New Delhi,It is not questions on establishing a brand presence in India or educating the Indian customer or ascertaining the size of the Indian luxury market or understanding the mindset of the Indian customer that tops the list of challenges on a luxury company CEO’s mind. Real estate and the availability of luxury retail space is what worries him the most.
“Finding the right location is the most challenging task for us, says Andrea Perrone, CEO, Brioni, of the exclusive menswear brand from Italy. His competitor, Paolo Canali, sales & marketing director, Canali agrees, “We are trying to find the requisite space for ourselves. It is a key to sales.”
Vittorio Missoni, chairman of Missoni points out that location of the store is key to a luxury purchase. “One cannot expect someone who purchase a high-end good, to tolerate a buying experience that is not as good. In luxury retailing, this experience is everything,” he says, adding that development in retail is what brands are waiting for.
In sectors like home and interiors, finding a large enough store is a challenge as well. “We cannot be in a hotel as they haven’t got adequate space,” says Elisa Astori, vice president, Driade, Italian home living chain. “Boutique stores are enough for objects, but furniture requires a large format store,” she adds.
Besides not having enough space, hotel arcades are also scattered all over a city, points out Vivek Kaul, national director, JLL Meghraj.
At present, a luxury retailer has few options for retailing his brand. Dedicated luxury malls like DLF’s Emporio in Delhi is set to open this year, and even with 130 brands showcased spread over 3,50,000 square feet, will not have enough space to fulfill the demand. UB Group’s Collection will add another 1,50,000 square feet when it opens next year, while MBD group’s Zephyr accommodate brands over 7,00,000 square feet when it opens in Bangalore by 2011.
“The cost of development of luxury is about 30% more expensive,” says Sonika Malhotra, MBD group.
India represented 0.8% of the world’s consumption of luxury brands last year, about $1.5 billion,” says Armando Brancini, MD, Altagamma, an association of Italian luxury goods.
Luxury retail real estate space will play a crucial factor if India is to have a larger of the market in the coming years.