Premium brands pitch easy finance and instalments over superior features

Luxury cars, exquisite fragrances, the trend is feeding into various product categories and over the past few years, the trend has been further accentuated by the growing influence of e-commerce

Be it cars, mobile phones, accessories and clothes, whether it is Apple, BMW or Steve Madden; across the universe of luxury products in India, equated monthly instalments or EMI has become the universal and ubiquitous brand attribute. Makers of luxury goods are taking the EMI route as a sure shot way to consumer’s wallet in a market where value seeking buyers are not uncommon even in the premium segment. 

Confronted with consumers who simultaneously inhabit antithetical worlds—where premium features and bragging rights are important and so is the price tag, luxury brands in India have found this the best way to draw buyers in without dropping prices and compromising their premium positioning.  From luxury cars and exquisite fragrances to high-end phones, the trend is feeding into various product categories and over the past few years, the trend has been further accentuated by the growing influence of e-commerce. “It is the mindset that differentiates an Indian consumer from a global one,” Sushmita Balasubramaniam, South Asia Domain Lead, Commerce at market research firm TNS Kantar said.

Take the case of the super-premium iPhone, which has had to go up against intense competition from Chinese smart phone makers in India. In September, Apple launched the high end iPhoneX with a price tag of Rs 91,900. In the run-up to the launch, besides highlighting the features of the phone, the fact that it was available on “no cost EMI” got significant display on banners and ads. As a matter of fact, it even became a talking point on social media with rivals taking a dig at the brand. “Choose wisely between MI or EMI,” wrote Manu Kumar Jain, country head, Xiaomi in response to a tweet. (MI is the Xiaomi smartphone brand)

Auto makers have long embraced the easy finance route. But a dull festive season has also prompted luxury car makers to get more aggressive about EMIs, besides doling out steep cash discounts and hefty exchange bonuses. BMW for instance, is offering its 3 Series for an EMI of Rs 25,333. Mercedes and Audi have similar offers on some of their select models.

Democratising luxury

Such moves, point out marketers and experts, are being driven by the need to democratise luxury. “There’s one thing that all the luxury brands are looking at, democratisation of luxury.  The fact that one can buy premium, luxury segment on EMI reflects that,” points out Balasubramaniam. 

Global consulting firm Boston Consulting Group (BCG) defines democratisation of luxury as middle-market consumers selectively trading up to higher levels of quality, taste, and aspiration. The unabashed adoption of EMI in advertising narratives and as a core value by luxury brands has brought many more consumers into the fold say market researchers.   

To a great extent, democratisation is being driven by the diversified nature of luxury, said Balasubramaniam. “People born into the luxury segment are a small percentage of total. Now the neo-rich  are joining the luxury fold, that is why there is so much action in the so-called affordable segment,” she said adding that the new shoppers are first generation luxury consumers who have made it big. But she points out. even though they have graduated to the luxury segment, their mindset is still the same and they tend to be value seekers. 

Digital push, consumer pull

The e-commerce boom is playing a crucial role in bridging the gap between those that can afford luxury items and those aspiring for it, says Ritesh Srivastava, chief executive at Elitify.com, an e-commerce website that retails everything from a Calvin Klein, DKNY and Biagiotti to an Emporio Armani and Burberry to a Jimmy Choo through a discounted price and EMI.  Close to 40 per cent of his firm’s sales are coming from tier two and three towns. 

“While there was always latent demand,  inaccessibility to malls and good brands was always a challenge. With e-commerce we are leveraging that opportunity in a big way,” Srivastava said. 

For aspirant markets such as India, consumers are quick to lap up an EMI option, which according to Srivastava, is  reflective of the nature of the consumer in the country. People want affordable luxury he believes and pegs the overall retail market for fashion at around $14 billion, within that share of luxury segment is 15 per cent.

So what needs do luxury goods meet?  Researchers point to snob value, a sense of inward and outward gratification as being critical factors driving demand for premium and luxury goods and services. 

Kantar’s Balasubramaniam said that luxury brands have been able to master the art of offering affordability via an EMI package. “They are looking for ways to get buyers (who value price and want luxury brands) in, the only way they can do this is to offer their products and services as small value packs so that consumers can sample the experience, and when they find value they will spend,” she said.

Aspiration with a price tag

•  Be it smartphones, cars, handbags, clothes, watches, premium brands are no longer pitching their wares to a select audienc
• Millennial consumers are more likely to bite the EMI bait, slaking their desire for luxury goods without burning a hole in their wallets, say market researchers
•  E-commerce has helped pushed the luxury in installments story as Amazon and Flipkart run their own financing schemes for large purchases