Luxury brands in India are housing themselves more in heritage homes than in few super premium malls or five star hotels which attract lesser footfalls especially from shoppers.
While luxury brands are going all out looking to expand footprint, real estate developers have shied away from building high-end malls. So, instead of waiting for luxury infrastructure to develop, such companies are seeking out heritage properties.
Multi-brand store Kitsch run by TSG International, which retails brands such as Alexander McQueen, Moschino and Stella McCartney, touched operational break-even in less than six months when it opened a standalone outlet in Mumbai’s Kala Ghoda area. In contrast, its outlet at luxury mall DLF Emporio in New Delhi took over a year to do so. Besides turning to heritage homes, luxury brands are also beginning to share space with brands that are a notch lower in prestige sweepstakes. Industry observers say this is a smart move because Indian consumers may buy luxury products in one category and premium in others.
Genesis Luxury, which has partnered brands such as Jimmy Choo and Bottega Veneta, experimented by opening a store for Italian menswear Canali at Mumbai’s Palladium mall. Canali store at Palladium generated close to 100 per cent higher sales within three months of launch than its outlet at JW Mariott in the same city.
Or take Tag Heuer, the world’s fourth-largest Swiss watch maker, which opened a 600-sq ft store in Bangalore’s Phoenix Market City mall next to the Spanish premium brand Mango. Higher footfalls have meant sales of 15 watches per month against 10 watches a month in hotels.
Since luxury high streets such as New York’s Fifth Avenue and Madison Avenue or London’s Bond Street are absent in India, most luxury brands chose to open their outlets in five-star hotels. Real estate consulting firm Cushman & Wakefield says such hotels across cities such as Mumbai, Delhi and Bangalore account for as much as 80-90 per cent of luxury retail space in the country. Footfalls have, however, been lower in hotels than in malls because most guests at hotels shop overseas and head for the restaurants and bars. Malls and standalone luxury outlets have been a comparatively bigger draw. While a luxury mall seeks rentals of Rs.550-600 per sq. ft, standalone outlets and malls with a mix of high street brands get offered up at half the cost.
Real estate is a huge challenge for luxury retail as the infrastructure is not as developed as China and other parts of the world. Most often five-star hotels have only two luxury brands but marketers say hotels need at least 12 brands to draw footfall. Rentals are 50 per cent cheaper at standalone properties and mainstream malls as against Rs.500-600 per sq. ft in luxury malls. Luxury brands are also tying up with spa, café, restaurant and art galleries to create a luxury destination in standalone outlets.
