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High-end luxury brands yet to take off at Indian airports
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High-end luxury brands yet to take off at Indian airports

Written by: Vijaya Rathore

Afew months ago, senior executives of Italian luxury brand Salvatore Ferragamomet officials at the Delhi international airport and came away impressed by theswanky T3 terminal. But will travellers get to shop for Ferragamo's famousWing-tip Derby shoes while in transit? Well, no, since the company is notsetting up shop at the airport anytime soon.

"No luxury brand will take airports seriously at this point in time,"says Dipak Agarwal, chief executive operations and strategy, DLF Brands, whichhas a joint venture with Salvatore Ferragamo in India. "Travel retail willevolve in India, especially in the luxury space, only when our airports becometransit points for people travelling across continents."

For another luxury label, Louis Vuitton, finding a hotspot at any of theairports in India may not be a tough task, but the brand's expansion isrestricted to luxury malls and hotels. Despite the privatisation and upgrade ofairports in India, not many high-end luxury brands have opened exclusiveoutlets to sell apparel, bags, shoes, watches and jewellery. While some saythis is because airports in India still do not meet global standards, othersblame it on the profile of Indian travellers.

"Our airports need to be upgraded to suit requirements of luxury brands.Besides, Indians travellers are buying products like whiskies, cigarettes andfragrances at airports but not high-end clothing, watches or jewellery,"says Tikka Shatrujit Singh, chief representative in Asia for Louis Vuitton.

"The profile of consumers is very important. In India, it takes long for ahigh-end luxury brand to make an airport store profitable. It is quitechallenging," admits Romy Juneja, chief commercial officer, Delhi International Airport. Among the premium brands at the duty-free area at present areHugo Boss, Mont Blanc and Swarovski.

In terms of cost of operations, brands have to shell out more to be at theairports. "A store at airport is good for visibility, but the costs arejust double. There are also other issues like security clearances and odd dutyhours for staff members," says Yashovardhan Saboo, chief executive ofEthos Swiss Watch Studios. Ethos sells watches from over 50 brands.

Monthly rentals at airports range between 6,000 and 12,000 a square metre, says Amit Arora, managing director at Buddy Retail, which buys retail space from airport operators to lease it out to brands. "There is a market for semi-luxury goods and low indulgence categories like fragrances, liquor and pens, which cost less than 10,000. There are very few people buying luxury products at airports in India and it will take another 10 years to take off," says Arora, whose company manages retail spaces at Delhi, Mumbai and Hyderabad airports.

Even LVMH's Tag Heuer brand is sold at Ethos stores at Delhi and Bangalore international airports. However, the group, which has Tag Heuer's standalone stores at airports worldwide, does not have any in India.

"We want first to make our current airport doors (retail point) more successful," says Franck Dardenne, general manager, LVMH Watch & Jewellery India. TAG Heuer has 95 retail points in India, while Dior Watches has 16 and Zenith has seven across the country. "You will not see many luxury watches sold in national airports now; customers prefer to buy in their city, where they know the service they can receive," says Dardenne. Even Genesis Luxury, which has a host of brands such as Paul Smith, Bottega Veneta, Canali, Burberry, Jimmy Choo and Armani, does not have even a single store at airports.

This article was originally published in the Economic Times dated 17th July, 2012, written by Vijaya Rathore, associated with the Economic Times Bureau, New Delhi.

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