The India Conundrum

That said,which European label’s balance sheet can honestly show profits in India? Maybe one,and that too by a very small margin. Rentals are exorbitant,important duties are daylight robbery and the labels are still lobbying for 100 per cent foreign direct investment versus the 51 per cent that exists today. Besides,there are fixed and variable costs in terms of staff,PR teams,advertising budgets and what have you. These make it logistically impossible for labels to make enough money.

“Which brand can be profitable with just one or two stores?” asks Sumeet Nair,the fashion wizard who was instrumental in starting fashion week in India. Nair is currently managing director of Incube Fashion,a licencing and branding company that has top-notch Indian designers Tarun Tahiliani and Rohit Bal as clients. “A boutique hotel with just six rooms cannot function.”

Not many heads of luxe labels will tell you the planning for India come out of their marketing budgets,not operating budgets; that profits are a long-term plan. “Brands who’ve been here in the last five years and that have come in on their own are here for their image,” says Kalyani Chawla,VP, Marketing and Communications,Christian Dior. “But from now on,things are only going north.” What she means is that luxury in India is still limited to a few thousand people in the top four cities. But the growth lies in the second-tier cities – in Pune,Chandigarh,Chennai and Hyderabad to name a few. (Hyderabad is said to be the trump card for the European labels with its 40-crore weddings and ultra spiffy young crowd.) Goa is also in the spotlight,for the image of the label,if not for the sale figures.

The retail landscape still has a long way to go. Emporio — the luxe-only mall in Delhi — is probably the only space outside five-star hotels that offer the requisite ambience. Everyone wants to be at Emporio even if they can’t afford it,and even if their stores at Emporio don’t record their highest sales. But more Emporios are needed for India not to be considered a tiny market for international labels.

Awareness is key. There are enough fashion glossies around to the job well,all newspapers have fashion and style editors now and Bollywood — the greatest opinion-maker in the style business in this country — is suddenly very fashion conscious. Magazines don’t have models on their covers,they have young actresses. And these same actresses don’t choose to wear Benarasi saris when being photographed at events,they all want gowns.

Luxury,truly,is an investment for the future. And India is teaching that to the big daddies of the business. namratanow@gmail.com