Luxury retailing in India- it's haute!

"Do you wanna know what comes between me and my Calvins? Nothing."

--this iconic line by a certain teenager named Brooke Shields catapulted her into instant fame and, in a way underlined the influence of brands in defining our social fabric.

DLF Emporio Mall, New Delhi

A gentle breeze swept across my face as I entered the DLF Emporio Mall in New Delhi. For one moment it felt like I was in another world- someplace like Milan's Via Monte Napoleone, London's Bond Street, or the venerable Fifth Avenue in New York... a smorgasbord of everything fashionable and haute! Emporio is India's answer to other International fashion capitals-- concierge service, 5-star ambience, presence of revered brands like Dior, Gucci, Armani and Louis Vuitton and a shopping experience that is purely world class. Having said that, Emporio Mall is targeting only the creamy layer of people in the Wealth pyramid, but it serves as a shining example of the good things happening with Indian Luxury retailing at present.

Every brand has a story to tell... and the aura of exclusivity coupled with high income elasticity of demand takes care of the economics for premium goods. Gone are the days when the typical well-heeled Indian had to travel overseas to buy their favorite designer labels or ask their non-resident friends to grab the stuffs from Duty-Free stores. Almost all major Indian metros are now warming up to premium and ultra premium retail experience although retail space still remains a prime concern. Due to prohibitive real estate prices, many of the premium labels are increasingly looking at operating from luxury malls than from 5-star hotels.

Key Challenges:

• Lack of dedicated retail Space; fashion high street
• Expensive real estate; which significantly hits the bottom-line
• Increasing the client base; target the high income population
• Improve service offering
• Establishing 'Luxury' as a need among Indian customers
• Focus on affordable luxury for Indian customers

Read the full article at:

http://www.infosysblogs.com/retail-cpg/2011/04/the_devil_wears_prada_but_god.html

FDI in Indian Retail- Lost in translation!

Victor Hugo once famously wrote- ‘One cannot resist an idea whose time has come’. 

FDI in retail in India would have been one such idea. As India is eager to make the transition into a developed nation with a robust economy and infrastructure to sustain the growth, opening up the markets in the retail sector would have been the next logical step. But then history has its way of scripting a twist in the tale.

India as a concept of nationhood is quite paradoxical- we have some of the poorest people in the world surviving on zilch and some of the richest people in the world who feature prominently in the FORBES billionaire’s list. Just like we cannot translate western ethos into an Indian setting and hope that it will work every other time, similarly we cannot afford the type of Western influenced Pareto efficiencies in India where the competitive forces will work their way to some sort of efficiency equilibrium without intervention or supervision or guidance. For a nation of billion people what we really need is an all-inclusive equitable growth keeping in mind the needs of the bottom-of-the-pyramid socio-economic groups amongst others; this is not a matter of choice or convenience or dogmatic one-upmanship but a matter of polity based on our socialist moorings.

TIME magazine named 'The Protester' as the Person of the Year for 2011. India also had its share of protests with the common people getting together to voice their anguish and resentments. Some of those protests were bonafide, some were ill-timed and some were utterly uncalled for. The protest against FDI in retail by a vested section of the population was one such rare aberration. There has been a deluge of arguments and counterarguments from all the estates of the realm; everybody worth their value in salt is debating the introduction of FDI in the retail sector in India. If we were to believe the top brass of India Inc. then 51% FDI in multi-brand retail sector was meant to be a boon and would have provided maximum benefits to the farmers and the consumers (the set of people whose welfare should be of paramount importance). Alas! For now, we will continue to see pesticides being used by the farmers for all the wrong reasons going by the statistics in Maharashtra, Andhra Pradesh and a host of other states!!

The Indian retail market, which is pegged at $450billion, figures prominently in the boardroom discussions of all major retailers and CPG manufacturers. The burgeoning middle class population and increase in disposable income has made India a strategically important and a lucrative market for the foreign retailers to join in. Moreover, it is still a monumental challenge to address the supply chain dynamics in the agriculture/aquaculture sector in India. Some of the pain-points are-

• Under-developed infrastructure
• Over dependence on weather Gods
• Numerous intermediaries without much value addition
• Colossal losses due to lack of storing facilities

According to conservative estimates, close to 30-40 percent of India’s fruits/vegetables perish before they reach the end-consumers because of insufficient cold-storage facilities and poor transport infrastructure. These losses in turn, are passed on to the consumers who end up paying more than they bargained for. The wheel that can set the whole efficiency thing into motion is healthy competition- domestic or int’l. Foreign retailers would have brought their proven and effective supply chain methods, efficient inventory control, economies of scale and backward integration to the Indian retail scene. The homegrown retailers would have scaled up their operations to match the competition or risk being marginalized. The retail pie would have increased and positively impacted the food inflation rate, created countless jobs and resulted in the expansion of the realty sector in India with the creation of shopping districts and malls.

Contrary to what the anti-FDI lobby wants us to believe, the small retailers have always thrived in all other geographies where they already have modern format retailers. They are irreplaceable for the kind of service, inventory, unique credit system (salaried people could buy throughout a month and pay during salary day at zero % interest), free home delivery, and most of all- convenience!! Nothing can beat the neighborhood kirana store for those quick shopping needs. Realistically speaking, the small sundry retailers will survive, but we will definitely see some traction in the fledgling Indian large retail chains. Either they will be up for grabs or will have to constantly innovate to stay in business. By conservative estimates modern format retail stores would require a catchment of at-least a million people to make their venture profitable. This leaves out 72% of India which lives in the rural areas and smaller towns and they would continue to shop from the neighborhood retail shops.

The policy makers, through means of legislations can ensure that the legitimate rights of the 175 million farmers for better prices doesn’t get lost in the chaos. These agricultural producers are waiting to get a better deal for their yield- a gap that the organized retailer can fulfill through means of technology and economies of scale. Hence, throwing the FDI baby along with the bath water of opportunistic, myopic policies isn’t something that is advisable. Vested lobby groups representing the ill-informed group of wholesalers, retailers, middle-men and the lack of a political might put us back by eons. FDI would have given real benefits to the Consumers and the farmers and would have removed the unproductive, money wasting bottle-necks. Consumers would have saved money while shopping; farmers’ would have got a better price for their produces, jobs would have been created in the retail sector, Government would have got back millions in taxes which are evaded by the sundry retailers. Can we ask for more?

I’m not entirely sold out on the idea of FDI as a cure-all remedy for all thing retail in India. They must be regulated, controlled in such a way that the SMEs are not marginalized by means of cheaper imports alone. Level playing field is what is required so that we give consumers the choice- to buy better, cheaper, quality products. Having said that, I don’t prophesize the Wal-Marts and TESCOs of the world coming to India and closing down the neighborhood kirana store, the hole in the wall Mom and Pops, the mithaiwallah, the standalone saree shop. I am pretty confident that they will improvise, innovate, provide better service and continue to thrive. The existing distribution system is archaic yet it provides life’s essentials to places where there are no roads, no means of travel. That is India- we always have a jugaad way of managing things.

Change is not always bad or for that matter good- and more often than not there will be resistance against change- maintaining the status quo is part of our Indian-ness and in a queer way defines us. We need to look at things from a neutral frame of reference- the greatest good for the greatest numbers most of the times. FDI in retail is not a zero sum game between the foreign retailers and the home grown retail/wholesale businesses; it was never meant to be that way. Obviously as with every change there will be a bit of collateral damage and we will all have to live with. Let us give consumers the choice- the flexibility to make their choice- with whom they want to do business with.

I have high hopes for India and surely it deserves better in the coming days.

The Devil wears Prada but God wears Gucci!!

"Do you wanna know what comes between me and my Calvins? Nothing."—this iconic line by a teenager named Brooke Shield catapulted her into instant fame and the rest as they say is history.

A few days back I was browsing through the perfume section of The Landmark store in Bangalore which was choc-a-bloc with high profile brands like Hugo Boss, Davidoff, and Chanel. Although it seems strange now but a few years back the typical well-heeled Indian had to wait to travel abroad to buy their favorite designer wears, perfumes and accessories or ask their NRI friends to grab the stuffs from Duty-Free stores in the airports. With the opening up of the Indian economy and a higher disposable income Indians are welcoming the most sought after brands and labels with great fervor. With greater FDIs in retail we might many other brands coming to cash in on the great Indian retail story which is expected to see boom time in the coming years. Retail space is a great concern in the Indian metros and many of the brands prefers high streets for their outlets or in the 5-star hotels, and it will take some time to iron out some of these pain points.

I saw a Reebok T-shirt proclaiming that there are two people in one and my materialistic side is eyeing a nice haute couture Hugo Boss suit, Davidoff CoolWater Perfume, Shoes by Clarks, and a sleek watch by Omega :-) Down with increasing consumerism and materialism... but atleast let me try for once...

I browsed the web and made a list of all the luxury brands that have opened shops in India, although they are still limited to the metros.

Tommy Hilfiger
• India Operation: Tommy Hilfiger has-
– 9 free standing stores across 7 cities
– Licensed products are available in over 300 selected retail stores across the country.

GUCCI
• Line of Business— women’s and men’s ready-to-wear, fine jewelry, furniture, and more.
• Gucci operates 425 stores worldwide and it wholesales its products through franchisees and upscale department stores
• Revenues of €8.7 billion
• India Operation: One store in The Galleria, Mumbai
• Gucci is the second biggest selling fashion brand after LVMH .
• AC Nielsen has rated GUCCI as India's most desirable brand.

Bottega Veneta
• Line of Business— men's and women's ready-to-wear clothing, small leather goods, and exclusive home items
• Revenues of €267 million in 2007
• The company merged with Gucci Group in July 2001.
• India Operation:
– One store in The Galleria, Mumbai

MOSCHINO
• Line of Business— women's and men's fashion, accessories, perfumes
• It has 4 stores and 31 in-store boutique operations around the world
• Revenues of $284 million (2001)
• India Operation: 2 stores
– New Delhi, a 140 sq.m boutique at One Style Mile
– Mumbai at the Taj Mahal Palace & Towers.

ROBERTO CAVALLI
• Line of Business— women's clothing, sunglasses, men's clothing, women's & men's shoes, handbags, timepieces, underwear, beachwear, eyewear, kid’s line.
• It has 200 stores around the world
• Revenues of €700 million in 2007 (doesn’t report its earnings )
• India Operation:
– 2 stores in Mumbai and New Delhi are in the pipeline

Marks and Spencers
• Line of Business— largest clothing retailer in the country, as well as being a multi-billion pound food retailer
• Revenues of £7.798billion of –worldwide
• 760 stores world wide in 30 countries

Indian Operation: M&S has 12 stores in India across-
• Bangalore
• Chennai
• Gurgaon
• Hyderabad
• Lucknow
• Mumbai (3)
• New Delhi (2)
• Pune
• Kolkata

MANGO
• Line of Business— luxury leather goods, fragrances and clothing,
• Revenues of €1.1 billion (2002)worldwide
• Mango has 850 stores in 81 countries around the world
• Indian Operation: Mango has 4 stores in-
– Bangalore
– Mumbai (2)
– Gurgaon
– New Delhi (Opening shortly in Select City Walk)

FCUK
• Line of Business— Western formals to casuals for men and women and Accessories
• Revenues of £265.7 million in 2005
• FCUK operates in over 25 nations with 1500+ outlets
• India Operation: 5 outlets in India (as of Oct, 2007)
– Mumbai (3
– Delhi
– Pune

Calvin Klein
• Line of Business— jeans, coats, underwear, fragrances and home decor to watches
• 760 stores world wide in 30 countries
• Revenues of £7.798 billion worldwide
• Indian Operation: Calvin Klein hopes to have
– at least 20 to 25 points of sale in the 1st year in-
• Mumbai
• Delhi
• Chennai
• Bangalore
• Hyderabad
• Kolkata

HUGO BOSS
• Line of Business- high-end apparel, accessories, perfumes
• Hugo Boss brands are available 103 countries and more than 5,002 retail stores.
• The brands are Boss, Hugo, and Baldessarini.
• Revenues of € 1.270 billion (2006)
• India operation: Hugo Boss has 4 stores in India
– Delhi (2)
• [Recorded sales worth Rs 10 crore in 2005]
– Mumbai
• [Recorded sales worth Rs 7 crore in 2005]
– Bangalore [The Leela Palace]
– In the pipeline are stores in Chennai and Hyderabad

ARMANI
• Line of Business- accessories, apparel, cosmetics, fragrances, home interiors, jewelry, eyewear and watches
• Armani sells under the various labels including-
– Giorgio Armani
– Armani Collezioni
– Emporio Armani
– Armani Jeans
– Armani Junior
– Armani Exchange AX
– Armani Casa
• Armani has nearly 300 stores in 36 countries around the world
• Revenues of $1.69 billion (2005)
• Indian Operation: Armani has 4 stores in India in-
– Mumbai
– New Delhi

COCO CHANEL
• Line of Business— cosmetics and accessories and prêt-a-porter (ready-to-wear)
• Revenues of €15.3 billion worldwide
• 1,800 stores across the world
• India Operation: Coco Chanel has-
– 1 outlet at Imperial Hotel in New Delhi
– The Chanel store in Imperial Hotel in New Delhi has the brand's range of cosmetics and accessories, and the prêt line.

ESPRIT
• Line of Business— manufacturer of apparel, footwear, accessories, jewelry, and house- wares.
• Revenues of $5 billion worldwide
• 640 directly-managed retail outlets and 12000+ wholesale outlets in 44 countries.
• India Operation: Esprit has 28 outlets in India
• 16 exclusive stores
• 12 shop-in-shops
• Bangalore
• Delhi
• Mumbai
• Chennai
• Chandigarh
• Pune
• Ahmedabad
• Ludhiana
• Jalandhar
• Gurgaon
• Noida

LACOSTE
• Line of Business— high-end clothing, footwear, perfume, leather goods, watches, eyewear, tennis shirts.
• Revenues of €1.5 billion in 2007
• 640 directly-managed retail outlets and 12000+ wholesale outlets in 44 countries.
• India Operation:
– 3 flagship stores in-
• Bangalore
• New Delhi
• Chennai
• 5-7 such stores are scheduled to be operational by 2010.
– 30 small stores at present
• In the pipeline, 50 more small stores by 2010

VERSACE
• Line of Business— Apparel clothing, Accessories, Watches
• Revenues of € 288 million (2006)
• Franchised brands in India include-
• Corneliani
• Versace Collections
• Gianni Versace
• Versace Jeans Couture.
• India Operation:
– 1 store in JW Mariott, Mumbai (being closed down to lack of sales)
– 1st store in Delhi coming up in March 2008
– Expansion to a 5-store network
• Projected turnover of around Rs 25 crore for financial year 2008 and Rs 40 crore for 2009 in India

CLARKS
• Line of Business— women's and men's casual and dress casual shoes, outdoor boots
• Revenues of £830 million in 2000
• Clarks is the #1 non-sports shoe brand in the world
• India Operation: Clarks has stores in-
– Ahmedabad
– Mumbai
– Bangalore
– Expansion plans: 1 new store every month
• C&J Clarks has tied up with lifestyle retail company Lifestyle Asia in India
• Clarks will currently offer only ladies and men's shoes in India

DEBENHAMS
• Line of Business— Clothing, cosmetics, house wares
• Revenues of £2,090 million GBP (2005)
• Debenhams the leading department store group in the Middle East Master and #2 in UK.
• Franchisee for Debenhams in India: Planet Retail Holdings.
• India Operation: Debenhams has-
– 1 store in Gurgaon
– 2 stores in New Delhi
– In the pipeline, 15 more stores in the next 3-5 years in
• Mumbai
• Bangalore
• Kolkata
• Chennai
• Hyderabad
• Ludhiana

Burberry
• Line of Business— clothing and other apparel, bags, leather goods, accessories
• Revenues of $1.61 billion in 2006
• Available in 130 stores worldwide
• India Operation: Burberry has an outlet in-
– Mumbai, The Taj Palace

TRUSSARDI
• Line of Business— manufacturer and retailer of men's, women's and children's ready-to-wear clothing, accessories and jewelry , perfume.
• Revenues of $500 million in 1998 (latest figures not available)
• Trussardi has-
– 100 boutiques around the world
– 7 stores selling clothes and accessories designed for young urban customers
• India Operation: Trussardi has an outlet in-
– Bangalore, The Leela Palace

DAKS

Line of Business— manufactures and retail of tailored garments and accessories for men and women
• Revenues of £500 million in 2007
• DAKS has-
– 2,000 specialty shops, major stores and concessions in 30 countries
• India Operation: DAKS has a store in-
– 1 store in Bangalore, The Leela Palace
– 3 stores in Mumbai
– In the pipeline, 25 outlets across India
• DAKS is brought into India by the Forbes Gokak group

GAS
• Line of Business— Jeanswear, casual wear, footwear, beachwear and accessories
• Revenues of €150 million worldwide
• India Operation: Grotto SpA’s GAS has—
– 5 flagship stores in-
• New Delhi (2)
• Mumbai (3)
– Departmental Stores in-
• Mumbai
• Bangalore
• Hyderabad
• Kolkata
• Pune
– Premium Multi-brand Outlets (MBOs)
• Ahmedabad
• Bangalore
• Pondicherry
– In the pipeline, 4 more stores and 14 franchisee stores by 2008
• Raymond Ltd launched GAS with a 50:0 JV with the Italian company Grotto SpA
• By 2010, GAS aims to have 600 retail points-
– including flagship stores, exclusive franchise stores, large format stores, MBOs

Dolce&Gabbana
• Line of Business— manufacturer and retailer of men's, women's and children's ready-to-wear clothing, accessories and jewelry, perfume.
• Revenues of €1.05 billion in 2006
• Dolce&Gabbana has-
– 90 directly-operated stores worldwide.
• Tie-up with real estate developer DLF Group in India
• India Operation: Dolce&Gabbana plans to open 2 stores in-
– Emporio Mall, New Delhi

Jimmy Choo
• Line of Business— Luxury Shoes, Accessories
• Revenues of $1.69 billion (2005)
• Jimmy Choo has 60 stores worldwide
• India Operation: In India, Jimmy Choo has-
– 1 store in The Galleria, Mumbai

TUMI
• Line of Business— suitcases and bags for travel
• Tumi has 56 stores around the world and are also sold in Departmental stores
• India Operation:
– Tumi has a store in The Galleria, Mumbai
• The Murjani Group plans to open 10 freestanding Tumi stores in India by 2010, with the first store opening planned for in Delhi or Mumbai

Dunhill
• Line of Business— luxury leather goods, fragrances and clothing
• Alfred Dunhill is part of the Richemont luxury group,
• Revenues of $1.69 billion (2005)
• 158 stores worldwide
• English luxury menswear brand Dunhill will make its debut in India through a deal with local fashion company Brand House Retail.
• Dunhill expects India to account for 10-20% of its global revenues.
• Indian Operation:
– 1 store in New Delhi, Shangri-La Hotel
– 4 stores will open in the next two years
– A total of 8-10 stores are planned in the next five years in major cities like Bombay and Bangalore.

FENDI
• Line of Business— handbags, apparels, footwear, eyewear and watches
• Part of the Louis Vuitton Moet Hennessy (LVMH) Group
• Revenues: LVMH does not break out Fendi's sales and earnings
– 1.89 million Euros in the first half of 2003 (estimate)
• India Operation: Fendi has-
– One outlet at The Taj in Mumbai
– In the pipeline, 6 stores in the next 5 years

LOUIS VUITTON
• Line of Business— luxury leather goods, fashion accessories, prêt-a-porter and jewelry
• Revenues of €15.3 billion worldwide
• 1,800 stores across the world.
• India Operation: Louis Vuitton has-
– 2 outlets in Mumbai and New Delhi
– In the pipeline: Upcoming retail project, UB City -The Collection in Bangalore ]

Christian Dior
• Line of Business— shoes, leather bags, costume jewelry and dresses
• Revenues of $20,094.5 million in 2007
• 1,800 stores across the world
• 760 stores world wide in 30 countries
• India Operation: Christian Dior has-
– 1 outlet in New Delhi at The Oberoi Hotel

GUESS?
• Line of Business- the brand includes clothing and accessories for men, women and children, as well as home collections.
• Guess? has-
– 184 retail stores in the US
– 213 international franchises around the world
– 1,135 shop-within-shops around the world
• Revenues of $936.06 million (2005)
• India Operation: Guess has 16 stores in India across the various cities mentioned below:
– Bangalore-2
– Mumbai-3
– Lucknow
– Ahmedabad
– Gurgaon
– New Delhi-2
– Hyderabad
– Chennai
– Pune
– Ludhiana
– Noida
– Kolkata

AIGNER
• Line of Business— high-end leather, clothing and accessories
• Revenues of $77.8M in 2006
• Available in 151 stores in 40 countries
• Sports Station India Pvt Ltd is the exclusive distributor for Aigner in India
• India Operation: Etienne Aigner AG has stores in-
– New Delhi
– Mumbai
– In the pipeline, new stores in New Delhi, Mumbai and Bangalore

BVLGARI (Bulgari)
• Line of Business— Italian jeweler and luxury goods retailer(watches, handbags, fragrances)
• Revenues of €1010.4 million in 2006
• Available in 150 stores worldwide
• India Operation: Bvlgari has stores in-
– New Delhi
– In the pipeline, new stores in Mumbai and New Delhi

Ed Hardy & Christian Audigier
• Line of Business—
– The Ed Hardy line caters to men's, women's & kids wear and stocks drinking flasks, Sunglasses, Key Chains, Watches, Air Fresheners, Energy drink, Shoes, Bags and Accessories.
– Christian Audigier sells the entire line of Bags, Hoodies, Accessories, Belts, T-shirts, Shoes and Lowers embellished with gold prints and sequined stone detailing
• 760 stores world wide in 30 countries
• Revenues of £7.798billion of –worldwide
• Ed Hardy & Christian Audigier has 2 stores in India in-
– Mumbai
– New Delhi

Other notable foreign brands in India
• Mother Care
• Royal Sporting House
• Austin Reed
• Levis
• Pepe
• Lee
• Nike
• Reebok
• Adidas
• Arrow
• Wrangler
• La Perla