30-day Challenge – Day 17
I have to apologize for not making a post yesterday. I have been in New York with my MBA class in Real Estate. Yesterday, our class visited the iconic Time Warner center, and was given a no-holds barred tour of the building by the property owners – The Related Group. I’ll write more about the experience in terms of how mixed use development creates adjacent opportunities for luxury brands. For now, lets learn about a substantial development in the Indian luxury market.
For any business, global expansion is no longer an option – it is a mandatory strategic move; and for luxury brands, access to international markets is key, especially when brands have saturated their domestic markets.
As such, the recent news from India regarding rules on foreign direct investments (FDI) in single brand retail is a plus for luxury brands. After years of negotiations, Indian legislators have passed laws allowing 100% of FDI for single brand retailers, and 51% FDI for multi-brand sellers.
In spite of the fact that India comes in third in the number of millionaires it produces, the country only accounts for half of a percent ($846) of the global luxury market which is valued at $169 billion. China, the second largest market takes a healthy 10%, and is predicted to grow to 20% by 2015 (McKinsey Study: Understanding China’s Growing Love for Luxury).
Though the new FDI laws are in a positive step, luxury brands still face some hurdles in India. High import duties, lacking retail infrastructural development and a highly regulated real estate market are other hurdles than will need addressed in order to help brands make the long term investments that the Indian legislature seeks.