Reuters reports that International luxury brands are entering India albeit cautiously. Versace was the latest international luxury brand to open in India. Others that have opened recently due to the government’s permission to allow 51% FDI in single brand retailing include Hugo Boss, Burberry, Cartier, Chanel, Louis Vuitton and Tommy Hilfiger. Gucci and Giorgio Armani have plans to open stores in the country in the next 18 months.
The luxury good market in India is estimated to be worth Rs. 15-20 billion ($326-$435 million), and expected to grow by 15-20% per year in the next 5 years. LVMH and Fendi are both planning to invest large sums in the country to set up manufacturing and distribution units.
The most significant factor driving this growth is the rise of the number of high income households caused by a robust economy. According to analysts, in 2006-07 there will be 6 million rich households and those with an income of $22,000 would increase to 91 million by end 2006. Other factors such as the enormous size of the population below 25 years of age, rising salaries and easy availability of credit are also fueling this growth.
Some of the problems that luxury brands are facing in India are the high price as well as lack of retail space in high streets and up-market malls, and high import duties.
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