Indian airports: Alternative destination for luxury retail

When real estate giant DLF launched the Emporio mall in New Delhi, it soon became a major hub for top luxury brands. From Armani to DKNY, Jimmy Choo to Hugo Boss some of the best known brands are housed here. And for the well

healed Delhiite who till now was used to buying their luxury brands from the shopping arcades of star hotels, had now got a new swanky address to shop. Indeed cities like Delhi and Mumbai to lack high streets, which are synonymous with ultra-expensive shopping in cities like London, Milan, Paris and New York. But now luxury brands are heading to international airports as an alternate destination in India. Airport shopping areas are now transforming into hybrid retail formats where ‘luxury’ can co-exist with ‘premium’ brands. That is, when luxury brands want to step out of the five star hotels or the exclusive malls, which are very few in number anyway.

Reports point out that star hotels account for almost 80 to 90 per cent of luxury retail space in India, with the prime focus being on metros like Mumbai, Delhi and Bangalore. Of course, the retail boom of the last few years has also led to the emergence of newer retail formats dedicated to specific segments, like the DLF Emporio in New Delhi and The Collection at UB City, Bangalore. And as Jaideep Wahi, Director, Retail Services (India), Cushman & Wakefield, a real estate consulting firm, says “an emerging alternative destination is the new modernized airports.” Apparently many luxury brands are in talks with the international airports in major cities of India to open their outlets.

Experts say that of the world’s leading 500 global luxury brands, only 30 per cent are present in India as compared to 70 per cent in China. The luxury brands which have entered India include Giorgio Armani, Jimmy Choo, Cartier, Tod’s, Dior, Fendi, Burberry, Hugo Boss, DKNY, Ravissant, Louis Vitton, among others. Also, India accounts for less than 1 per cent of the global luxury market while China accounts for 10 per cent of this market. From 1.2 million sq. ft. in 2008, (3.8 per cent of total retail space), the luxury retail space is estimated to grow to around 1.6 million sq. ft. by 2012 (3 per cent of total retail space). Moreover, the Indian luxury market is expected to grow 10 times, from $3 billion at present to $30 billion by 2015. The stats also show that around 40 per cent of the country’s wealthy households are in Delhi and Mumbai, while the remaining 60 per cent are spread across Pune, Hyderabad, Chennai, Bangalore, Ludhiana and Kolkata.

However, despite the potential of growth the fact is there is no Indian version of the Fifth Avenue (New York) or the Bond Street (London). One reason perhaps is because these places have not been a focus for development in India. Saloni Nangia, Senior VP, retail, Technopak Advisors, explained why a place like Connaught Place in Delhi or Linking Road in Mumbai cannot be a high street equivalent of Fifth Avenue or Bond Street. “You need to develop these places afresh for them to be high streets,” Nangia says. Experts say such high-end locations have the potential for some component to be redeveloped with excellent infrastructure and environment that this concept demands. Indeed, main streets in India unlike their European or American counterparts have a tenant mix, which is unappealing to luxury retailers, besides lacking basic infrastructure for shoppers such as proper pavements and parking spaces. Perhaps that is why as of now, luxury brands have to be content being housed in controlled environment in India to keep their exclusivity.