India key to LVMH expansion plans

Moet Hennessy Louis Vuitton (LVMH), known for luxury brands such as Fendi, Christian Dior, TAG Heuer and Dom Perignon, has identified India as key to its expansion. The group is in talks with three leading domestic companies for partnerships.

The plan is to introduce more of its brands in the country. It will bring in its Sephora chain of perfumeries and also widen the scope of luxury retail by setting up speciality malls in leading metros such as Mumbai and Delhi.

Sources associated with LVMH's India plans said talks were on with Reliance Retail, DLF and the Reliance Anil Dhirubhai Ambani Group (R- ADAG). However, when contacted, a R- ADAG official said: "We cannot comment at this stage."

The sources said while talks with Reliance Retail were on for some brands, Kenzo, a perfume brand, was not part of this. "Talks broke down over the shareholding pattern. Reliance Retail was not prepared to enter into any agreement as a minority shareholder," said a source.

Given the country's recent economic boom, analysts expect the luxury retail market to take off in the coming years. Retail consultancy Technopark has estimated the potential size of this market at Rs 65,000 crore.

It conducted a study on the domestic luxury market recently and concluded that the single most important reason for the luxury market not flourishing in India was the 'lack of luxury retail environments'.

The seriousness of LVMH's intent is also clear from its recent move to create a new position for India as part of its global management structure.

Ravi Thakran was appointed group director for India four months ago. This was in addition to his job as president and chief executive officer of LVMH group's watches and jewellery division for Asia Pacific.

Thakran said LVMH created such designations for only its key markets. It had done this for China and Japan earlier.

LVMH would increase its investments in the country by more than 100 per cent this year. "We will have to maintain the momentum of investment for the next four to five years. For this, we will have to pump in millions of dollars into the country," Thakran said.

He said in its India foray, LVMH is more serious on Kenzo and fashion and leather brands Celine and Thomas Pink. Currently, Christian Dior operates as a franchise in New Delhi. In 2006, Fendi and Louis Vuitton had got the government approval to enter the country with 51 per cent foreign direct investment.

"The luxury retail environment here exists only in micro-markets such as in five-star hotels. We are serious about widening this environment to luxury malls. DFS is our international retail concept, which covers our entire mall presence as this was done in Hong Kong and Singapore. The sizes of these malls range from 1 lakh square feet to 2.5 lakh square feet and typically have 30-50 boutiques and separate floors for perfume, jewellery and watches," Thakran added.

Sources said DLF was in talks with LVMH to build such malls and also to give out space to LVMH's brands in Emporium, the luxury mall currently under construction in New Delhi.

LVMH has identified watches as a category with immense potential in the country. "Our experience in China has taught us that this is the first category to take off in a nascent market," said Thakran.

TAG Heuer, LVMH's brand of luxury watches, currently has six outlets in India and there are plans to increase this to 25-30 this year. "We actively need to expand to uncovered markets such as Hyderabad, Ahmedabad, Pune and Kolkata," Thakran said.