franchising aspects Nov, 10 2009

India Climbs The Luxury Ladder

As per facts and figures, the luxury retail sector in India is at an all time high. With a number of international luxury brands entering the Indian market, an entrepreneur must wake up to the fact that there is no better option than taking up a franchise

By Ramanjit Kaur
Feature Writer
India Climbs The Luxury Ladder

India is home to some of the wealthiest men in the world, with sky high incomes, it is seen as the future hub of luxury retail market .India’s luxury market and retail sector has a turnover of around Rs 40,000 crore. India is poised to figure amongst the top five markets for luxury in the world by 2025.

The luxury retail industry is growing at a good pace as people have started spending money on luxury items like never before. This is the reason why world’s most esteemed luxury brands are expanding their footprints in Indian retail industry through franchising. As Charu Sachdev, CEO, TSG International Marketing Pvt. Ltd, “Franchising as a tool is being utilised world over by the luxury goods retail industry to enter new markets where local knowledge and expertise of the franchise partner helps to build  the brand and penetrate the market more efficiently and effectively.”

Rising brand consciousness

With better employment opportunities, rising disposable incomes, changing lifestyles and brand consciousness, people are ready to shell out on Brands. Now they are accepting the international labels and are ready to buy the branded stuff at any cost. Moreover, the FDI liberalisation has made India an attractive market for starting a franchise business. Therefore, numbers of international brands have landed in India through franchising to raise their share. They have opted for the franchise route because they want a safe way to test their brands in a new market. Furthermore, franchising provides them with enough information of the local market and its trends through their local partners. It helps the parent company to tighten their grip in the new market and cater their customers’ demands.

Popular brands of the various luxury sectors

The sector for luxury goods comprises various sub-sectors such as perfumes, handbags, outfits, jewellery, sunglasses and watches. The top most franchise luxury brands include:

  • TSG (The Sachdev Group),
  • Gitanjali Gems Ltd (covers brands like Nakshatra, Asmi, Sangini and D’damas)
  • Gucci (entered India via franchise agreement with Murjani Group that recently terminated),
  • Versace (franchisee tie-ups with Blue Clothing Company),
  • Valentino (entered India through franchise agreement  between Mafatlal Luxury and Marzotta Group),
  • Tiffany,
  • Moet Hennessey Louis Vuitton (LVMH),
  • Giorgio Armani and Dolce & Gabbana (entered the country by signing a joint venture agreement with DLF),
  • Brioni (an Italian menswear brand entered India via franchise agreement with Badasaab Designs) and many more.

Taking up a franchise of luxury goods

To own a franchise retail outlet of luxury goods, a perfect location is the prime necessity. Established brands are highly sensible in choosing the location for their franchise outlet. A high traffic area, a mall or a shopping complex can be a suitable site to open a franchised outlet of luxury goods. As an aspiring entrepreneur, you need to put in a good investment in a franchise store for luxury goods as compared to other retail outlets. Though the returns are also proportionately higher still a franchise partner has to be financially sound to take up the franchise outlet.

As a franchisee, you will be provided with training and guidance, marketing and PR support from the franchise company on a continuous basis. As Sachdev says, “It is beneficial for the entrepreneur to opt for a franchise than company owned model. By taking a franchise the entrepreneur gets the benefits of marketing support and know how while owning the business and in return gain substantial profits.”

The increasing urbanisation and burgeoning middle-class is fuelling consumerism, which in turn is acting like a catalyst in the growth of the retail sector (especially the luxury goods industry). People keenly spend enough money to add on to their collection of luxury products. Currently, the Indian luxury goods market is estimated to be at $377 million. Therefore, it is worth associating with a well known luxury brand.

Owning a franchise business outlet of some famous luxury brand is like discovering a pot of gold under the rainbow.

Related: An insight into Franchise Agreement

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