New Delhi: Leonardo Ferragamo is on his very first visit to India and what he sees reminds him of China some 15 years ago.
Back then, Ferragamo, who heads the family-run firm Salvatore Ferragamo, was among the first to spot China’s future potential when it comes to luxury brands. “We had the courage to open Ferragamo’s first store there, in the middle of nowhere, because we had faith in China,” recalls Ferragamo in an interview with Mint. Today, there are about 30 Ferragamo stores there, he says.
“I have the same kind of feeling for India today that I had for China 15 years ago,” says Ferragamo, who is also here to lead a delegation of Altagamma, the Italian association of luxury-goods makers. “The Indian market is really ready now.”
Ferragamo isn’t just being optimistic. He says the company’s first—and only—store in India, operating since last year out of a Hyatt hotel in Mumbai, is doing “far better than we had expected”.
The big sellers at the store so far: pricey men’s shoes, ties and other accessories. Still, Ferragamo isn’t about to go on a store-opening spree in India any time soon, given the nascent market and—more importantly—a key stumbling block that many other Altagamma members are also pointing out: lack of a suitable retail environment even in Mumbai and Delhi, the two cities where a majority of overseas luxury-goods retailers are concentrated.
“It is not impossible to find the right location,” says Ferragamo, picking his words carefully. “But it is an issue.”
With a slew of new hotels on the cards for Delhi, courtesy the Commonwealth Games in 2010, as well as real-estate developers targeting luxury brands with new malls, the problem looks like it will ease at least here, though not very soon. In Delhi, for instance, DLF is building its Emporio Mall in a south suburb aimed at housing luxury brands.
Altagamma isn’t necessarily banking on that one suburban location for its members. Armando Branchini, executive director of the association, says the group is in discussions with several builders, including DLF, the Wadias of Bombay Dyeing, Reliance and the Rahejas, about possibly creating in-city luxury retail space in Delhi and Mumbai, which could attract not just Italian brands, but also brands from France and other European countries that spawn luxury goods.
At issue for many of the foreign luxury-goods players is the need to be in areas where there is foot traffic that isn’t just the kind of traffic that high-end hotels draw to their stores now. At the same time, they want to retain the cache of their ultra-expensive, at least for many shoppers here, and premium-brand imagery—which means they don’t want to be too close to suburban malls, even somewhat upscale ones. “The Emporio will be fantastic as a destination because it is in proximity to other new malls and will draw a lot of captive audience. But we also want the right locations in the centre of the city,” says Ferragamo.
While Altagamma is working on potential long-term solutions for the space issue, Ferragamo also points to the group’s deepening ties with the Federation of Indian Chambers of Commerce and Industry as an illustration of how India and Italy could work at a macro level to try and resolve some of these issues, which also include an effort to try and get the government to reduce import duties and non-tariff barriers on luxury goods.
While other Altagamma members are much more strident, noting that tariffs remain a problem as do government regulations in retail, Ferragamo is clearly taking the elder-statesmen role on this trip, saying: “The Indian government is aware that this is a constraint, but they also have to manage the process (of any change) carefully,” given various domestic issues, he says.