In nouveau riche India, even the poor show off

In the new, capitalist India, consumers are eager to flaunt their wealth.

By Mark Sappenfield | Staff writer of The Christian Science Monitor

from the June 4, 2007 edition

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NEW DELHI - Raman Kathuria's job is to make sure that his local Mercedes-Benz dealership never underestimates the Indian consumer again. When the car brand first came to India 11 years ago, it sent only its oldest and most pared-down models to the country – thinking that Indian buyers were not ready for true luxury.

The result: After a good first year, word got out and sales dropped by nearly two-thirds. Now, manager Mr. Kathuria imports Mercedes's top models from Germany, custom designed for Indian consumers with massaging leather seats and infrared dashboard displays for nighttime driving. After import taxes, the cars cost nearly $250,000 each.

While its materialistic glamour revolution is still in its infancy, the new capitalist India is all about keeping up with the Kumars. At all socioeconomic levels, Indian shoppers are becoming more "aspirational," using their new wealth to buy status in a country where social cachet is a vital commodity.

Fifty years of postindependence socialist policies allowed few imports and yielded consumer goods that were usually scarce and shoddy. But the new, open capitalist mentality seems to fit India like a tailored Burberry glove. In this strongly stratified society, where the differentiations of caste, class, religion, and birthplace still linger, consumerism can in some ways act as a means of maintaining clear lines.

"India tends to be very status-conscious," says Raman Mangalorkar, a consumer market analyst in Mumbai (Bombay) for the consultancy A.T. Kearney. "A subtle hierarchy gets established in one's mind … and people use these symbols to put themselves in different levels of standing."

As India's middle class grows and becomes more acquainted with the outside world, it is increasingly seeking to emulate the perceived buying habits of wealthy Westerners. That has meant the spread of Hugo Boss stores and a run on plasma TVs.

Varun Mirchandani, for example, who owns a Delhi electronics store, has shunted the old color televisions into the far corner of his store. Two years ago, 90 percent of his sales at the Rhythm Corner electronics store were color TVs. Now, 65 percent are plasma.

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