Tata CLiQ Luxury’s CEO Vikas Purohit believes that going ‘phygital’, marrying online with offline, is the way to go
Pankti Mehta Kadakia
In April this year, e-store Tata CLiQ Luxury signed on a new brand; an old Indian favourite—Montblanc. The German manufacturer made unprecedented sales of its writing instruments, leather goods and cufflinks—and encouragingly, these orders came from far and wide, from towns including Bilaspur, Kanpur, Coimbatore and Raipur, where Montblanc has had little presence. That, as they say, is the power of e-commerce, especially in a country as diverse as India.
Last month, the parent e-tail brand, Tata CLiQ, celebrated its second anniversary. In October 2016, the brand had launched a separate identity, website and mobile app for its luxury arm, christened Tata CLiQ Luxury. Tata CLiQ Luxury hopes to fill the gap for an Indian Net-a-Porter or Matches.com, and currently stocks premium and bridge-to-luxury brands such as Armani Exchange, Brooks Brothers, Coach, Diesel, Hugo Boss, Kate Spade, Michael Kors, Movado, Ted Baker and TUMI.
According to an ASSOCHAM report released in February this year, India’s luxury market is set to grow to $30 billion by the end of the year, up from $23.8 billion in 2017. In the same month, market research company Euromonitor International projected the luxury goods market to more than double in five years, to $53 billion by 2020 from $25 billion in 2015. However, the report also noted that store-based retailing remained the dominant channel for luxury goods. ‘The trend whereby consumers are checking out luxury goods physically before making a purchase continued during 2017. Consumers in India associate luxury goods as a big investment,’ the report said.
How, then, does a luxury e-commerce website like Tata CLiQ Luxury, with prices ranging up to a few lakhs, work to change consumer habits?
“The luxury e-commerce market has a lot of positives going for it, making it a good time for luxury e-commerce in India,” says Vikas Purohit, COO of Tata CliQ, who will take over as CEO in July. “With a growing discretionary income and an appetite for luxury brands, buoyed by awareness and online accessibility, today’s brand-aware customer is comfortable buying luxury products online. Luxury e-commerce is expected to grow at a CAGR of 25-30% till 2026, and Tata CLiQ Luxury is all set to ride this growth wave.”
The Euromonitor study also says that the Indian luxury consumer is evolving. ‘Consumers no longer rely heavily on brand names, instead appreciate the merits of different products,’ it says.
Purohit agrees. “The luxury customer in India today is evolving into a discerning customer who appreciates the heritage, legacy and craftsmanship behind each luxury product,” he says. “This is being seen across big cities as well as Tier II and Tier III towns. The digital revolution has led to customers having easy access to information on luxury brands, and they are appreciative of superior quality, design and exclusivity.”
Let’s get ‘phygital’
Tata CLiQ Luxury’s target audience isn’t a first-time luxury buyer, but a ‘brand-focused informed customer’. One of the greatest hurdles to luxury e-commerce, world over, has been the question of authenticity. Tata CLiQ Luxury hopes to tackle this through a two-fold method—one, by partnering directly with brands and their authorised franchises, rather than sellers; two, going phygital.
Phygital, a portmanteau of the words ‘physical’ and ‘digital’, does, as the name suggests, marry online with offline. It means that when they buy a product on the website, it gets shipped from the nearest physical brand store or warehouse, reaching them quickly. They can also use the ‘CLiQ and PiQ’ option—pick up their order from the closest store within three hours of placing the order. Returns and exchanges can be made at the nearest brand store or centre.
“Shipping the orders of the phygital partners from stores enables us to achieve the lowest delivery cost in the industry, with one of the fastest delivery timelines, 24-48 hours for 90% of local orders,” says Purohit.
“Phygital is an evolving concept, with very strong customer convenience and brand representation pillars and we have seen a significant number of customers opting for CLiQ and PiQ across categories,” he adds.
Currently, there are more than 120 stores that offer omnichannel services for the Tata CLiQ Luxury brands. Purohit’s team is working on increasing delivery areas—they started with 6,000 pin codes, and now deliver to 15,000 pin codes in 23 states and two union territories, across 689 cities and towns in India.
“In areas where we don’t have stores yet, customers may not be able to physically visit brand stores, but they will receive authentic products original warranties and guarantees, instant returns and exchange, after- purchase support and installations,” he says.
For logistics, they work in partnership with third-party players such as Blue Dart, ekart and Delhivery. “We have a large number of omnichannel partner stores with more than 50 brands on board, including Montblanc, Michael Kors, Brooks Brothers, Coach, Tumi, Kate Spade and others,” he adds.
However, a large part of the luxury shopping experience is the in- store service a customer receives. How does Tata CLiQ Luxury compete with that?
“It is possible to create a personalised experience through a well- designed site, which indulges the customer to replicate the in-store experience,” says Purohit. “The phygital edge empowers customers with an additional degree of confidence in the product, bringing in the human touch if required. Just as high-tech brands are integrating technology into their physical stores, Tata CLiQ Luxury uses technology to give customers an immersive experience tailored to their individual likes and needs. Shopping on Tata CLiQ Luxury is personalised and curated as opposed to an infinite product listing.”
Data plays a key role here. “Data allows us to go beyond demographic stereotypes to derive insights about each individual,” says Purohit. “And this personalisation is critical in building a relationship with the customer and earning his or her loyalty.”
Make in India push
While you can buy your Armani blazer and Raymond Weil watch on the website, Purohit says there’s a conscious effort to promote Indian luxury brands. In January, they launched a section called ‘IndiLuxe’—a platform to connect consumers to premium Indian brands. The section kicked off with a campaign called ‘The Shawl Project’, which invited 10 leading Indian designers (including Manish Arora, Abraham & Thakore, Rahul Mishra, Raghavandra Rathore and Rajesh Pratap Singh), to reimagine the traditional shawl. The campaign is part of an ongoing collaboration between Tata CLiQ and The Woolmark Company, which gives out the prestigious International Woolmark Prize each year. All the designers were commissioned to create shawls with Merino wool, and a unique blend of silk and cashmere.
“The Shawl Project is an initiative to highlight the craftsmanship, techniques and designs that have originated in India and are timeless despite the continuous evolution of global trends,” says Purohit. “The association with Woolmark is a step towards creating awareness about Merino wool, a luxurious and natural fibre from Australia, among the Indian customers.” IndiLuxe, he adds, aims to bring the finest Indian luxury craftsmanship to discerning customers, and currently stocks labels such as Anita Dongre Grassroot, AM:PM, Pero and Ritu Kumar, among others, in categories spanning fashion, beauty, accessories and home.“The coming months will see our customers get online access to arts and crafts of our country with exclusive Indian luxury brands in the IndiLuxe section,” Purohit says.
By and large, numbers show that conversions for luxury e-commerce so far have been low. Many luxury consumers prefer to buy branded goods abroad, at a more reasonable price. What is Tata CLiQ’s game plan?
Many customers prefer to buy bridge-to-luxury brands such as Michael Kors online, rather than top-end products. “Such brands allow aspirational customers to move higher up the scale to luxury gradually,” says Purohit. It allows them to get the feel of a luxury brand experience at a lower cost, and this helps brands open up to a wider customer base, especially a younger adventurous customer.” While conversions may currently be low, stickiness is high, which makes the difference, says Purohit. “We are bullish, as we are seeing good traction on the more premium end, along with better margins,” says Purohit. The average cart value is anywhere between $200 and $250, which is much higher than that of a non-luxury e-commerce portal.
“We offer our customers an online experience that is efficient, yet ‘luxurious’ and keeps them engaged throughout the process,” he adds. “The ‘new and now’ proposition panders to the customer’s sense of belonging to an elite and exclusive club.”