2008 witnessed the opening of India’s first luxury malls i.e. DLF Emporio in Delhi and UB City in Bengaluru. Over a decade later, 2019 is touted to be the biggest year for high-end fashion in India. As per a recent report by The Business of Fashion and McKinsey, over 300 international brands are expected to enter the Indian market and open stores in the next two years. As the second largest market after China, India will play a significant role for global fashion brands seeking the next phase of growth. Backed by strong regulatory changes including policy changes in FDI, a deeper focus on Make in India, rising income of the middle class and strengthening of the Indian manufacturing industry, the time is ripe for the global fashion brands to expand their footprints and launch products in India.
With new awareness and appreciation of high-end goods, the Indian consumers are consistently seeking fashion brands that enable self-expression and Individuality. With official forecasts across industries reflecting a positive outlook on the Indian market. 2018’s FDI policy change that allowed 100 per cent Foreign Direct Investment (FDI) in single-brand retail via the automatic route has found favour with international fashion brands and white goods companies. At the same time, India’s improved ranking on the World Bank’s ‘Ease of Doing Business’ ranking will lead to a boost in the foreign investment in the country. A move already visible based on the plans of various international fashion houses to launch stores in India. The government has also relaxed the compulsory local sourcing condition of 30% which again plays in favour of the fashion brands as it would allow them to source directly and not have to find qualified local manufacturers.
Growth in the disposable incomes of the middle class is another such factor. The government’s recent budgetary announcement to increase the non-taxable income brackets would further push growth in the sector. With rising disposable incomes and more avenues available for a novel shopping experience, brands can expect more sales in the year.
Policy changes such as RERA and GST implementation, FDI changes and major government actions like Demonetisation are all examples of the Indian government’s interest in improving the fiscal health of the country and in turn woo foreign investors in India and it is working. As per UN Reports, India received $22 billion in the first half of 2018 as FDI Investments. Additionally, Investments in the country by brands such as Ikea, Starbucks, Walmart and many others is a clear indication of India’s favourable positioning for international brands. The decision to allow 51% in multi-brand retail has allowed major brands to take note of the Indian market. Walmart’s 77% stake acquisition of Flipkart at $19 Billion is the single-biggest investment in Indian history. A significant sign of promise of what the Indian market holds for international businesses.
India’s recent policy changes with regards to e-commerce have made a direct impact on Amazon and Flipkart with both losing more than $50 Billion in the last few days. Regulatory restrictions such as the ban on exclusive deals with mobile companies, disallowing private labels or sub-brands owned by the e-commerce giants and restrictions on cashback and discounts, have forced the e-commerce industry to rethink their business strategies. While restructuring is on in both the organizations, private labels of both the e-tailers have been stopped. This has serious implications for the offline retail industry. Already being hailed as a strong move backed by the traders association, the move is seen as a positive for the retail industry that was already on a losing streak due to the heavy cash discounts being offered by the e-tailers. Falling numbers of customers in the mall has been a consistent worry for brands in the retail space and this move has brought in optimism in the industry.
International brands like Gucci, Prada, Louis Vuitton, Ralph Lauren and many others have grown exponentially in India and are consistently seeking newer avenues for growth in the country. In 2018, Gucci has sold every piece of its $4000 casual tote bag even though it is not a signature piece or a collectable. Christian Louboutin has had a similar success in the country with its designer products. Christian Dior has had huge success from its two stores in New Delhi and Mumbai. Zara’s success in India is a case study in its own. With over 17 stores in India and more in planning stages, Zara is the first brand in India that has sold over $100 million worth of products. With products such as Rado, Omega, Tissot to name a few, the Swatch group has made a mark for itself in the Indian market with large volume sales registered for the companies’ brands. Another brand that has done immensely well in India over the last 12 years is the PVH Group. The group operates leading brands such as Tommy Hilfiger, Calvin Klein etc. and has set up more than 200 selling points across India including 97 exclusive stores. As a luxury watch and accessories brand, Michael Kors is already present in 3 Indian metropolitan cities and offers a wide range of products such as apparel, accessories, watches, eyewear, fragrances and much more.
Launching a global fashion brand in India however is no small feat. With the retail sector largely being unorganised, brands would need a strategic partner that has the insight into the Indian luxury market. As India’s premier luxury consulting firm, Luxury Connect helps brands to implement high-value Business Advisory and Strategy Solutions. Founded during the peak of the luxury sector boom in 2012, Luxury connect is a “Luxury Knowledge Company” that provides luxury brand consulting, that specializes in innovative and effective luxury brand development and management strategies across categories of fashion, beauty, automobiles, real estate, financial services, hospitality, travel & tourism, watches & jewellery, wellness and fitness etc. Luxury Connect offers bespoke services such as Strategic Management & Business Advisory, Statutory Compliances Management, Talent Management, Operational Excellence, Sourcing & Manufacturing/ Product Development, Marketing & PR Support, Market Entry Strategy Formulation, Retail Location Proposition and much more. With clientele such as Fairmont, Van Urbanovsky, BMW, Royal Enfield, Kolkatta Knight Riders, Lodha Group, Good Earth etc., our research and strategic management advisory services have helped brands launch and scale luxury and fashion businesses in India.
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