Even as Ermenegildo Zegna, the luxury Italian suitmaker, is getting ready to open doors to the largest luxury store yet in Mumbai, group president Paulo Zegna is warning other companies that India is not everything it has been made out to be.
He should know. After all, Zegna was one of the first few luxury companies to make a foray into the Indian market in 1999. It withdrew a few years later as there was no suitable mall or shopping complex to provide the right ambience to market the brand. India's chronic lack of space for luxury retail and government hurdles are some of the biggest problems for luxury companies.
"There are tens of new shopping malls planned but none to my knowledge are of the standard needed for international brands," Mr Zegna told the Financial Times at the new store at Mumbai's five-star Taj Mahal Palace and Tower hotel.
India has one of Asia's least developed retail sectors, with organised corporate retailing accounting for a mere 3 per cent of estimated total retail sales of about $200bn, according to KPMG, the consultancy.
It took two years for the company to set up the new store, a process that involved finding a local partner, seeking regulatory approvals, and then trying to find a suitable location. In India foreign retailers selling under a single brand name, such as Zegna, are allowed to own 51 per cent of a retail joint venture. Those selling more than one brand are not permitted.
Mr Zegna says that beyond the regulatory processes, the biggest difficulty for retailers was real estate. In Mumbai, the only suitable locations for luxury brands were the city's five-star hotels. In New Delhi, DLF, a major retailer, is building a luxury retailing complex, Emporio, but some analysts believe even this might not be up to the standards of luxury shopping malls in east Asia, from which Zegna derives much of its sales.
"In my view, luxury, high-end malls are going to be few and far between," says Ranjan Biswas, a partner at Ernst & Young, the professional services firm. "If you look at the present category of malls in India, they are aimed mostly at the middle and upper middle classes because these are the groups that will have the highest purchasing power."
He said he believed proper, purpose-built high-end malls of international standards were about five years away.
Well, nobody said it was going to be easy, but someone's gotta do it, right?
No comments:
Post a Comment