New Delhi: Chief executive of luxury department store chain Harvey Nichols and Co. LtdJoseph Wan spoke to Mint about India’s emergence as a luxury market and how high rental price and duties hold the market back. Wan, whose chain has just opened outlets in Istanbul, Hong Kong and Riyadh, says the iconic British store will look to enter the Indian market if it gets the right space and partner. Edited excerpts:
You probably have an insight on Indian customers because they visit your stores in London or Dubai. What do you make of the market for luxury products here?
I think that with the rise in affluence of Indian consumers, there is a strong desire and demand for luxury goods. But I am not sure it is 100% ready to take off because there are still heavy duties on luxury goods. Therefore, businesswise it may
not achieve optimal performance if luxury goods come in now. Luxury customers can when they are travelling, say in New York or London, see the same things and buy them there at cheaper prices because of import duties (that make the same products more expensive here). Everybody is looking at it very carefully to determine the right time to come.
Game plan: Harvey Nichols chief executive Joseph Wan.
Rentals and other costs are also quite high in India...
Yes, it could be particular to India, mainly on real estate. So we need to find the right partner who would have the connections or local knowledge to find a suitable sight on commercially acceptable terms. But apart from real estate costs, other costs are substantially lower when compared to the Western world because transportation, utility, insurance and staff costs are much lower.
In the UK where we know our markets very well, we do invest in opening our own store. But when we go overseas, our strategy is through licensing agreements. So, we find a local partner, a licensee to operate the store. Our stores in Riyadh, Istanbul, Dubai and Hong Kong are all under licence agreements. If I come to India, it will be through the same route.
Would you say that there is a lack of good partners, with luxury retail experience, in India?
Yes. I think that is the same in most emerging markets. It is a question of whether they have the strategy of going in to luxury retail on a global basis and whether they have the infrastructure to move in to that area.
Harvey Nichols is really at the top end of retailers in the UK and houses edgy luxury brands. Would you say India is ready for this?
I think the consumer appetite and demand are there...
There are such sophisticated customers in India although not in huge numbers. We believe the government is moving in the right direction. We need to build and prepare ourself. We can’t sit here and wait for liberalization. That is why India has been on my radar screen for quite some time.
Is it a problem that there are no high streets? How can a high street be created here?
Yes, it is difficult. I think it has to do with the government —whether they have a real desire to create luxury retail in the Western way. In every city, all the luxury shopping is created by the government. It has a lot to do with government policy.
Do you look at India as a difficult market to succeed in?
Yes, at the moment it is not easy to succeed.