Luxury retailers upbeat on expansion, cautious on property choice

Louis Vuitton, Prada, Gucci and Jimmy Choo are now familiar brands to India. Last decade in India has witnessed luxury retail growing at the rate of almost 20 per cent and the increasing upper middle class is expected to be the key driver of luxury retail demand in future. With this, both national and international luxury retailers are in a spree to foray or expand their footprint in India. The future of luxury retail is promising, but availability of retail space that on par with global standards is a big challenge according to a JLL(Jones Lang LaSalle ) report. Retailers are aggressive on their expansion plans but cautious about property selection, as per the report.

In India, preference for luxury goods is growing across all the metro cities, but most luxury retailers are mostly concentrated in Mumbai and Delhi. Luxury malls such as DLF Emporio in Delhi, Palladium in Mumbai and UB City in Bangalore are already operational. Luxury retailers generally open their stores in luxury hotels with increased preference from consumers as they are expanding their brand presence by starting their stores in high-end malls and high streets and sometimes opening their flagship stores in high-end residential neighbourhood. However, finding a space as per their standards and specifications is still a challenge in India, said the report.

Report suggests that luxury retailers are not only looking for properties that suit their operations and costs, but also their customers in terms of the location, facilities and overall shopping experience. Retailers are focusing on the quality of the malls, along with the mall management, tenant profile, etc. all of which are acting as factors responsible for the success of the malls. The saturation of established retail markets closer to the prime city centres is a compelling factor for developers and retailers to focus on this emerging consumption.

As per industry estimates, India enjoys only 1%–2% of the global luxury market, but with better education and young age by their side, Indian consumers have emerged as potential spenders. With policy changes all set to attract more retailers into Indian market, a more clear picture on FDI policy is still awaited.