India is slowly and gradually accepting luxury and increasing the space for luxury in India. According to a recent report by Cushman & Wakefield, luxury in India will acquire 1.44 per cent of the total retail market by 2015 as against one per cent currently, while the total retail malls stock is set to increase by 27 per cent by 2015.
Highlighting the changing luxury retail scenario in India, the report suggests that total current operational mall space in the organised retail sector across the top seven cities of India is estimated at 66 million (approx.) sq. ft. of which luxury retail space is only 770,000 sq. ft.
Of the seven cities, Delhi/NCR leads the space acquisition at 38 per cent, followed by 21 per cent in Mumbai and 17 per cent in Bengaluru.Due to a strong mall culture and fashion hubs in the country, NCR and Mumbai lead the show while a great level of disposable incomes and a leading IT hub Bengaluru has become the third best destination.
Meanwhile, cities like Pune, Chennai and Hyderabad are yet to gain traction from luxury retailers in malls as they have relatively low luxury brand reach and are yet to catch up with the mall culture to the extent witnessed in NCR, Mumbai and Bengaluru.
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, said “Luxury retail has specific requirements in terms of location, ambience, adjacency of exclusive brands etc. which are critical as luxury retail is more about creating the right kind of purchasing experience. Contrary to belief, luxury retailers in India have shown a preference for exclusive mall spaces as against main streets or hotel properties as these are the only locations that match up to international standards. The current estimated mall space fit for luxury is only 1% of the total operations mall space and is expected to remain the same in the next couple of years. Thus even with intensions of establishing or expanding in India, most global luxury retailers are skeptic on account of available retailing space in India.”
Sanjay further added, “It is estimated that there will be an increase of five times in the number of ultra high net households in India with a minimum worth of US$ 250 million and more by 2016 – 17, also indicating a corresponding increase in purchasing power of luxury within the country. Yet with limited growth on support infrastructure in India, luxury retail may not be able to grow at the same pace as desired.”