Global luxury brands scout for new partners in India

Thursday, 29 March 2012
The promising Indian luxury market is seeing its share of ups and downs. And the latest is that many international fashion brands such as Versace, Corneliani and Guess are planning to part ways with their Indian partners. They are a joining a growing list of international fashion brands struggling to settle down in India. Versace and Corneliani have decided to split with their Delhi-based partner Blues Clothing Company and would scout for a new local partner to start afresh.

Meanwhile, Guess too is expected to look for a new partner after its long-time partner Planet Retail decided to restructure its business. The American clothing maker will now tie up with Major Brands, the marketer of Mango and Aldo in India.

Experts say that these moves are because most Indians still prefer buying luxury products from abroad because the high import duty makes them costlier here. Also, while rentals in a metro like Mumbai is comparable to global cities, the average sales per sq. ft. per day in a shop in Mumbai is one-tenth of Hong Kong and one-fourth of Dubai. They also feel that luxury retail in India will experience a boom but not so soon. It will take a good number of years for the market to develop. And though most international brands prefer to have a local partner for the complex Indian market, often, the partner does not invest enough to scale up the brand. .

According to consumer goods and retail consultancy Third Eyesight, about one-third of the more than 150 international fashion brands launched in India over the past seven years have either changed partners or exited the market and around 26 brands have changed partners, while 23-26 exited the market with at least half of those later returning either as a wholly-owned subsidiary or with a new partner.

But it does not mean that the global luxury apparel retailers are not keen to enter India, in fact, due to the slowdown in the West, India is emerging as a strong business destination for them. And now that the government has allowed 100 per cent FDI in single-brand retail, those, who have already established a footprint in India with a local partner can go solo and launch their own stores to expand the reach.

And India’s fast-growing economy backed by thriving middle class and Indian consumers’ rising aspirations and growing exposure to western products is leading Indian companies like Madura Fashion & Lifestyle convert a licensing and distribution deal with Esprit into a joint venture.

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