was then hired by a bank in New York. I spent about 10 years banking across the world. I was picked up by the LVMH group to look at India when India was a closed market. I joined them in 1994 and advised various companies within the group. In 1998, the chairman of Louis Vuitton said, "Hey, I want you full-time with me. And we will decide who else you can advise."
It has been a fascinating journey because [Louis Vuitton] chairman Yves Carcelle is the real pioneer in the luxury business. He's a legend. He has created Louis Vuitton. And [he is] passionate about India and the development of business in India. I consider myself privileged and honored to have been associated with him, professionally and personally, for such a long time.
India Knowledge@Wharton: Let's talk about the luxury market in India. You mentioned it was closed at one point. Now you have a presence in India, as I'm sure do other luxury brands. Can you tell us a bit more about the Indian consumer when it comes to the luxury market? What sorts of trends are you seeing? Who is your target customer in India? And also, do you see an aspirational element in India or is it a very set group of consumers that are going after the luxury market?
Singh: I think this is phase one of development. Phase one of development in a country like India is with the very affluent. They have the same trends as global customers. They travel. They've seen the world. They want similar products as consumers across the world.... The aspiring middle class, which is actually the game changer, they see what Bollywood is doing, what the Indian tycoon is doing, what the young politician is buying and they follow that trend.
India Knowledge@Wharton: What M.S. Dhoni [captain of the Indian cricket team] is doing?
Singh: Exactly. So we have to be careful that the brand is always positioned at a level they are aspiring to reach. It has to be managed very carefully. [For instance], iconic Indian faces from Indian royalty, whose families have had associations with Louis Vuitton for over 100 years -- we do photo shoots with them [and] with top Bollywood stars. Everything is done at the top level to give that exceptional experience with an exceptional brand. No compromise is made. But, as I said, the game changer is the middle class and they want to see this brand associated with exceptionally gifted and talented people.
India Knowledge@Wharton: Can you tell us a bit more about how you're managing the challenges that Louis Vuitton as a brand has to face and what's the strategy going forward?
Singh: The strategy is simple: To get the message across through different media, different avenues of communication; to do very select events that are unique; to always make the consumer, and this middle class, feel that here is a brand that is always thinking out of the box and [that] any experience with Vuitton is a surprise.
India Knowledge@Wharton: Can you give us an example of such an event?
Singh: When we opened our Bombay store, we said, "Let's look for a unique venue." Normally, brands would play it safe and go to a five-star hotel. Vuitton doesn't do things that way. We asked a friend ... if they could give us their home. Now you imagine a billionaire giving his home to a commercial company. It doesn't happen. But Vuitton is the only brand they were willing to make an exception for. This is a home on top of a hill, perhaps the greatest home in Bombay, belonging to a very conservative family.
India Knowledge@Wharton: You're giving me too many clues.
Singh: No, you'd be surprised. It's not what you think. They're a very special family. They gave us access to their home. An event [management] team came, created some incredible scenery outside and also covered their pool with Plexiglas. The dinner was held on the pool, special menus, special champagnes were flown in, [plus] great entertainment. People went and said, "Wow, what an experience." This could never happen anywhere. Then we also lit up the Gateway of India with our logos....
Vuitton has the ability to create exceptional experiences and moments. And even government agencies don't mind us doing [that] because we are very respectful. When we lit up the Gateway of India, it was done in a very tasteful way. It wasn't a brash brand flashing its logos everywhere. It was done in a very artistic way.
India Knowledge@Wharton: Let's talk about this affluent customer in India. You said the patterns you've seen in India are very similar to affluent people anywhere else in the world. That said, I'm sure there are differences. Could you talk a little bit more about that and also, are you seeing affluent Indian wanting a mix of Western fashion, Western designs, combined with some sort of a heritage, traditional element as well?
Singh: As I said, an affluent Indian is a global customer. He's used to seeing Vuitton globally and knowing the product. What is different with the Indian consumer is that he still wants something specially made for him.... We've had a special order section within Louis Vuitton for over 150 years [and] Indian consumers today are some of the biggest spenders. For example, a large steamer trunk with their initials and family coat of arms [can be] made for them. We have a customer who has ordered a shoe case for 100 pairs of shoes. Another customer has ordered a watch cabinet for his collection of watches. They like things specially made for them, which is very interesting. These were traditions which India, in a way, excelled in and they still are very much in vogue today.
India Knowledge@Wharton: Given that you've straddled both India and the U.S. and I imagine several other countries in your career over the past few decades, can you share a few insights about how management practices and management philosophy in India differ from what you've seen elsewhere?
Singh: Management philosophy for us, I can only talk on behalf of Louis Vuitton, is very similar [across countries]. Standards are set by the chief executive officer. What he looks for is some unique qualities in you. Qualities that people don't really evaluate, but are coming to [value] much more, are humility, the ability to appreciate other cultures and integrity. When you are representing an iconic brand, you really need to be careful about how you conduct yourself. You're not selling a mass market product. Ethics, value systems and [being] a custodian of the heritage [are important] because when you join Vuitton, you become a custodian of a very interesting, unique, heritage.
We try to make sure that these values filter down to all the employees. The company is very proactive. It does a lot of training sessions. It has many seminars. There's a lot of interaction between different levels of management, formal and informal, just to make sure that everyone becomes the custodian of the DNA of the brand.
India Knowledge@Wharton: As you see Indian companies expanding abroad, do you see anything in terms of practices, philosophy and values that the Indian management ethos has to offer the rest of the world?
Singh: That's a difficult question. I think Indian management skills are being used more and more across the world. But I'm not quite sure how they can really merge with practices of the West. I think what is happening right now is that we are coming from a very different world. We're very used to a consumer market that is driven internally. I think our companies, Indian traditional companies, haven't had to deal with competition.
I think that's the opportunity for Indian companies to change, become more international. The acquisition of Jaguar and Land Rover by the Tatas is, I think, a game changer because [the Tatas] produce terrible cars in India. There is no comparison between the Land Rover they produce and the cars they produce. On the other hand, they have this Nano, you know, and other Tata vehicles, which are a different story. They're also in the hospitality sector. They're leaders in beautiful heritage hotels. And they've acquired the Pierre in New York. I believe they've redone it. They've acquired a hotel in Boston.
[The Tatas also] own a hotel in San Francisco. So in the hospitality sector I think we're very strong and there's a huge opportunity for us to create this magic of service, of luxury, of being entertained. We're very good at that. But other sectors, I'm not quite sure how we will [perform]. It will take time to adjust. But the opportunity is there. We've got tremendous talent. All they need to do is unleash it.