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Luxury retail giants eyeing a new keystroke for growth

Anuradha Shukla     December 10, 2012
High rental and lack of proper infrastructure for luxury retailing is forcing many brands to go in for online retailing for growth.

Brands like Giorgio Armani, Jimmy Choo, Canali, Paul Smith, Bottega Veneta, Etro, Crabtree and Salvatore Ferragamo are either launching their own websites or tying up with luxury e-retail portals.

For example, the average rent at DLF Emporio is around Rs 1,000 per sq foot excluding sales tax, common area maintenance and electricity charges.

"Rental at luxury retail malls is unrealistically high. It takes three-and-a-half to five years for a brand to break even due to high rental and larger operating cost," said an executive at Hugo Boss in DLF Emporio. The luxury brand recently downsized its 4,000-sq ft store at Emporio to a third.

Bottega Veneta's leather goods store in Emporio Mall in Delhi is now half its size. Versace in India is also squeezing everything in a single store at Emporio unlike its large store formats abroad.

High rental forced brands like Alfred Dunhill and Espirit to shut down many stores after continued losses.

99labels. com, which is open for members only, has labels like Armani, FCUK, Christian Audigier, Fitch, Ed Hardy, Cerruti, CK, Benetton, American Eagle, Hollister, Cadini, Tie Rack of London along with leading Indian designers like Ritu Kumar, Rina Dhaka and Ashish Soni.

Apart from apparel, 99labels. com has watch brands like Roberto Cavalli, Moschino, Esprit, Guess, Kenzo as well high-end children's merchandise from Disney and Okaidi. The site, which was opened in 2009, is doing brisk business.

According to McKinsey and Co, e-commerce in India has grown by an average 34 per cent a year since 2005 with sales projected to top $2 billion by 2015.

Growing disposable income in smaller cities, increasing taste for luxury brands, and Websites offering them at discounted rates has also led to people taking to online shopping platforms.

That is the reason online luxury stores such as fashionandyou. com and 99labels. com, which sell discounted luxury products, are doing well. These online stores source unsold inventory from brands such as Burberry, Versace, Michael Kors and Cavalli, Boss and Ferragamo.

In association with Mail Today

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