Luxury brands not making an impact in India

07 April 2009

NEW DELHI: Luxury brands are yet to make significant in-roads into the Indian market, and companies like Hermès and Armani predict the industry's short-to-medium term prospects are unlikely to have a dramatic impact on this situation.

Prior to the global downturn, it had been argued that the "robust demand for luxury goods is evolving as a defining feature of contemporary Indian society."

McKinsey, the management consultancy firm, also reports that just over 1 million members of India's population of over 1 billion people make up the target audience for luxury goods brands, with a combined spending power of some $40bn.

However, global luxury sales are forecast to decline by between 10% and 15% this year by Bain & Co., which also states that India takes a 0.4% share of the $233.9bn (€174bn; £158bn) worldwide market.

Speaking at the Sustainable Luxury conference in New Delhi, Christian Blanckaert, executive vice-president of Hermès, further argued that he would be a "grand, grand, grand grandfather" before India becomes a "very big business for us."

John Hooks, deputy managing director of Armani, similarly suggested that it is "very, very early days" for the Indian luxury sector, and that his company's operations in the country so far had been hoping "just to establish our brand." 

B K Murjani, of the Munjari Group, which runs luxury malls and distributes premium brands in the country, stated that the "euphoric expectations" of luxury firms entering the market had not been met.

Rather, he said that luxury retail sales averaged around $500 per square foot in India, compared to between $3,000 and $6,000 internationally, with the average luxury retailer losing $375 per square foot last year.

Overall, he stated that the "bottom line is that Indian luxury business as it is currently structured is not a commercially viable model."

Data sourced from AFP; additional content by WARC staff