According to a study conducted in 2013 by Assocham and Yes Bank, despite continued global economic slowdown, the luxury market in India is expected to grow at 25 per cent and to touch 15 billion dollars ( 80,325 crores) by 2015. It is quite evident that Luxury brands are playing a role in the Indian economy and the Indian market has become more appealing for international luxury brands.
The arrival of international brands in India started in a big way in the early 90s when Lacoste (French) entered India. This was shortly followed by the Italian brand â€˜United Colors of Benettonâ€™. While small and sporadic imports were carried out by retailers in Delhi & Mumbai in the mid 90s, the first organized franchise arrangement was made by Blues Clothing Company Ltd for â€˜Versace Collectionâ€™ and â€˜Cornelianiâ€™ in 2005. The Emporio mall came up in 2007-2008 and ushered in a plethora of luxury fashion brands. Ever since, Italians brands like Roberto Cavalli, Missoni, Emilio Pucci have entered India much to the delight of fashionistas who once had to shop from foreign shores to satiate their hunger for designer labels.
But the luxury market has expanded in India and a new clientele has emerged. The Indian consumer has become more discerning due to increased exposure to the world over the years. Frequent travel has served as an eye-opener giving rise to a consumer who knows exactly what he wants. Luxury consumers in India now include young professionals and businesspersons.
What are the specific challenges that are faced by luxury brands when they enter Indian markets? The challenges can be best understood by the brands and people who have been associated with the entry of these brands in India. Luxury Connect is one of the first few groups that have been instrumental in bringing luxury brands like Gianni Versace, Versace Collection, Versace Home, Corneliani, John Smedley, Ferre, Cadini to India. To understand better the challenges faced by the brands, Pitch spoke to Abhay Gupta, CEO, Luxury Connect, who explained, â€œLack of environmentally suitable retail spaces is one of the biggest challenges faced by brands. Selling luxury brands requires a particular type of ambience, neighborhood and above all atmosphere. Lack of such a retail space is a huge challenge. Such space is restricted to DLF Emporio in Delhi, Palladium in Mumbai and UB city in Bangalore.â€ He further stressed, â€œThese spaces firstly do not have any leftover spaces and if at all there are some exits, the rentals sought are unimaginably high. This has resulted in some of the brands operating from five star hotel lobbies, which may not really attract the traffic any of the spaces mentioned above do.â€
The other challenge mentioned by him was regarding regulations, â€œRegulatory issues related to FDI / duties / various other statutory regulations are a bottleneck. While FDI has been theoretically allowed in single brand retail, add on clauses like 30 per cent sourcing from Indian SMEâ€™s is a major deterrent. Luxury brands find it extremely difficult or impossible to meet this condition mainly because most brandsâ€™ USP revolves around the competitive advantage of its country of origin. Other issues like high import duties, different taxation structures across different states are irritants in developing this market.â€
Those who best understand the problems faced by Italian brands are people who understand both the Indian and Italian markets. One such is Indian designer Rahul Mishra, who recently brought India laurels in the fashion world by becoming the first Indian designer ever to win the International Woolmark Prize (IWP) in Milan. Rahul explained about the the challenge faced by Italian brands saying, â€œPrice point is one of the biggest challenges faced by luxury brands. The Indian consumerâ€™s mentality is driven by occasional dressing. People donâ€™t mind shelling out extra money when they have an occasion like a wedding in the family or other such occasions.â€ But he also added that the market for accessories like bags, sun glasses was growing faster as compared to the apparel.
Most luxury brands come with their exclusive offering and signature. They may all try to target the same customer and compete amongst themselves but they are all unique in their own right. They have advantages of heritage and technology and do not compete with Indian brands. Roasie Virq Ahluwalia, Director, Marketing for Canali answered the query about competition saying, â€œCanali, known for its fine tailoring, elegance and style in menâ€™s luxury fashion is 100 per cent made-in-Italy. The brand has made quality, the bespoke tradition and â€˜Made in Italyâ€™ its essential characteristic, in almost 80 years in the business. Besides, it is one label and one brand. It does not have diffusion lines. In this sense, Canali doesnâ€™t have any real competition in India. However, brands like Zegna, Corneliani, Tom Ford and Hugo Boss are also operating in the same segment.â€ Where Canali might be recognizing the existence of competition, Furlaâ€™s Director of Marketing Mansi Mehta denied having any competition saying, â€œFurla is an established womenâ€™s accessories brand with a strong made- in- Italy tag. From the design to the craftsmanship, everything is manufactured in Italy; hence there is no clear competition for the brand.â€
How difficult is it to market the Italian luxury brands in India? Mansi shared the marketing plans of Furla and said â€œFurla is currently following the International marketing guidelines but going forward for India we will focus on Bollywood and Red Carpet Dressing.â€ Talking about marketing plans of Canali, Roasie said â€œWe have always been focused on our clients and try to build a long lasting relationship with each of them. For this reason we have constantly offered high service standards to offer a luxury experience to the customers.â€ She further added â€œTo promote the Su Misura service (Made-to-Measure), we usually organize seasonal events in our boutiques. We personally invite our existing and loyal customers while we try to attract new ones with dedicated shop windows and sometimes with specific advertising.â€ For the high-end luxury brands, the other efficient marketing medium has been fashion magazines that reach the target consumers.
Each brand has its own unique expansion plans. Canali entered India in 2004 by opening its first store in Mumbai. Canali has in total 6 standalone stores in Delhi, Gurgaon, Mumbai, Bangalore, Hyderabad and Chennai. Canali is opening the 7th store in Kolkata next month. Furla entered the India market in 2012. The brand is soon opening stores in Delhi and Calcutta.
The Indian market is attracting luxury brands and this is reciprocated by the brands as they create some â€˜indianizedâ€™ products. Fashion brands like Hermes for example introduced a limited range of Sarees. Canali introduced bandgalas and Nehru jackets. Christian Louboutin introduced an Indian range suitable for the wedding market. Judith Leiber offers innovative bags and clutches shaped after Indian deities like The Ganesha etc. On being asked how important this Indianisation is for luxury brands entering the Indian market, Saba Ali, Indian Senior Associate, Fondazione Atlagamma, said, â€œBrands are inspired by the nature of the market in which they are spreading their presence. Itâ€™s always good to compliment the market the brands are expanding in.â€ The companies usually come up with limited collections to attract customers as well as to compliment and pay tribute to the market they are getting a good response from.