Have brand, can't grow

Designer labels complain that Indian retail space lacks luxury

Here's what's ironic: even as retail space continues to grow in India, with several hundred malls already announced, luxury brands already in the market are facing problems finding the right retail environment for their pricey goods. An increasing number of luxury brands are holding on to their expansion plans till the right retail outlets become available.

Hugo Boss, for one. A year old in the country, with outlets in The Oberoi hotels in New Delhi and Mumbai, Hugo Boss chairman and CEO Bruno Salzer says even plans for the next three years cannot be chalked out because "everything depends on the availability of the right locations".

Location, in fact, is the main problem where another designer label, Ermenegildo Zegna, is concerned. "We require luxury retail spaces, not malls," says director Karima Sagrani.

"We're biding our time till we find the right locations, whether in five-star hotels or as stand-alone stores, that will justify our high price points."

Both brands say their presence in China grew phenomenally on account of the right space and location. India, on the other hand, has been a laggard, and though the luxury brand market may have opened in the country, the reason it isn't growing is because there simply isn't the space for it.

"A Hugo Boss showroom, on average, needs 150 sq metre of space," says Salzer, which is an indulgence in most Asian locations, including India.

China, on the other hand, has been generous, so the brand has 60 Boss showrooms in 30 metro areas in the country, a growth it has achieved within 10 years. In India, Hugo Boss will add two new stores by spring 2005, its second outlet will be in Mumbai located at the Grand Hyatt, and another in Bangalore's Leela Palace.

Ermenegildo Zegna opened at Mumbai's Crossroads four-and-a-half-years ago, but is now considering a flagship store in the same city. It's looking for a location in Delhi as well as other metro areas, but has not been able to identify anything suitable yet. "In China, we opened in five-star hotel arcades," Sagrani says, "and we'd like to look at the same model in India."

She identifies two more concerns about the Indian market that have stopped the luxury menswear brand from growing to its potential. "There's a huge shortage of sales staff," she says, "people in India don't look at retail as a prestigious vocation yet." There's a problem with brand awareness, she adds.

In a first therefore, Ermenegildo Zegna made presentations last week in Ludhiana and Jalandhar "to introduce the brand there" and used the discounting route to get the elite to test brand quality.

"Niche brands like ours could be very big in India," says Sagrani, adding "we represent luxury and quality." And though she'd like to add a couple of stores every year to her Indian portfolio, "everything depends on the location".

"Hugo Boss has been part of the buying behaviour of the Indian consumer," confirms Salzer, "but we need high-end locations to give them the same experience/product as they've enjoyed in London, Paris, Singapore, Dubai or Abu Dhabi."

Guillaume Nagy couldn't agree more. The regional marketing manager for Puig Asia Pacific has been on a whirlwind tour of Mumbai and Delhi to introduce the latest Nina Ricci fragrance to India.

Evening in Paris, the perfume, was launched just a month back in Europe and India is "among the first wave of countries to retail it because the Indian consumer is both aware and demanding". Yet, he admits, "China is at least 10 years ahead of India in retail."

The group may be investing heavily in India by way of advertisements in fashion magazines and workshops by Baccarose beauty and fragrance experts, but it sees India as a huge market that "will pay off 20 years from now".

That's one reason why, like Ermenegildo Zegna, it's biting back on its margins to make up for the high duties and provide its products at prices that are on par, even competitive, with the rest of the world.

Nina Ricci began with brand/identity counters in flagship department stores of Shopper's Stop, and has since moved to Lifestyle, Pantaloon and Central (in Bangalore and Hyderabad) as well.

"We're following retail spaces," Nagy says, "and in the second category stores we now have personalised displays." Unlike China where consumers choose beauty products over fragrances, he's convinced India will be a very big market for fragrances. But for that "" yes, you're right "" "the retail market has to open up first," he observes.