The drive to come

FASHION: Valentino enters a luxury market full of promise, but that alone may not be enough.

A couple of weeks ago, Valentino, a ¤1.9-billion luxury brand with profits of nearly ¤20 million last year, made its grand entry to India with the unveiling of a showroom at New Delhi's Shangri-La hotel. It's an 800-sq-ft store, according to Michael Norsa, CEO, Valentino, which has invested around $3,000 per sq ft in it.

Valentino, of course, is only the latest luxury player to test the Indian urge for supreme exclusivity. The likes of Chanel, Versace and LVMH, to name just a few, are already present in a luxury market estimated by consultancy KSA Technopak at Rs 2,000 crore and poised for an exciting future.

The current rating of the market's prospects are in sharp contrast to the actual fate of attempts by Pierre Cardin and Liz Claiborne in the 1990s to crack this market.

"India has changed considerably in the past four-five years," explains a visibly upbeat Norsa. The Asian economy is rising much faster ("almost 6-8 per cent" annually, in his words) than the European and American markets, which are recording figures of barely 2 per cent. Then, there's the overall sense of well-being among the well-off. "Luxury needs a safe environment," contends Norsa, "and there's no better time to launch in India than now."

The next Indian store is likely to be in Mumbai, according to Sheetal Mafatlal, president, Mafatlal Luxury, which has a partnership with Valentino in India. And don't expect additional stores to sprout up too quickly.

Says Mafatlal, "I think we will break even only by the third year, and profits will only come later." Valentino, admits Norsa, has had some re-learning to do, too "High-end luxury stores have failed in the past," he says, "Before Marzotto group acquired Valentino, the brand was making tremendous losses because its business execution had failed miserably."

Valentino intends to follow its global practice of finding small but effective store locations. Judge its planning from the fact that Norsa is already in touch with a real estate developer to set up a special mall by 2008 (in either Mumbai or Delhi) to house high-end Italian brands.

But what about brand planning? Most other luxury brands are better known in India than Valentino, and some have even got auras that radiate specific brand values.

Raj Ramanandi, head, operations, Pure Gold, which distributes Versace's couture line in India, does not exaggerate when he says that "Versace has a great brand heritage, and people in India are extremely brand conscious". This should please Valentino. But it will also have to drive itself into that consciousness.