To most Indians, luxury goods are those that cost a great deal and come from foreign markets, observe Michael Boroian and Alix de Poix in ‘India by Design: The pursuit of luxury & fashion’ (www.wiley.com). They find that, with the exception of the international brands now implanted in the major cities, India is practically devoid of any Indian branded fashion and luxury goods today.
The authors foresee a potential dilemma and eventual danger for Indian companies producing fashion and luxury products, in the competition with the savvy, global marketers seeking a way into the market. “Unless they come up to speed very quickly in branding, they risk being devoured little by little as the consumers become educated by and addicted to luxury brands from the West.”
Citing estimates on the size and growth of the luxury market in India – at Rs 15 to 20 billion, and 15 to 20 per cent annual increase, respectively – the book speaks of the range of goods covered in this market including ‘jewellery, watches, apparel, accessories, fragrance, gourmet foods, wines and spirits.’
The coming decade, in the authors’ view, will present a more conducive growth environment for luxury goods as the number of upmarket malls, world-class retail outlets, mono-boutiques, and retail chains increase. “The continuing relaxation of restrictions on foreign direct investment in retail, though very slow, will also contribute substantially to the growth of India’s luxury retail market.”
Choices, however, are limited for international brands intending to enter and develop their presence in India, the authors say. “They may opt for mono-brand retail stores or shop-in-shops for these brands, in which case they have two alternatives, viz. joint ventures, and distribution agreements.”
The jury, though, seems to be out on the success of franchisee-run operations, ‘in a country where everyone from Bollywood to industrialists want to own cricket teams and luxury brands.’ Despite real-estate concerns and lack of adequate local expertise to run international brands, the authors find the current phenomenon to be healthy for the growth and development of the market.
“Discerning brands will choose their franchisees or joint venture partners carefully rather than simply on the basis of their social connections. Retail and distribution issues remain a major challenge, and it would seem that in this current economic climate, more and more distributors are focusing on developing private labels.”
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