Thursday, February 14, 2008

Valentine's Day: Big business for luxury brands

In 1891, an Indian prince sent his beloved in London, a Valentine card set in carved ivory surrounded by diamonds. It cost him £250,000. In 2007 a love-struck CEO brought his Valentine a Sabbia Rosa cashmere and silk robe for $3230. This year you could fly her to the Taj Lake Palace hotel in Udaipur and spend two nights at the Royal Suite for $2,500.
Or you could present her cymbidium flowers nicely arranged in a ribbed vase from IK. The tag is Rs 1,71,500—Rs 1 lakh for the vase and Rs 1,500 per flower. You could also gift her a Tag Heuer Aquaracer Lady Watches for Rs 1,05,000.
Well, besides being blind, love can also be illogical. The power of reasoning is proportionate to the spending power of the love-struck.
And for luxury brands it means big business. Brands such as Christian Dior, Hugo Boss, Swarovski and Gucci have unveiled special Valentine collections.
Manishi Sanwal, general manager, Jewellery and Watches, LVMH India says, “Valentine sales account for nearly 10-12% of business share for a luxury brand. It is a heavy buying festival that has seen a significant jump over the past 4-5 years.”
While flowers and jewellery remain the most preferred gift items, the demand for “something different” is growing. It could be a Leiber ring purse for $1,895, an IK rose flower dipped in gold for Rs 1, 300 or a romantic spa package at Galaxy Hotel for Rs 12,500.
Hugo Boss has a special gift hamper for men that includes sterling silver cufflinks, an exquisite silk tie, a calfskin belt, wallet and a key chain), with a tag of over Rs 12,000. Says Harish Chandra, brand manager, Hugo Boss, India, “Accessories are a popular buy as they are compact.”
According to the US’ National Retail Federation (NRF), Americans plan to spend a staggering $17.02 billion this year on Valentine’s Day. Jim Trippon, an authority on the money habits of self-made millionaires in the US says that this year’s day of love will cost the average consumer $1,300.
Closer home, the numbers are equally impressive. According to the Retailers’ Association of India (RAI), the total spent on Valentine’s Day gifts last year was about Rs 12 billion ($270 million).
According to Gibson Vedamani, CEO of RAI, the marketing and merchandising power of romance has grown exponentially over the last few years. "Valentine’s Day in India has been assuming greater significance with every passing year. In 2007, the occasion accounted for Rs 1,200 crore ($272 million) in product sales." He says about 30% of the total spend, Rs 360 crore, is estimated to have been spent on jewellery of various kinds.
“The occasion which started with hearts has now transformed with the evolving preference of the consumer. The trend is towards gifting items with an eye on contemporary design and high usability,” says Deepak Whorra of Episode, the lifestyle store.
He is expecting at least a 50% growth over the last year Valentine’s season. Karishma Manga, marketing head, Dior watches, India, says “We expect 20-25% in sales this month. Valentine’s Day is among the top four festivities in the country. Dior has come out with a Christal Red Sapphire 38 mm limited-edition chronograph with 307 glittering diamonds!

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