For years, it seemed that among the global luxury brands in India, only Louis Vuitton could make money. Then, a couple of years ago, Gucci matched LV store for store. But profitability seemed elusive as Dunhill shut shop and Hugo Boss scrambled for smaller stores to cut costs. Hermès shut its Pune store, leaving only Delhi and Mumbai, and dashing hopes of a small-city boom.
But the expansion plans of one brand and the re-entry of another, at two ends of the luxury spectrum, suggest that the market is maturing. Furla, the family-run Italian maker of chic handbags (Gossip Girl star Kelly Rutherford is a fan) is planning to add more stores, and Bulgari, from the LVMH Moët Hennessy-Louis Vuitton Group, reopened in India in October.
Luxury goods companies are realising that while there’s no dearth of money, Indian customers are price-wise, and brand awareness is low. Those new to luxury might be looking for a good-looking, pricey handbag but are less moved by marquee names because they don’t know enough about brands. That’s where brands like Furla come in. They work as a starting point for the customer to understand what luxury offers—without paying the earth for it.
Owned by Bologna’s Furlanetto family for around 80 years, Furla’s goods are priced about 30% to 40% less than, say, Gucci’s. Furla CEO Eraldo Poletto says there’s an increasing understanding that Indian customers need brands to “enter the value chain of luxury”.
Furla has been running two stores in Delhi and Mumbai in a franchise model with luxury marketing company Genesis for the past two years, and has applied for a joint venture licence. Poletto says the company is looking to expand to another two to four stores even as it waits for the JV licence to come through. Earlier this year, Furla sealed a joint-venture deal with Hong Kong-based Fung Group to open 100 stores in China.
At the other end of the chain is Bulgari, which left India three years ago in the haze of a failed partnership with Lifestyle Tradelinks India. It realised that most Indians spend big money on jewellery for weddings, but go to traditional Indian jewellers. LVMH bought Bulgari in 2011 for $5.2 billion (Rs 31,928 crore), and its 130-year-old brand of classic pieces priced at thousands of dollars has been on an expansion mode ever since. It has returned to India as a 51:49 joint venture with Luxco India, with India-oriented designs.
Bulgari CEO Jean-Christophe Babin says India is not the first place where the company is offering items tuned to local tastes. “Our new watch will be a smaller size in Japan, where people love small watches.” And Bulgari isn’t the first company to do that either—Ermenegildo Zegna and Canali, for instance, have Nehru-collared jackets only for India.
Bulgari’s return and attempt at localisation shows that jewellery brands might be finally developing a coherent strategy for the billion-dollar Indian wedding market. There has been talk of Tiffany’s coming to India for a long time. Perhaps that’s next.