Mumbai: Louis Vuitton, Jimmy Choo, Ermenegildo Zegna, Burberry, Bottega Veneta —a few of the bona fide luxury brands available in India. As they try and crack the local market, those responsible for marketing such brands in the country have come to realize that location may not necessarily be everything. That it’s far more important to have a store where the largest number of potential customers are likely to be browsing.

This means that the country’s top five-star hotels are no longer the most desirable address for such brands. The alternatives are the so-called high street—this includes shopping complexes in upscale neighbourhoods—or the three malls in the country that are home to such brands. Not the best solution given Indian building standards and steep real estate rates but seemingly preferable to the sparse attendance at five-star hotel stores.

Genesis Colors Pvt. Ltd, parent of Genesis Luxury fashion, India’s largest luxury fashion house which retails Canali and brands including Bottega Veneta, Burberry and Jimmy Choo plans to move all its brands out of hotels into malls that cater to luxury brands.

India has three such malls—DLF Emporio in Delhi, Palladium in Mumbai and UB City in Bangalore. Of these, only the first is exclusive to such brands—the other two offer a more egalitarian mix. While mall fatigue has struck across the country’s big cities owing to the slowdown and a boring sameness, there is even less appetite for the upscale variety. No new luxury malls have been launched in the last three years, so most brands will have to make do with what’s available, at least for now.

Canali, an Italian luxury men’s fashion brand, was among the first to make the move two years ago when it shifted to Palladium from JW Marriott in Juhu, Mumbai. Last year, Tod’s, another Italian luxury goods brand, closed its store at The Galleria at the Trident Hotels in Nariman Point, Mumbai. It has just one store in the country now, at DLF Emporio.

“For our portfolio of brands, we have booked spaces in malls that specially cater to luxury brands and once all these locations are operational, most of our business will be housed out of there instead of five-star hotels, where footfalls remain a challenge," said Sanjay Kapoor, managing director, Genesis Colors.

Darshan Mehta, chief executive officer, Reliance Brands, a subsidiary of Reliance Industries Ltd that retails Italian luxury men’s fashion brand Zegna in India, said it’s not opening any new stores in five-star hotels as such locations don’t work. What was once Zegna’s flagship 3,000 sq. ft store at the iconic Taj Mahal Palace hotel in Mumbai, has been downsized to 900 sq. ft.

A Zegna store of more than 1,000 sq. ft has opened at Palladium.

The key statistic is the number of visitors that stores get.

“As far as footfalls go, if a brand store gets 10-12 footfalls in a day in a mall, the same would get two or three in a hotel and sales per sq. ft also would be in that proportion," said Kapoor of Genesis.

“We get customers from all sorts of places. They could be people from across India and even tourists from South Africa visiting the city. The number of walk-ins are at least 10 times higher (compared with five-star hotels) and customers who are visiting the mall are curious to check out the brand, know the prices and see the collection," said a store executive at Jimmy Choo’s Palladium store. He declined to be named as he’s not authorized to speak to media.

To be sure, real estate is a big challenge as such brands need to be housed in a location that’s suited to them. But that may be changing.

“We are thinking of creating more luxury environments like Palladium in cities like Chennai and Chandigarh," said Rajendra Kalkar, senior centre director, High Street Phoenix, which runs Palladium. The new centres will take a year or two to come up, he said.

A few developers have announced luxury malls but these will take at least two years to be ready, said Shubhranshu Pani, managing director, retail services, Jones Lang LaSalle Meghraj, a real estate advisory.

Developers aren’t all that enthusiastic because of the limited number of potential tenants. Most luxury brands plan to expand their presence to anywhere between two and six stores in the next 10 years and not much more beyond that.

The overall Indian luxury goods market was $2.18 billion in 2011, a little more than 10% of China’s $17.94 billion luxury market, according to an October report by Euromonitor.

That’s why luxury brand marketers are looking elsewhere to open their stores. In 2011, French luxury brand Hermes ignored hotels and malls in Mumbai to open on the high street in a 150-year-old building at Horniman Circle in Mumbai. Louis Vuitton meanwhile opened its fifth store in Bergamo, a so-called boutique mall on Khader Nawaz Khan Road in Chennai.

The shift is coming about because alternatives, albeit limited in nature, are emerging.

“There were no appropriate spaces other than five-star hotels to house these brands (earlier), hence a lot of our business was out of five-star hotels," said Kapoor of Genesis.

To be sure, five-star hotel shopping areas will still house brand names.

For instance, the Taj Krishna hotel in the upscale Banjara Hills locality in Hyderabad set up a luxury shopping area three years ago. It houses brands such as Zegna, Cartier, Burberry and Omega.

Emails sent to the Taj Group of hotels didn’t get a response. Trident declined to comment.

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