India is open for luxury business, says Reliance Brands CEO
India is not the impregnable fortress most luxury brands think it is but rather the next frontier, Darshan Mehta, chairman and chief executive of Reliance Brands, the largest distributor of high-end and luxury brands in India, told FashionNetwork.com.
Reliance Brands is a joint-venture partner in India for many high-end and luxury brands including Burberry, Bottega Veneta, Armani, Zegna, Jimmy Choo and Dolce & Gabbana. It runs a portfolio of around 250 mono-brand boutiques and an equal number of shop-in-shop partnerships.
“It is the mindset that is the biggest obstacle for most luxury brands,” Mehta said on the fringes of the New York Times International Luxury Conference.
He pointed out that with around 260,000 high-net-worth individuals (people with liquid financial assets of $1 million), luxury buyers in India represented a combined market of $1 trillion. The population of China, where most luxury brands have built a strong presence in the past 20 years, is 1.42 billion, while that of India is 1.35 billion and, as in China, its population of affluent shoppers is rising fast.
But many luxury brands have steered clear of India in the past 10 years due to red tape, high taxes and lack of retail infrastructure. While Mehta estimates that there are only around 15 malls in India that could qualify as suitable to host luxury brands, he said the future of luxury business was online, not in bricks and mortar stores.
“In three to five years, we will see the digital economy becoming more and more important,” Mehta said, adding that Indians were increasingly shopping on their mobile phones. “Bricks and mortar will no longer be the channel to distribute the brand but to build a brand as the focus is on creating experiences and the ‘theater of the brand.'”
Mehta argued that the equivalent of VAT in India had come down and import tariffs as well.
He also said the legislative environment had become much more favorable in recent years as foreign companies can now own 51 percent of an Indian joint-venture and up to 100 percent of a subsidiary, provided 30 percent of the goods sold are sourced in India. He added the women’s market in India is “under-serviced” because women’s purchasing power is growing and they are becoming increasingly financially independent.
Copyright © 2021 FashionNetwork.com All rights reserved.