While lack of appropriate real estate remains their largest single frustration, luxury brands also have a long list of litanies that they say is holding back the industry.
The Indian government imposes duties on many such products that are among the highest in the world. Assorted duties on luxury products could vary from 30-50%, compared to single-digit duties in Dubai, while sales per square foot are double those of the few stores operating in the country. So, retailers are caught between high rent, scarce space and high duties, a multiple blow in terms of overall profitability in an industry where profits are quite handsome, given ultra-premium pricing based on snob value and brand image.
But, with more and more Indian luxury-product shoppers travelling overseas and with India’s renowned money for value culture, most foreign brands are making sure there is not too much of a gap between product prices here and in places such as Dubai. “We try to ensure that prices are never more than 10% more expensive than elsewhere,” says Vijay Murjani.
Complicated and variable duty structures aside, there is also the hassle of several outdated regulations the industry needs to comply with.
For instance, each crate of clothes needs to have a swatch outside so that it can be checked for hazardous dyes and termites. “The Indian government needs to work on making India more welcoming,” says Baljit Singh Kohli, who is the Indian partner for household brands, such as Bodum and Brabantia, the maker of fancy trash containers, among other products.
Luxury retailers are also finding that despite an appetite for most things Western, the Indian consumer has her own tastes and preferences when it comes to items such as branded apparel.
As a result, selling high-end women’s clothing, which has never been easy across cultures, is particularly challenging in India. As a result, many of the luxury brands stock and sell mostly accessories, such as bags, shoes and belts. At Versace, nearly half the people who walk in to the store just buy sunglasses. “Couture lines are hard to wear here,’ says Raj Ramande, head of operations for Versace, in India. “But, we do sell a lot of accessories and casual wear.”
After the initial push of existing lines, products mix is being thought out much more carefully now. Bonardi says La Perla will bring embroidered corsets to go with Indian clothes, along with its lingerie, beach wear and ready to wear line. Chanel makes sure to bring less heavy winter clothes and accessories that go with Indian clothes and weather. Fratelli Rossetti stocks a lot of black men’s shoes rather than the myriad colours it sells in Europe and offers soles that are much more durable and flexible.
Stores are also finding that looks can also be deceptive when it comes to spotting the window-shopper from the deep-pocketed luxury buyer. As a result, having a sales staff that isn’t too snooty and can speak the right language—including that of intense bargaining—is critical to closing the sale.
It is not uncommon, for instance, at Chanel’s make-up workshops and one-on-one make-up consultation sessions for top clients to find that customers have come all the way from Chandigarh just for the day. Chanel’s Bertrand says that they do see clientele from so-called Tier Two cities, particularly places such as Amritsar, Ludhiana and Chandigarh.
“Apart from those who traditionally travelled and shopped abroad, there is a new set of people with sufficient money,” Bertrand says. “These new customers need more interaction with the brand. This has made it all the more important for us to have well trained staff here.”
–Rana Rosen contributed to this story.