India’s luxury retail market is constantly booming and as Rajendra Kalkar, president, West, The Phoenix Mills puts it, “this market attracts a fair bit of attention because of the significant number of Indian billionaires in the list of high net-worth individuals (HNIs) and because of the new brands that look to enter this market.”
Globally, renowned luxury labels have realised that India, although challenging, is a diverse and viable market that will contribute towards their respective brands’ overall growth trajectory. Dinaz Madhukar, executive vice president, DLF luxury, retail and hospitality says, “I have seen so much of interest for India right now. Earlier, while calling up brands, I had to introduce them to India, then introduce Delhi and then introduce DLF as a brand. However, now, everybody is aware. You call up brands and they are aware of DLF Emporio and The Chanakya. They know of India and its potential growth in the future. Everybody says they are ready to explore India as a market.”
Also, the growth in India’s retail segment is fuelled by well-travelled consumers, millennials and business travellers who wish to explore more refined and varied options.
Going beyond “just” shopping
Some of the key names in the luxury retail space in India include DLF Emporio and The Chanakya in New Delhi, Palladium Chennai, Palladium Mumbai and UB City in Bengaluru among others. Each of them is moving beyond the confines of being a shopping centre and is focusing on enhancing the F&B, lifestyle and event aspect. A case in point is Chennai’s Phoenix Marketcity and Palladium’s September Fest comprising unique events such as animecon, cosplay, gaming convention and beautycon. In addition to this, Palladium Chennai also hosts national and international styling events, wherein customers can connect with fashion bloggers, stylists, and attend masterclasses by make-up artists. This helps the mall to establish itself as a lifestyle hub, going beyond mere retail.
Likewise, UB City is your go-to spot for the finest events in Bengaluru. From exclusive art exhibitions to fashion shows and music concerts, the mall is buzzing with events all year round. This is part of a larger trend of malls hosting curated experiences and events within their premises.
As far as F&B is concerned, The Chanakya and DLF Emporio offer an impressive collection of international and local food outlets that give customers a breather from run-of-the-mill food court formats at malls. Some interesting food offerings include The Chanakya’s Khoya for handcrafted Indian sweets, MKT for international cuisine, Foodhall for gourmet delights; and DLF Emporio’s Cha Shi for Oriental dishes, SET’Z for Thai, Arabic and European food. Mumbai too has a similar phenomenon. For instance, High Street Phoenix and Palladium in Mumbai have now become dining hubs as they house dozens of food and beverage outlets ranging from fast food to fine-dining to complement the retail experience.
Interestingly, some of these malls are also using their platform to promote philanthropic activities. For instance, every year, Palladium Mumbai donates a certain percentage of its sales to an NGO. This year too, the mall intends to donate a larger sum by driving in more number of people, by increasing customer engagement and consumption through activities and promotions.
Challenges on the way
Although the luxury retail market in India is thriving, there are several challenges that need to be overcome. Expressing his views on the challenges faced by the market, Kalkar says, “Lack of a suitable infrastructure, high tax rates and parallel growing market of counterfeits are some major problems that are a cause for concern for luxury players entering India.” As Kalkar points out the growing nexus of counterfeiters is a major concern for luxury brands. The increasing availability of fake luxury goods is not just affecting the brand’s image but also creating a ῾brand dilution’. However, luxury labels and retail spaces are actively issuing takedown notices and opting for elaborate legal measures to curb this menace.
Adding to this, Madhukar says, “One of the limitations that comes about is that for brands to become economically viable, they need multiple options to open. Just one store in one city does not make it economically viable. So, you need good real estate for the brand to expand.”
Another limitation pointed out by Pooja Patti, centre director, Palladium Chennai is affordability. She says, “While everyone has their eye on good international brands like Kate Spade, Canali, Mont Blanc, Paul and Shark, Hugo Boss and Coach, affordability still remains a moot point with each consumer.”
Also, young Indians prefer to go for affordable luxury, thereby leaving a small vacuum in the uber-luxury market.
Impact of Digitalisation
The role of digitalisation in the retail segment has been a topic of debate for quite a while. Where some say that the presence of e-retailers has not really affected the luxury retail business, a few others are of the opinion that the malls can benefit from digitalisation. Patti says, “At Palladium Chennai, we have benefited from digitalisation as we arrived right in the middle of the information revolution. We no longer need middlemen to reach our target audience and can directly start conversations with them, understand the requirement of every consumer and reinvent ourselves in real time. E-retailers have given good visibility to our brands in the vast online space that helps us drive in more number of visitors.”
“With lifestyle labels like ours, the brick-and-mortar model is indispensable because it’s still the best way for people to experience the brand for themselves.”
On the other hand, Madhukar believes that luxury is not all about shopping but the experience that goes with it, and that is the reason people still prefer to come and experience the brand’s culture before they buy the product.
Tier II and Tier III cities as a market
Currently, the luxury retail market in India is limited to metro cities like Mumbai, Delhi and Bengaluru. Tier II and Tier III cities, despite having high spending power and a growing wealth, remain unexplored. As per Pooja Patti, centre director, Palladium Chennai, since real estate is heavily regulated, luxury brands generally launch stores in high-end malls or hotels, through joint ventures with local distributors. In addition to this, she says, “The cost of setting up luxury stores in high streets is very high which dissuade retailers from opening stores in such areas.”
However, one cannot ignore the fact that there is a large target audience residing in Tier II and Tier III cities that not just have an inclination towards these luxury goods but also have the monetary power to buy them. According to industry reports, even though, there is low engagement and outreach by brands in non-metro cities, the consumption of high-end products there has been outpacing metros for a few years now. Looking at the increasing number of HNIs in these cities, there seems to be a possibility that soon India’s luxury retail market will be driven by Tier II and Tier III segments.
