French luxury brands eye Indian market

By Tripti Lahiri NEW DELHI, AFP

India may not be seen as a likely place to sell a US$1,000 handbag, but top luxury brands from France said Friday that the country holds the key to a major boost in their global sales. “After China, India will be the next growth story,” Yves Carcelle, CEO of Louis Vuitton, said in the Indian capital at the start of a two day conference promoting international luxury goods.

The per capita income in India hovers just above US$700, according to the World Bank, but with a one-billion-plus economy, increasing numbers of people are crossing into the category of super-rich. India now has the highest number of billionaires in Asia, accorded to Forbes magazine, and 1.6 million households earn more than US$100,000 a year, making them all potential customers of luxury goods. The Indian luxury market is thought to be worth some two billion dollars and is growing at 20 percent a year, according to India’s main trade federation FICCI.

“We believe in the potential of the Indian market,” added Carcelle. “But right now we are just at the beginning.”

For the moment, sales in India for the brands represented by the Comite Colbert, an association of 70 French luxury houses, are tiny, accounting for a quarter of a percent of worldwide sales of US$40 billion.

But according to retail consultancy Technopak, which last year surveyed 4,000 affluent consumers across the country, the Indian market could potentially be worth up to US$14 billion a year.

The consultancy said there were 1.6 million families who could spend up to US$9,000 on items including fashion goods and jewelry.

However, Carcelle and other top officials of the French houses said high Indian tariffs were slowing their expansion in India.

“It is very difficult for our customers to understand why they have to pay 35 percent more in India than in Paris or London,” said a Chanel executive.

India’s Commerce Minister Kamal Nath told the conference the government was open to reducing duties on imports of luxury products as long as it could be done “without hurting the local industry.”

Luxury goods retailers added finding the right store location was difficult too with most opting to sell in five-star hotels. They avoid the “high street” as most markets present a chaotic scene of crowded shops along potholed roads.

“There is a lack of selective retail environments,” said Damien Vernet, general manager for Louis Vuitton in the Middle East and India, whose company has two shops in India, both in top hotels.

“If it was not for that obstacle, we probably would have a few more stores in India.”

As a result, the stores are often empty, with only one or two customers seen going into a Louis Vuitton shop or Christian Dior to browse items like a US$2,300 cotton cardigan, on a weekday evening.

“Right now the numbers are very marginal. But India is one of the markets where growth will be exponential,” said Vernet, adding the company was experiencing “double-digit” growth in the country.

Xavier Bertrand, managing director for Chanel in India, said the company had recorded sales growth of “between 40 and 50 percent” last year, and will next week open its fifth Indian store in the southern high-tech hub of Bangalore.

“What makes India unique is a young population that also aspires more and more to luxury products,” Bertrand told AFP, adding he expected to see similar growth figures for the next three to four years.

And many of these young, who have come of age during the economic liberalization of the 1990s, are more than ready to eschew the independence struggle-inspired “buy Indian” ethos of their parents and grandparents.

“I would like to call it traditional modernism,” said Shimul Mehta Vyas, head of India’s top fashion school, the National Institute of Design.

“On the one hand we still uphold our traditional culture but on the other hand we aspire to be global consumers.”

But unlike lower end global American brands such as McDonald’s — which in India serves spicy concoctions of mashed potato and cottage cheese for the largely vegetarian population — the French say they will not “Indianize.”

“What we propose is Chanel style, whether you like it or not. If you don’t like it, don’t buy it,” Chanel chairman Francoise Montenay, who also heads the Comite Colbert board, said.