Giorgio Armani SpA, the Italian fashion company which designs fashion accessories, apparel, cosmetics, fragrances, home interiors, eyewear and watches, among other things, opened its store in India in the middle of a slowdown. The company’s deputy managing director John Hooks who has considerable experience in luxury retail in Asia was in India some time ago and spoke to Anoothi Vishal on Armani’s India plans.
You opened the Armani store right in the middle of the slowdown last October. How is business doing?
We are satisfied with how things are going in India. We have good Indian customers and the Armani name is very well known here. We are going to be here for a long period of time. We had anticipated the challenges that we would face in this market. In fact, we now have two stores in India — Emporio and Giorgio Armani (both at the DLF Emporio mall in Delhi).
What are the main challenges in the Indian market?
It is important to understand a market culturally. Indians have always been quality conscious and they recognise quality because they have a long tradition of luxury. But our biggest challenge was location. Where to locate our stores? We tied up with DLF as our Indian partner because it gave us good location and the knowledge of the system—on how things work in India. That was part of our plan, to put in the larger share of money ourselves and have DLF as a minority partner. On the other hand, difficulties are also a guarantee against competition. You know that others will face the same problems.
Critics argue that the model for luxury retail in India has failed. Any comment?
You are too quick to judge. India has had a long tradition of luxury but is a very new market for luxury. We will take three-four-five years to get going and we are not in a hurry because we are here for a long time. It is an extreme statement to make. I was in China in the 1980s and was closely involved when Giorgio Armani started retailing from there in 1997. They had more extensive infrastructure, better quality malls and the great advantage of Hong Kong and yet it (luxury retail) took time to take off.
The Indian customer is the most discerning in the world unlike in China which has lost its luxury tradition. Certain individual cases (of retail in luxury) may have failed because of their own reasons but if you choose the right partner, there is no problem. We have franchisee partners all around the world.
Why did you come through directly-owned stores in India and not through the franchisee arrangements that some other brands follow?
That was part of our plan. When you have a franchisee, you are delegating, you are entrusting your brand to someone else. In India, there is no significant experience when it comes to luxury retail. There were only people who ran garment stores and the like. So we decided to have a direct involvement. The only way you can do this in India is through majority shareholding and direct management.
How much more expensive are your products in the Indian stores than elsewhere? And if they are more expensive, why should customers buy from India?
The products are a little more expensive depending on the category, about 10-15 per cent higher and even less than that on some of the more accessible categories like watches, jeans, sunglasses, knitwear… Even if it is a 15 per cent difference, how much is that? Most of these products are impulse buys and would you wait till the next time you went abroad to pick one up? China has customs duty but Hong Kong does not and we don’t find any difference in the stores at both the places. In fact, Chinese customers don’t even go to Hong Kong to pick something up.
Are the Armani products in India same as elsewhere?
We offer absolutely the same products. Even the stores are the same. The Giorgio Armani store here is the very latest equivalent to the one in Beijing or Milan.
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Recession is also a time to make corrections.
Yes, it just doesn’t mean a drop in turnover but there are problems of relations and efficiency that we need to face. This is also the time for innovations. If we experiment with something now and that works, we really know that it works. Rents have also come down so it is time to look at other locations, to invest now.
We have already been looking at our cost and price structure, at being able to provide more value for money. Some of this should be evident in our spring/summer lines. Our main line, Giorgio Armani, will always remain made in Italy. But for things like jeans, we are looking at getting more work done abroad especially in Asia, where labour is less expensive and therefore we’d be able to give a better quality:price ratio.