NEW DELHI — The woman in the crimson sari is making a beeline for the cherry bags.
Immediately
upon stepping into this city’s sole Louis Vuitton store, a quiet
boutique in the lobby of the lavish Oberoi hotel, her eyes are on
Vuitton’s new monogrammed cherry bag collection. Within minutes, she’s
swapped the luxe black leather handbag she carried in for the
fruit-emblazoned Speedy model, checking herself out in front of the
mirror with a wide smile. The red details on the bag almost exactly
match the color of her bright, floaty sari.
Welcome to the
world of fashion in modern India, where traditional styles like the
sari and brand new luxury must-haves are starting to coexist. It’s an
interesting mix not seen in many other places in the world, and
retailers couldn’t be happier: After all, India is considered by many
to be “the next China” as far as luxury consumption and development,
and the next few years are expected to bring in a rush of foreign
brands hoping to establish themselves before an expected retail boom.
Expansion
into the country is happening already. Louis Vuitton, frequently among
the first luxury brands to enter a potential market (they had the
foresight to open in China 13 years ago), now has two stores in India:
the two-year-old shop at the Oberoi and a boutique that opened in
September in the swank Taj Mahal hotel in Mumbai, the city formerly
known as Bombay. Chanel opened its first India store last month in New
Delhi’s Imperial Hotel. And Donatella Versace just made a splash on the
front page of the country’s national newspapers when she announced,
during a visit to Mumbai in March, that Versace would be opening five
boutiques in the country next year.
“As soon as [China’s
market] started to grow, everyone began looking at India’s population
and demographics and realized that they needed to include us in their
global plan as well,” said Superna R. Motwane, editor in chief and
publisher of Indian versions of L’Officiel and Seventeen magazines. “A
lot of people are banking on India as the new China, and we’re all just
keeping our fingers crossed that it actually happens.”
A Merrill
Lynch report issued last fall predicts that India, which currently has
around 5 million luxury consumers, is about a decade behind China right
now as far as market development. The past few years in China have seen
many companies scrambling to open stores and establish a presence
before the country’s retail market explodes, as it’s expected to do in
the next five to 10 years. Now that India is being identified as the
next big place to watch, many foreign brands have already started
looking into expansion options there so they’re not forced to rush in
at the last minute once again.
The similarities between the two
countries, at least on paper, are undeniable. Both have populations of
more than a billion people (the two combined make up nearly 40 percent
of the world’s population), which makes for an enormous amount of
potential customers. Both have quickly growing economies and emerging
wealthy classes with an increasing number of businesspeople and
entrepreneurs who have lots of cash to spend. And both have been
opening their doors to Western ideas, companies and lifestyles over the
past decade.
These alluring traits have positioned India and
China as prime retail spots, and foreign brands are beginning to
salivate over the potential success in both markets in the next few
decades. But despite the basic similarities, the two neighboring
countries have many differences that will shape the way foreign luxury
brands — many of which are now established in China — will start to
approach the Indian market in the next few years.
The main
distinction between China and India is possibly most obvious on the
streets of each country’s main cities. China, which was closed off to
the outside world for decades under the Communist regime, had long
abandoned fancy fashions for the dark, simple suits that are still
daily attire for many in Beijing, Shanghai and elsewhere. When Western
brands began trickling in about 15 years ago, their colors and styles
were seen as a breath of fresh air for fashion lovers who previously
had to work with the dowdy shapes and gloomy palettes sold at home.
India,
on the other hand, has never lost its sense of traditional style even
as its wealthier consumers have developed an interest in Western
designers, travel and luxury brands. A walk through the busy streets of
New Delhi or Mumbai shows that women regularly wear saris or the salwar
kameez, a three-piece outfit consisting of pants, a tunic, and a long
scarf. And although many women, particularly younger ones, have begun
embracing a very Western style of daily dress, they still have closets
full of these traditional Indian designs, which are still the standard
formal attire for the country’s frequent, wedding-heavy social
functions.
The result has put foreign retailers in a position
where, unlike China, they need to meet the need for Western goods while
still being somewhat mindful of India’s own fashion history. “This is a
culture that still needs Indian clothes a lot,” said Motwane. “I could
never have a wardrobe of all Western clothes. But what we’re seeing is
that the Western clothes are starting to blend in very well. A woman
can wear a suit to the office and then a sari in the evening to go out.
Or she can wear a salwar kameez to the office and then a short dress to
go out. We have been able to keep our traditional clothes and mix our
wardrobes with Western styles.”
But though big-name foreign
brands are increasingly showing up in the Indian mainstream, what is
different about Indian customers, unlike those in many other Asian
countries, is that they still prefer buying pieces that are unique or
less mass-produced — a trait they’ve carried over from their
traditional clothes, which are often custom-made and always colorful
and creative.
“The Indian customer is very individualistic,”
said Prasanna Bhaskar, India retail manager for Louis Vuitton. “You
will not see 30 people carrying the exact same bag in this market.
Unlike a place like Hong Kong, where you do not need to remember what
bag you sold to a customer’s sister-in-law, in India you do. They do
not want to be sold the same design.”
What’s also a challenge
for foreign brands is setting up a high-end, stand-alone store in a
country where shopping has long meant a trip to a local market. A
dearth of central destination malls has, for now, forced brands into
safe spots like the lobbies of high-end hotels. Foreign retailers in
India are finding that they’re still in untested territory, which often
presents difficulties that are not unlike the problems they faced in
China until relatively recently.
“We do think the market in
India is going to explode in about five years, but there are still
plenty of challenges here,” acknowledged Bhaskar of Louis Vuitton.
“Infrastructure is probably the biggest challenge in India. There are
no roads here that you could easily walk on in Louis Vuitton shoes, and
that’s an issue. Location has always been a challenge. There are no
luxury malls here yet, and even if there were, there are not yet enough
[high-end] brands to fill them. We are still waiting for the day when
there are at least 10 luxury brands here who can move into a luxury
lifestyle mall, like Pacific Place in Hong Kong.
“The chance
of an Avenue Montaigne developing in India is very low. We do not have
the kind of roads and promenades here that customers could easily walk
down. A street of high-end retailers is definitely a distant dream.”
One
of the other big hurdles for luxury brands establishing a presence in
India is getting customers to stay at home to shop. Wealthy Indians
have long traveled abroad — primarily to spots like London and Dubai —
to buy their Western wardrobes each season. Even with more stores
opening in the country, going abroad maintains its appeal because of
the wide selection of available brands, although luxury retailers say
they are finally convincing customers that they can shop just as well
in India.
“It took years for people to start getting used to the
idea of shopping for international brands here,” said Anna Bredemeyer
of Entrack International, who manages the Mont Blanc, Canali and
Girard-Perregaux stores down the hall from Louis Vuitton in the Taj
Mahal hotel in Mumbai. “Part of the problem was just the mind-set about
the currency. People were used to shopping abroad, and a higher-end
product that costs 100 pounds [$190] in London would translate be the
equivalent of about 80,000 rupees here. It’s the same price, but just
the thought of spending in the thousands versus in the hundreds —
people still felt like they were spending less if they shopped abroad.”
Taxes
on imported luxury goods in India have, in fact, raised prices in the
country by up to 30 percent more than stores abroad. Companies like
Louis Vuitton absorb some of the taxes to keep their prices closer to
the world standard, a practice they also maintain in other countries
with high import tariffs, like China. But the difference in cost isn’t
much of a sticking point for shoppers who have the money to spend,
Bhaskar said.
“I think Indian customers are much more
comfortable shopping in our stores and are willing to pay a premium for
the service they get,” she said. “Our Indian customers lead lives of
royalty. They do not like to queue up. They do not like the idea of
going to a busy store where they’d be one of 700 customers at a time
waiting to see a bag. I have heard this time and again from clients who
say that they prefer to come [to our local stores] because a bag will
be reserved for them or because they can easily come often and spend an
hour in the store. They are very conscientious of service, and they
become very loyal if you offer them good service.”
Motwane
added: “What customers are really starting to look for here is the
buying experience. For shopping in India, this is a very new idea. But
this luxury customer the brands are now after is a well-traveled woman.
She knows what the buying experience is like in a place like New York.
If you can replicate the experience here that you would get anywhere in
the world, then that’s what’s going to grab your customer in India.”
The
trouble is simply finding the location to grab them. Retailers estimate
there are about 25 to 30 pockets of wealth scattered around the
country, which can be tough to tap into with only one or two stores in
New Delhi and Mumbai. And both of those cities are so spread out that
it can take hours to get from one section of town to another.
“Brand
awareness is not a problem in India,” said Swapan Bharma, retail head
of Bulgari, which has a shop in the Oberoi hotel in New Delhi. “What is
the problem is just getting people to the store.”
In fact,
unlike China, where many brands have to work on increasing their
recognition, most Indian consumers are well aware of Western labels and
the products they’re known for. A growing number of local magazines has
helped, and there are four dedicated almost solely to fashion: Indian
versions of international titles L’Officiel, Cosmopolitan and Elle, and
locally owned magazine Verve.
“When I started L’Officiel three
years ago, everyone told me India was not ready for a luxury fashion
magazine,” said Motwane. “But looking back, it was absolutely the right
time. Today, it has a circulation of 50,000. It does very well with
readers, and very well with advertisers. Obviously, the readers were
ready for an international-quality magazine with a local focus.”
She
followed up with the launch of Seventeen in 2003, targeting India’s
very youthful demographic (the median age is about 24 years old) who
are expected to be a big consumer base for the country in the future.
The pages of such magazines mirror the changes in the country,
combining local Indian styles with Western fashion — a mix that
everyone expects to see more of as companies continue to flow into
India and set up shop.
“Right now, India is a country where you
cannot walk out in the morning and buy a Gap T-shirt, or a Prada suit,
or a pair of Diesel jeans,” Motwane said. “Now, I think every brand is
probably going to be here in the next two years. It will be exciting to
see what happens.
  |
