“The success formula for retailing luxury watches in India is anything but a secret”

“The success formula for retailing luxury watches in India is anything but a secret”

In conversation with Franck Dardenne, general manager and country head, LVMH Watch and Jewellery India, on his game plan for the Indian market 

MADHUMITA PRABHAKAR

FRANCK DARDENNE, GENERAL MANAGER AND COUNTRY HEAD, LVMH WATCH AND JEWELLERY INDIA PVT. LTD.

When Louis Vuitton Moet Hennessy (LVMH), the French multinational luxury conglomerate, planned to setup its watch and jewellery business in India in 2003, it was received with a lot of scepticism due to the domination of grey markets, unfavourable market regulations and taxation systems. Today, 10 years hence, the brand, which sells Tag Heuer, Zenith and Dior Horlogerie watches in India, still faces these constraints but enjoys a 12.5 per cent market share and is aiming for a market leadership position in the next few years. “Today around 60,000 Swiss luxury watches are sold in India every year. As you can see, this number would not correspond to a big percentage of the Indian population, but what matters is that it is growing by 20 per cent every year and that’s a positive sign for us to continue to penetrate in this market,” says Franck Dardenne, general manager and country head, LVMH Watch and Jewellery India Pvt. Ltd.

Dardenne has been associated with the LVMH brand since 2002, and has worked in the sales and marketing division of Tag Heuer in Korea, Japan and France. In his current role, he is responsible for the LVMH Watch and Jewellery portfolio in India and the sub continent – Pakistan, Bangladesh and Sri Lanka. In this interview, he shares with us insights about what makes a luxury brand tick in India, the challenges faced in such a dynamic market and, the brand’s expansion plans in the country.

How are each of your product verticals – Zenith, Tag Heuer and Dior – performing in India, today? What would you say are some of the factors driving its demand in this market?

Tag Heuer has reached a leadership position in India in the past decade. In fact, despite unfavorable market conditions over the past two years, it has grown significantly better. This is primarily because, firstly, the uncertain economic environment led customers to lean towards brands that are well known and safe to invest in. Moreover, after a decade of consistent investments, Tag Heuer opened new boutiques in key locations, which further strengthened the brand’s presence. But, the main reason, as is always the case in the luxury segment, was in introducing a successful line of watches.  For instance, the Calibre 1887, which powers the model, Carrera chronographs, was introduced at a time when the Indian consumers started understanding the watch-making know-how. Similarly, the steel and gold Aquaracers gained popularity because both metals are well received in the country.

On the other hand, having been introduced recently, Zenith, which is more niche, garners good demand from the high-end luxury segment. For instance, Christophe Colomb, the academy model watch, has been recognised among the finest Swiss watches and, thus, appeals to collectors. Lastly, Dior Horlogerie creates a good appeal among Indian women and, particularly, the Dior VIII series operates well in the high-end segment, at an average price of Rs. 3 lakh.

Today, if our brand is successful in India, it’s because we have continued to invest in the business, despite challenging environmental conditions. We were among the first to set up a subsidiary in India and will continue to bet on this market.

Today, we have seven boutiques in India. We plan to double this number in the next two years, and setup 20 stores in four years. After more than a decade, we are less dependent on the advice of retailers and drive new customer traffic within the multi-brand stores. Moreover, the more the presence we create, the more the visibility and desirability for our brand.

Given the market dynamics, what are your current challenges in sustaining a luxury business in India? 

Contrary to the size of the market, the competition is quite fierce, and this is the foremost challenge for us. Every morning, you’ll be surprised to see the number of insertions in key Indian tabloids. Compare the price you pay for that space to the number of watches you sell, and you’ll know the pinch of competition. Nevertheless, such moves raise the standards and push us to do our best to sustain our positioning. Moreover, it helps educate the market about the appeal of Swiss watches.

Today, if our brand is successful in India, it’s because we have continued to invest in the business, despite challenging environmental conditions. We were among the first to set up a subsidiary in India and will continue to bet on this market.

A second challenge we face is in coping up with the lack of availability of retail space, the regulatory policies and high custom duties. It is very difficult to operate profitably in India with such duties. We would prefer to invest that money in promotion and in retail.

How does the luxury watch market in India compare to that in an emerging market such as China?  

Tag Heuer created its subsidiary in India the same year as it did in China, in 2002. However, China ranks much higher in terms of Swiss watch exports than India does, because the Indian economy opened in 1991, ten years after China’s did, which means, the middle class has emerged earlier in the latter market. Moreover, the space for luxury retail is more developed in China, with the presence of high-end malls and a stronger focus on luxury goods within malls. Nevertheless, India has encapsulated a market leadership position in India with respect to Tag Heuer alone.

What strategies do you adopt to sustain your market presence and succeed against your competitors? 

Today, if our brand is successful in India, it’s because we have continued to invest in the business, despite challenging environmental conditions. We were among the first to set up a subsidiary in India and will continue to bet on this market. For instance, while Chinese consumers prefer ultra-thin watches, India consumers prefer models that are in line with the brand’s DNA. This gives us the confidence to create a continued presence in this market. In fact, we want to go one step further and educate our customers about Swiss watch manufacturing processes.

It’s been more than a decade since LVMH entered India. Can you share a few lessons you learnt about setting up and operating a luxury business in the Indian market? 

The first lesson I learnt was that it is possible to build a successful luxury business in India. When we setup our first store at New Delhi, in 2003, many people told us that, with the domination of grey markets, we will never succeed. Today, the brands that were reluctant 10 years ago are now following the same path and are setting up subsidiaries in India. I don’t deny the fact that the current regulations and taxation systems affect operations, but, to achieve success in the long run, we need to pay attention to the market conditions and plan our moves tactfully.

Secondly, the success formula for retailing luxury watches in India is anything but a secret. Watch is a wholesale business in India more than in any other country, so, relationship with dealers is very crucial and takes time to build. The dealers are the ones who build a brand and help us achieve growth. Moreover, consistency in communication results in greater profitability. If you notice, we’ve ensured that we associate Tag Heuer only with Shah Rukh Khan.