Disrupt or die? No chance: Experts say e-commerce will not collapse luxury industry

Panelists sat down to discuss the effects of digitalization on the premium goods industry at Arab Luxury World in Dubai.
Updated 23 May 2017
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Disrupt or die? No chance: Experts say e-commerce will not collapse luxury industry

DUBAI: Would you buy a luxury product worth thousands online? It is a question that panelists at the Arab Luxury World forum in Dubai sat down to discuss on Monday as the fourth iteration of the annual event kicked off.
The forum is set to run from Monday and Tuesday and features an agenda of speeches and panel discussions by more than 70 speakers under the theme “Digital Disruption and Emotional Engagement.”
In the world of luxury goods, the panelists agreed that digital shopping will not soon replace brick-and-mortar retail as many consumers still wish to get a real feel of the high-end product they are buying, however, all panelists emphasized the need for luxury brands to communicate effectively with consumers online.
In a session moderated by Anand Vengurlekar, chief communications officer at INSEAD Business School, experts from the luxury industry discussed the effect that digitization was having on the market.
However, panelist Samer Bohsali, a partner at the Strategy& consulting firm, was quick to assure the audience that digital avenues would not disrupt the luxury industry in same way Uber had for the transport industry, for example.
“The old model of digital was disrupt or die. With what Netflix has done to Blockbuster, what Uber has done to the taxi industry, you would think that the next victim is the fashion business,” he told the audience, before adding: “Digital will not disrupt luxury the same way.”
Why? Because, according to Bohsali, “the luxury industry has relied, for centuries, on the aura of exclusivity and sensory experiences that are very difficult to replicate on a mobile device.”
However, Bohsali did note that the digital sphere has made customers more aware about the products they wish to buy.
“Digital has transformed the habits of your users and your consumers, you’ve got a new generation online that can compare the price of a bag in Beijing and Paris and know they are not getting a fair deal in Beijing,” he said.
Category Director for Fashion at noon.com, a Middle East-focused online shopping portal, Jose Antonio Grajales, agreed that the digital world was transforming the luxury industry, rather than disrupting it.
“For me, the disruption is not a complete metamorphosis of the industry, it is more of an evolution of the way we consume,” he said.
According to Grajales, much of the world’s luxury sales happen in just 10 cities, something he says digital platforms can help to change.
“As sellers of luxury products, we have failed at getting that product to customers in other places… Because of e-commerce and digitalization, we are able to get those products into the hands of consumers more easily.
“Luxury is unique because you like to touch it, you like to feel it and you like to experience it but you aren’t always in a place which makes those nice things easily accessible,” he said, explaining the power of e-commerce in widening the reach of luxury brands.
“Technology should enable us to serve a customer better, wherever you are you should be able to access that luxury experience and that luxury product.”
But what advice did the panelists have for luxury brands seeking to leverage the digital world?
“Be prepared to fail,” Bohsali said.
“The fashion industry hasn’t cracked it. The classic model that has worked is a store — the in-store experience works — but the future could be a combination of using a mobile device and coming to a store.
“It’s an experiment, the industry is still experimenting.”
The panel also included Graziela Martins, vice president of the merchant business at American Express Middle East and North Africa and Emre Karaer, general manager at Volvo Cars MENA.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”