Hi-end luxury brands scout for premium retail space

Giving a twist to the Indian retail scenario, luxury labels are now scouting for heritage homes rather than space at heritage hotels to launch new outlets. India lacks hi-street destinations like New York's Fifth Avenue and Madison

Avenue or London’s Bond Street, so they have to go that extra mile to look for a retail place that would attract enough footfalls. And with an increase in demand for suitable retail space, heritage homes are fast becoming premium retailing destinations in India. The reason behind the new trend is the dearth of high-end malls and low sales potential of five-star hotel’s retail space.

For instance designer wear brand Kimaya Fashions preferred a 16,000 sq. ft. bungalow in the upscale Jubilee Hills, when they wanted to set up shop in Hyderabad. What’s more, the place gives them three-times the display area compared to the size of its average outlets. Similarly French luxury brand Hermes moved into a Victorian property in Mumbai's Horniman Circle to retail its popular Birkin bags.

Another example is of multi-brand store Kitsch run by TSG International that retails brands such as Alexander McQueen, Moschino and Stella McCartney, was able to achieve operational break-even in less than six months after setting up a standalone store in Mumbai's Kala Ghoda area. In contrast, its outlet at luxury mall DLF Emporio in New Delhi took over a year to break-even.

According to real estate consulting firm Cushman & Wakefield, five-star 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. While malls and standalone luxury outlets have been a comparatively bigger draw.

Another option, these brands are considering is sharing space with brands that are not in competition when it comes to the level of premium products offered. Genesis Luxury, which offers brands such as Jimmy Choo and Bottega Veneta, experimented by opening a store for Italian menswear Canali at Mumbai's Palladium Mall. And in Chennai, it entered Express Avenue mall which has a mix of brands such as Levi’s and Biba as well as the super-premium brand Diesel. While it opened a standalone outlet for Burberry, it clubbed its other brands under a format called Luxxe Box. Exprerts say, this is a smart move because Indian consumers may buy luxury products in one category and premium in others.

This way, these brands save the cost required to create an ambience and generate footfalls in stand-alone stores. But on the other hand, while a luxury mall seeks rentals of 550-600 per sq. ft., standalone outlets and malls with a mix of high street brands are available at half the cost. As Priya Sachdev, Creative Director and COO of TSG International Rentals says rentals are 10 per cent of the sales of luxury brands globally and they are able to achieve that in India by experimenting with location.