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Women's Accessories: The absence of quality retail space in South Mumbai compelled Abhay Gupta, Executive Director, Blues Clothing, the Indian franchisee for Versace, to consider starting an accessories-only boutique in an 80 square feet space at Galleria, The Trident. A month and 20 days later, he says the decision was bang on. "We are selling one pair of sunglasses every day. Clutches are a favourite, as are shoes for men," he says, emphasising how most international brands presumed that Indian women would fancy their figure-flattering threads. "How many Indian women have Shilpa Shetty's figure? They'd rather wear their
salwar suit, and team it with a designer clutch. Here, accessories have a far bigger market than ready-to-wear," he says about the female buyer who's likely to pick a saree over a trouser-suit for a corporate do, and throw in a luxury buy in the form of a purse or heels.

The other issue is of sizing. Concentrating on accessories makes complete commercial sense since there are fewer issues with size and changing trends. "While most women would not repeat an outfit twice, they can happily carry the same handbag or shoes at consecutive dos," says Sanjay Kapoor, MD Genesis Luxury.
Men's ready-to-wear: Brioni, the 64 year-old Italian brand known to make hand-crafted suits that grace James Bond, has worked towards maintaining a 70:30 ratio (70% clothing, 30% accessories), and they are in no mood to tip the balance just to follow market trends. "The Brioni made-to-measure suit is iconic and will always remain our cornerstone. Accessories on the other hand, do exactly that they accessorise a Brioni suit. It's never the other way around," stresses Kishor Bajaj, Chairman Badasaab Group, exclusive franchisee Brioni India.

Even in troubled financial times, menswear continues to attract customers. And that's reason enough for  Genesis Luxury to launch London's Tie Rack this year, with plans to open 10 stores across the country.

Actress Priyanka Chopra's sex appeal may have worked in upping an Indian's interest in brand Salvatore Ferragamo after she posed for L'Officiel magazine, wearing their merchandise. But it's not female customers who are queuing up at their boutiques.

"Our brand positioning attracts men and women alike. Around the world, the mix is a 60:40 (wome
n VS men), but in India, it's skewed in favour of menswear," admits Paul Cadman Asia Pacific CEO, Salvatore Ferragamo.    
Kishor Bajaj believes this might have to do with biological differences. Men being creatures of habit, display buying patterns that are need-based rather than impulse-based or seasonal, which characterises the way women shop.

Future of luxe brands in Bangalore is uncertain says fashion stylist Gautam Kalra
Branded accessories make perfect sense; they make great gifts, and aren't limited by sizing. They go with 10 different outfits, various hairstyles and make-up. They look new each time.

The city has pots of money, but the recession has hampered growth. UB City has a good mix of luxury brands, and we thought it was something special when it was launched. But I wonder if it sees clientele who can sustain it. The socialite scene has grown increasingly smaller too.
"What we didn't appreciate is that over the last few decades, consumers had got accustomed to shopping abroad. They rather spend 200 pounds on a shirt there, than Rs 20,000 here. It was tough getting them to change," confesses Mohan Murjani, Chairman of the Murjani Group that launched brands Gucci, Jimmy Choo and Bottega Veneta amid a trumpet blast in Mumbai in 2007. Socialites teetered on their Choos, and the media finally gave Indian designers the much-needed break. But the roaring fanfare was reduced to quiet stardust when the man that Mumbai owes its luxury moment to, decided to terminate his franchise agreement.

Import duties are a headache

The figures were rosy, especially since research conducted by a luxury menswear brand said the number of Indian millionaires was growing at a staggering 19.3% annually. But the party poopers came in the guise of infrastructural and regulatory hurdles, if not the challenge to find the right local partner who shared a vision and had a sound track record. "Steep duties translate to prices 15% higher than in Europe. Currently, only 51% FDI is permitted, but it applies only to single-brand retail, leaving multi-brand retailers in the lurch. The government has been assuring 100%

FDI, but it's going to be a while before we see any changes. In terms of size, India is still long way off from China's $8 billion luxury market," says Kishor Bajaj, Chairman Badasaab Group, exclusive franchisee Brioni India.

Local partners, customers lose. Brands win

A marriage between equals is one that works, and Murjani says the one between franchisor and franchisee is in desperate need of a relationship counsellor. Most luxury brands came in when rentals were high, which
lowered margins. This led the brands to pass on high duties to customers, who then preferred to shop abroad rather than pay 25% extra. "The luxury segment works on very high margins, but brands refuse to pass these on to local partners. So, it's partners like us, and of course, the customer, who lose out," says Murjani.

The Indian high-end retail market is expected to grow to $30 billion by 2015, from the existing $3.5 billion. Luxury brands will have to re-strategise either alter the arrangement with local partners or invest their own money and run the business before aspiring for a slice of the action, he suggests.

Is recession the reason?

Although experts claim that the Indian economy and the luxury sector aren't insulated from the economic crisis, and International Herald Tribune Fashion Editor Suzy Menkes opened the IHT Luxury Conference in Delhi this March, saying, "These are tough, rough times in the luxury world... and those sensitive to the shifting mood doubt that the 15 years of expansive growth can return in the same heady, crazy way," there are those who argue that India's lukewarm response to luxe brands has little to do with recession.

"The economic slowdown hasn't made much of a difference; we haven't felt it in most categories, either high-end or premium," says Murjani. And if the luxury buyer is someone with very high disposable incomes borne out of family businesses, recession won't play mischief believes Sanjay Kapoor, Managing Director Genesis Luxury that's acquired Jimmy Choo under its company.

Premium brands doing better than luxe labels

On the other hand, premium brands like FCUK and Tommy Hilfiger have engaged in a profitable dialogue with the Indian consumer. Little luxuries don't hurt, not when they come at a lower price. Incidentally, the only international brand to enter India this year, with a store at Delhi's Emporio Mall, happens to be a premium one DKNY. "DKNY is a bridge to luxury, a more accessible fashion brand. You can buy a dress, bag, shoes or
fragrance between Rs 4,000 and Rs 30,000," says Vikas Kohli, Marketing Head, DLF Brands. 

Having learnt his lesson, Murjani is now a campaigner of "de-emphasising luxury", and admits to having done extraordinarily well with his premium brands Tommy Hilfiger and FCUK. "Our price points in India are lower than those overseas. These brands allow us to be cost/duty effective, giving enough margins for us to pass savings on to our consumers," he says.

Brands in for 10-year wait

Most luxury brands and their Indian partners admit that it will take between five to 10 years before they can raise a toast to celebrate profits. "Doing business in India is definitely not a wham-bam-thank-you-ma'am formula. It's a slow process, but one that will eventually pay long-term dividends," says Abhay Gupta, Executive Director Blues Clothing, franchisee of Versace.  

Eighty and still-going-strong, Italian brand Salvatore Ferragamo has four doors in Delhi and Bangalore, and two in Mumbai since 2005. Paul Cadman, Asia Pacific CEO, says their investment is proportionate to market potential at this time, given the current world economic crisis. "Long-term plans involve developing more doors, however with India's current GDP, largely from internal consumption at about 5% to 6%, we think internal expansion in the Indian luxury market will show positive returns in the next five to 10 years."

In India, luxury brands are in for a long grind
Santosh Desai, CEO and MD Future Brands dencostructs why

In India, luxury brands are in for a long grind. Regardless of the economic slowdown, what's fundamentally not working for them is the fact that they are not making sense to the Indian buyer. While a luxury brand sale in South Korea will see people queuing up at 4 am, in India nobody cares. Unless they design a strategy specific to India, luxury brands have no future here. Unlike the Japanese, Koreans conquered the electronics business because they took India seriously.Indians are victims of habit

With shiny statistics that indicated India's big money-spender category escalating to an astounding 22.6% between 2006 and 2007, Merrill Lynch may have reassured uncertain luxury players, but did the US financial management company miss out on the one big Indian weakness to hold on to their habits?


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