Luxury retail market sluggish in India

Despite rising incomes and top notch luxury brands entering

the Indian market, the growth in the $4.8 billion luxury retail market remains sluggish. The reason: dearth of luxury shopping destinations, high pricing of products and low brand awareness. The Indian luxury market forms only 2 per cent of the global market for luxury goods. In the lifestyle segment, which includes apparel, footwear and accessories, premium global brands like Armani, Tommy Hilfiger, FCUK, Calvin Klein, Louis Vuitton, Dolce and Gabbana to name a few have entered the market in the last five years. However, their reach and visibility is limited to metros only. The Collective, a super premium lifestyle retail chain, stocks about 100 luxury brands in its three flagship stores in Delhi, Mumbai and Bangalore. The Collective has maintained a growth rate of 19 per cent in the last three years. Its best-selling brand is Hackett, which has grown at 50 per cent and Armani, which has grown by 30 per cent. Though overall growth has been on the slower side, it’s expected to rise as the customer’s propensity to spend is increasing.

The lack of good luxury shopping centers is another factor that has impacted retailing in this segment. Luxury retailing in India is limited to a few shopping plazas, select high street locations, malls and five-star hotels. Three centers which are in the luxury segment are DLF Emporio in Delhi, UB City in Bangalore and Palladium in Mumbai. However, the right location and the retail ambience for a brand are crucial. Lack of proper retailing channels across the country can mar the growth of a brand.

Another constrain is that luxury retailers offer a limited product range and stock second-rung products at astronomical prices. Also, there is no brand consciousness in India when compared to the West. Despite the challenges, retailers are hopeful of a bright future in India.