Luxury brands face a tricky time as walk-ins decrease by twenty-fifths of what they were. The recent sales were an enormous disappointment. It is hoped that November will be a better month. India's luxury market was expected to reach $ 50 billion by the start of the next decade. The growth has slowed down post-demonetization.
The high costs of operation are proving to be a hassle for the luxury retailers who have noticed the footfalls reduced to three-fourths, they say that the increasing rentals are becoming a pain. There was virtually no business in the Diwali season. The founder of a luxury brand explained that the French brand Longchamp was earning around Rs 60-70 lakh a month couldn't continue when the average rentals are near to Rs 350-500 per square feet, which adds around to Rs 24-30 lakhs for a typical store. Longchamp, a bridge-to-luxury brand had four outlets, which have all wound up. According to sources close to DOIT Retail, the plans to bring Alexander McQueen to India have also been shelved. The founder of DOIT stated that they will continue to operate brands and stores that are generating revenue.
Experts said that the two luxury brands, Versace and Roberto Cavalli, with one store each in Delhi's DLF Emporio Mall, are on the lookout for a new partner. These are both Run by the owners of Infinite Luxury Brand, the pan masala barons of Chaurasia Group. Delhi based Bequest Group which runs Berluti, Tod's and Saint Laurent, refused to comment but, it is being said that they are running for partnership with Cavalli.
According to the registrar of companies data from Tofler, DOIT Creations recorded a widening net loss of Rs 9.95 crore in 2018 versus the 7.7 crore the previous year, and DOIT Retail's net loss of 3.43 crore has increased to a net loss of Rs 7.26 crore in 2018.
Market conditions combined with the real estate prices have forced the smaller players to quit. Diwali sales lacked behind malls, however, they have gone with the ostrich way, and don't acknowledge the fact that walk-ins are down.
Luxury malls make up about 5% of India's entire mall strength. There are very few successful ones and only in the bigger cities.
Experts pin the problem on the confusing methods of luxury brands in India. Goods are priced 1.35 times, of what they are elsewhere, collections are a season old; the local partners only want a return on their investments, explains Nakul Bajaj, founder-cum-CEO of Darvey. Companies are now pegging their hopes on the Black Friday sales at the end of November.