If 2005 was the year of the (proverbial) bottom of the pyramid, 2006 was all about the realisation of the opportunity at its summit the potential of providing for the very rich.
As Tikka Shatrujit Singh, advisor to LV Trading India, puts it, "Rich Indians are no longer embarrassed or guilty about spending on luxury."
Some evidence of that legitimising of self-indulgence came in the form of the first-ever report on the Indian luxury market by retail consultancy, Technopak, which declared that 1.6 million Indian households spend Rs 4 lakh a year on uber brands.
Also lending credibility to the sector was the establishment of companies like Leading Brands of the World, a consultancy helping luxury brands set up business in India.
And the big brands kept streaming in
In April, British power brand Burberry opened in Mumbai. "This is significant because it's the perfect bridge brand offering purchase opportunity even to young professionals," commented the brand's franchise partner, indicating that the consumer profile for luxury purchases is changing.
Salvatore Ferragamo debuted in Mumbai's Grand Hyatt Plaza. Hugo Boss extended their presence to four stores and three cities.
Several more brands have announced their interest in a 2007 entry; it might be hard to keep count thereafter. Gucci, Jimmy Choo and Calvin Klein will be here courtesy the Murjani group. Fendi and Dior, from the LVMH stable will debut. TSG International Marketing will bring in Jean Paul Gaultier and Alberta Ferretti.
Somehow, it is always luxury clothes and accessory brands that are most noticed for their local presence. According to Technopak, luxury clothing and accessories account for as much as 28 percent of the $14.4 billion total luxury spend in India.
It's no longer inconceivable to spot a Porsche Boxster zipping down Mumbai's Marine drive; the company hopes to sell 200 models next year. Italian super luxury sports car maker, Automobili Lamborghini, launched two models of the car mid-year in India. Rolls Royce arrived at a Mumbai mall and 'officially' sold 10 Phantoms in its first year.
And though taxes on high-end imports still call for rationalisation, watches for instance are levied 50 percent, the government isn't unresponsive. In January, the state gave upscale retailers a boost by allowing foreign companies to own a controlling interest of 51 per cent in joint ventures operating 'single-brand' stores.
The LVMH group, which owns Fendi, using this new window of opportunity, has applied to the Foreign Investment Promotion Board for clearance to invest in India.
Fendi has tied up with Fun Fashion India for a joint venture and 51 percent equity. Clearance has already been obtained separately for the Louis Vuitton brand. Most other brands, however, are still entering through the franchisee models, preferring to rely on local partners for local expertise.
Another product category that's received attention this year is leisure boating. That Ferretti group, the largest manufacturer of luxury yachts, got itself active representation in India last year speaks volumes for its manufacturers' faith in the emergence of the market.
The luxury watch market is also booming. Rolex recently launched at New Delhi's Shangri-La hotel, Tag Heuer hopes to open its 100th point of sale in 2008, and everyone's excited.
Even traditional mass market retailers can't resist. Shopper's Stop is said to be in talks with over 40 global luxury brands from Gucci to Prada, to rope them into its as-yet-unveiled multi-brand luxury retail chain business, lining up over Rs 500 crore for this purpose. The first of these multi-brand stores is said to be opening in Delhi in 2007.
One obstacle that begins to retreat in 2007 is the development of high-end retail infrastructure. Work on DLF Emporio in Delhi, luxury retail's best bet, has been stalled for environmental clearance issues, rescheduled for a 2008 unveiling.
One Style Mile in Delhi, where three brands were set to launch, has been sealed for heritage zoning issues. Select City Walk in Saket, to be completed this year, might be 2007's brightest prospect.
Meanwhile, Versace Jeans set up shop in CR2 in Mumbai. And although it'll be a while before we overtake the spending power of the Chinese, India is certainly one market luxury makers have discovered they can ill afford to neglect.
