The concept of international, standardized luxury floor space must evolve further before India can absorb the demand. Developers must come up with more imaginative ideas of differentiating their luxury malls from the run-of-the-mill. The idea is not to attract mass traffic, but to offer an atmosphere of exclusiveness. In other words, luxury mall developers must learn to eliminate the commonplace components and introduce high-end features in their place.
The factors contributing to the advent of luxury brands include:
- A heightened awareness and aspiration among affluent Indian shoppers
- Increased density of newly affluent consumers
- The fact that the Indian government has encouraged upscale retailers by allowing foreign companies to own a controlling interest of 51% in ‘single brand’ joint ventures
DEVELOPER CAPABILITY
Only developers with previous exposure to international standards will be able accommodate and adequately present international luxury brands in terms of the infrastructure and ambience, and a proven capability of catering to them, will be able to do so. The rest will have to settle for the usual upmarket mass brands. The criterion is not one of mere opulence, but refinement. There is also a matter of sustainability – the current demand for luxury brands will reach its most favorable proportions only in five years or so.
The luxury mall format is not inflexible, though the standards of floor-space and security must obviously go beyond those in a garden-variety mall. A luxury mall faces the tricky challenge of providing a synergistic atmosphere for competing, yet compatible brands targeting affluent buyers. It must provide a unique gateway to the luxury marketplace. Achieving this is a fine art, combining the most evolved concepts of human psychology, aesthetics and marketing strategy.
LOCATION
The location must be a suitable distance away from aesthetically unappealing components such as slums. It must be able to accommodate a good approach road and ample parking facilities. For all these reasons, the location need not necessarily be central. Discerning and affluent buyers are not necessarily averse to traveling some distances to reach an exclusive shopping destination. However, it must be at an appropriate distance from similar establishments. Generally, the location should have access to a catchment with a concentration of high-income buyers.
COMPETITION FROM FIVE-STAR HOTELS?
Luxury malls will not face any competition from five-star hotels as retail destinations. Today, only about 1% of tourists residing in luxury hotels actually shop there, and then only for last-minute impulse buys. They actually get better and cheaper buys at duty free shops. Other discerning shoppers would rather have more under a single roof, and at more accessible locations.
Hotels do not offer anything different to customers – they already have fine dining and ambience in place. Luxury malls, on the other hand, have to establish the necessary infrastructure that recreates the ambience and enablement of 5 star hotels, so the rentals are higher by between 30-35%.
The author, Shubhranshu Pani, is Managing Director – Retail Services, JLLM
